CITATION: R. v. Reeve, 2017 ONSC 5376  
COURT FILE NO.: CR-13-8029  
DATE: 20171013  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
B E T W E E N:  
)
)
Her Majesty the Queen  
) F. McCracken, for the Provincial  
Crown  
)
)
)
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and -  
)
)
)
)
Daniel Reeve  
) M. Cremer, H. Gladstone for the  
)
)
)
)
)
)
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accused Daniel Reeve  
HEARD: June 8, 2015 - June 6,  
2017  
Reasons for Judgment commence following the Table of Contents.  
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R. v. Daniel Reeve  
TABLE OF CONTENTS  
TABLE OF CONTENTS .............................................................................2  
REASONS FOR JUDGMENT.....................................................................9  
A. OVERVIEW ................................................................................................................ 9  
B. ISSUES ...................................................................................................................... 9  
C. STRUCTURE OF THE FACTS................................................................................. 10  
CROWN EVIDENCE.................................................................................10  
A. THE INVESTORS..................................................................................................... 10  
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A. JOSEPHINE DESALVO ........................................................................................................................................10  
FIRST INVESTMENT – JAKOBSTETTEL INN .........................................................................................................11  
SECOND INVESTMENT – BREADALBANE INN ....................................................................................................13  
SUBSEQUENT EVENTS .......................................................................................................................................14  
B. ANGELA DESALVO.............................................................................................................................................17  
C. CONCLUSION ....................................................................................................................................................18  
. NANCY HERLICK ..................................................................................................................................................19  
. ANDREA MORGAN..............................................................................................................................................21  
A. RONALD DEKONING .........................................................................................................................................25  
B. BRENT DEKONING ............................................................................................................................................30  
. WARREN BOLDT..................................................................................................................................................32  
. BARRY CUNNINGHAM ........................................................................................................................................36  
FIRST INVESTMENT – JAKOBSTETTEL INN .........................................................................................................37  
SECOND INVESTMENT – BREADALBANE INN ....................................................................................................39  
SUBSEQUENT EVENTS .......................................................................................................................................41  
. BRIAN CROZIER...................................................................................................................................................43  
. DOUG THIEL........................................................................................................................................................47  
. DR. IRA BERNSTEIN.............................................................................................................................................51  
FIRST INVESTMENT – BREADALBANE INN.........................................................................................................52  
SECOND INVESTMENT – BREADALBANE INN, AGAIN........................................................................................54  
SUBSEQUENT EVENTS .......................................................................................................................................56  
0. MICHELLE KEDDIE.............................................................................................................................................60  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE ..............................................................................................61  
SECOND INVESTMENT – BREADALBANE INN ....................................................................................................63  
SUBSEQUENT EVENTS .......................................................................................................................................66  
1. LORNA EADIE ....................................................................................................................................................67  
2. MARK MCGUIRE ...............................................................................................................................................73  
FIRST INVESTMENT – BREADALBANE INN.........................................................................................................75  
SECOND INVESTMENT – JAKOBSTETTEL INN.....................................................................................................77  
THIRD INVESTMENT – MILLIONAIRE MORTGAGE .............................................................................................79  
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SUBSEQUENT EVENTS .......................................................................................................................................80  
3. HEATHER GARDNER..........................................................................................................................................81  
FIRST INVESTMENT – JAKOBSTETTEL INN .........................................................................................................82  
SECOND INVESTMENT – N.Y. PARK PLAZA ........................................................................................................83  
THIRD INVESTMENT – BREADALBANE INN........................................................................................................84  
SUBSEQUENT EVENTS .......................................................................................................................................85  
4. PATRICIA WESTERHOUT ...................................................................................................................................88  
FIRST INVESTMENT – LOAN TO DPR..................................................................................................................89  
SECOND INVESTMENT – BREADALBANE INN ....................................................................................................89  
THIRD INVESTMENT – MILLIONAIRE MORTGAGE .............................................................................................91  
FOURTH INVESTMENT – JAKOBSTETTEL INN ....................................................................................................92  
5. LAURA KERR......................................................................................................................................................95  
6. AMOS LICHTY....................................................................................................................................................99  
7. ANNE COLQUHOUN........................................................................................................................................102  
FIRST INVESTMENT – JAKOBSTETTEL INN .......................................................................................................103  
SECOND INVESTMENT – N.Y. PARK PLAZA ......................................................................................................104  
THIRD INVESTMENT – BAYFIELD PROPERTY....................................................................................................106  
SUBSEQUENT EVENTS .....................................................................................................................................108  
8. GLEN BRUBACHER ..........................................................................................................................................110  
FIRST INVESTMENT – JAKOBSTETTEL INN .......................................................................................................110  
SECOND INVESTMENT – N.Y. PARK PLAZA ......................................................................................................111  
SUBSEQUENT EVENTS .....................................................................................................................................114  
9. CLAUDETTE TAYLOR........................................................................................................................................116  
FIRST INVESTMENT – JAKOBSTETTEL INN .......................................................................................................118  
SECOND INVESTMENT – N.Y. PARK PLAZA ......................................................................................................119  
SUBSEQUENT EVENTS .....................................................................................................................................120  
0. PETER STEENBERGEN......................................................................................................................................124  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE ............................................................................................126  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE........................................................................................127  
THIRD INVESTMENT – N.Y. PARK PLAZA..........................................................................................................128  
SUBSEQUENT EVENTS .....................................................................................................................................129  
1. MARINA OGNJANOVSKI..................................................................................................................................131  
2. WILMA JORDAN..............................................................................................................................................134  
3. CHIN TAN ........................................................................................................................................................136  
4. THERESA KAUP ...............................................................................................................................................141  
5. RENE BROSSARD.............................................................................................................................................146  
FIRST INVESTMENT – EMERALD MET..............................................................................................................147  
SECOND INVESTMENT – N.Y. PARK PLAZA ......................................................................................................149  
SUBSEQUENT EVENTS .....................................................................................................................................150  
THIRD INVESTMENT – ISABELLA BROSSARD ESTATE.......................................................................................153  
SUBSEQUENT EVENTS .....................................................................................................................................154  
6. CRAIG MASON ................................................................................................................................................154  
7. CARIN SMITH ..................................................................................................................................................159  
8. SHERRILL MARTIN (STEVENSON)....................................................................................................................163  
9. BRAD ASHMAN ...............................................................................................................................................169  
0. EVA BERNACHI................................................................................................................................................173  
FIRST INVESTMENT – JAKOBSTETTEL PROPERTIES INC. ..................................................................................174  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE INC.................................................................................177  
SUBSEQUENT EVENTS .....................................................................................................................................180  
1. JEANNETTE HARROP.......................................................................................................................................183  
2. KEVIN HILLMAN ..............................................................................................................................................190  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE INC......................................................................................190  
SECOND INVESTMENT – JAKOBSTETTEL PROPERTIES INC. .............................................................................192  
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SUBSEQUENT EVENTS ................................................................................................................................194  
3. GARY RAYCROFT .............................................................................................................................................196  
FIRST INVESTMENT – CELEBRITY MANAGEMENT INTERNATIONAL INC. ........................................................197  
SECOND INVESTMENT – JAKOBSTETTEL PROPERTIES INC. .............................................................................199  
THIRD INVESTMENT – MILLIONAIRE MORTGAGE INC. ...................................................................................202  
4. WAYNE SCHROEDER .......................................................................................................................................206  
5. ANDREW EPLEN..............................................................................................................................................210  
6A. LYNETTE CARNEGIE (CAIGER).......................................................................................................................214  
6B. ROBERT CAIGER............................................................................................................................................219  
6C. DAN BALCH...................................................................................................................................................223  
7A. PILITA GALANO.............................................................................................................................................226  
7B. JOHN CAVAN ................................................................................................................................................229  
8. LINDA CHAFFE.................................................................................................................................................232  
9. PAUL MELEG...................................................................................................................................................235  
FIRST INVESTMENT – REEVE HOTELS AND RESORTS INC. C.O.B. AS BREADALBANE PROPERTIES INC. ..........237  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE INC.................................................................................238  
SUBSEQUENT EVENTS .....................................................................................................................................239  
0A. LISA SCHNARR ..............................................................................................................................................241  
0B. PAUL SCHNARR.............................................................................................................................................243  
1. CHERRIN MELEG .............................................................................................................................................245  
2. STEVE MANUEL...............................................................................................................................................248  
3. ISAAC THIESSEN..............................................................................................................................................251  
4. JAMES REINHARDT .........................................................................................................................................256  
5. KEITH AUSTIN .................................................................................................................................................260  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE ............................................................................................260  
SECOND INVESTMENT – BREADALBANE INN ..................................................................................................261  
SUBSEQUENT EVENTS .....................................................................................................................................262  
6. LLOYD HOFFMAN............................................................................................................................................263  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE ............................................................................................264  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE........................................................................................266  
SUBSEQUENT EVENTS .....................................................................................................................................267  
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B. THE PROPOSED REAL ESTATE VENDORS....................................................... 268  
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. BREADALBANE INN...........................................................................................................................................268  
PETER EGGER...................................................................................................................................................268  
. N.Y. PARK PLAZA HOTEL ...................................................................................................................................272  
ALICIA GANZ ....................................................................................................................................................272  
MERYL GOLDBERG...........................................................................................................................................275  
. BAYFIELD PROPERTY.........................................................................................................................................276  
HENRY ISRAEL..................................................................................................................................................276  
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C. DPR FINANCIAL – THE INSIDERS....................................................................... 277  
1. JEFFREY MAY.....................................................................................................................................................277  
2. KAREN GINGRICH..............................................................................................................................................279  
3. CYNTHIA TAYLOR ..............................................................................................................................................292  
4. KIMBERLY KROEKER..........................................................................................................................................299  
5. DIANE INTINI.....................................................................................................................................................301  
6. SARAH SNOW ...................................................................................................................................................304  
7. LINZIE BROWN..................................................................................................................................................311  
8. STEVE HANEY....................................................................................................................................................318  
9. LEE-ANNE RUGGLE............................................................................................................................................325  
10. LEN BRUNEN...................................................................................................................................................327  
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1. HOWARD SOUTHWOOD.................................................................................................................................329  
D. THE ATTEMPTED COMEBACK............................................................................ 332  
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. MARK JACKSON ................................................................................................................................................332  
. NEIL BOYD.........................................................................................................................................................334  
E. FAMILY MEMBERS ............................................................................................... 337  
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. CHERYL REEVE ..................................................................................................................................................337  
. DAVID REEVE ....................................................................................................................................................340  
F. CROWN FORENSIC ACCOUNTING EVIDENCE (CAROLINE HILLYARD) ......... 364  
A. DEFENCE FORENSIC ACCOUNTING EVIDENCE (EDWARD NAGEL).............. 374  
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. APPENDIX C ISSUE #1........................................................................................................................................377  
. APPENDIX C ISSUE #2........................................................................................................................................378  
. APPENDIX C ISSUE #3........................................................................................................................................379  
. APPENDIX C ISSUE #4........................................................................................................................................380  
. APPENDIX C ISSUE #5........................................................................................................................................381  
. APPENDIX C ISSUE #6........................................................................................................................................381  
. APPENDIX G ISSUE #1 .......................................................................................................................................383  
. APPENDIX G ISSUE #2 .......................................................................................................................................384  
. APPENDIX G ISSUE #3 .......................................................................................................................................384  
0. APPENDIX G ISSUE #4 .....................................................................................................................................385  
1. APPENDIX G ISSUE #5 .....................................................................................................................................386  
B. DANIEL REEVE ..................................................................................................... 444  
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. GENERAL...........................................................................................................................................................444  
. SPECIFIC INVESTORS.........................................................................................................................................486  
BREADALBANE INN..........................................................................................................................................486  
i. Josephine DeSalvo...................................................................................................................................486  
ii. Andrea Morgan ......................................................................................................................................487  
iii. Ronald DeKoning ...................................................................................................................................488  
iv. Warren Boldt .........................................................................................................................................490  
v. Brian Crozier...........................................................................................................................................491  
vi. Dr. Ira Bernstein.....................................................................................................................................492  
vii. Michelle Keddie ....................................................................................................................................495  
viii. Isaac Thiel ............................................................................................................................................497  
ix. Lorna Eadie ............................................................................................................................................497  
x. Mark McGuire.........................................................................................................................................498  
xi. Patricia Westerhout...............................................................................................................................499  
xii. Heather Gardner...................................................................................................................................499  
N.Y. PARK PLAZA..............................................................................................................................................500  
i. Background..............................................................................................................................................500  
ii. Heather Gardner ....................................................................................................................................501  
iii. Laura Kerr ..............................................................................................................................................502  
iv. Anne Colquhoun....................................................................................................................................503  
v. Amos and Dorothy Lichty .......................................................................................................................504  
vi. Glen Brubacher......................................................................................................................................506  
vii. Claudette Taylor ...................................................................................................................................507  
viii. Peter Steenbergen...............................................................................................................................508  
ix. Chin Tan.................................................................................................................................................509  
x. Rene Brossard.........................................................................................................................................510  
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GENERAL COMMENTS ABOUT THE PLAZA INVESTMENT................................................................................512  
JAKOBSTETTEL INN ..........................................................................................................................................513  
i. Background..............................................................................................................................................513  
ii. Nancy Herlick..........................................................................................................................................514  
iii. Barry Cunningham.................................................................................................................................515  
iv. Claudette Taylor ....................................................................................................................................517  
v. Marina Ognjanovski................................................................................................................................517  
vi. Theresa Kaup .........................................................................................................................................519  
vii. Eva Bernachi .........................................................................................................................................520  
viii. Gary Raycroft .......................................................................................................................................521  
ix. Wilma Jordan.........................................................................................................................................522  
x. Kevin Hillman..........................................................................................................................................523  
xi. Wayne Schroeder ..................................................................................................................................526  
xii. Craig Mason..........................................................................................................................................528  
MILLIONAIRE MORTGAGE ...............................................................................................................................530  
i. Background..............................................................................................................................................530  
ii. Michelle Keddie......................................................................................................................................531  
iii. Mark McGuire........................................................................................................................................532  
iv. Pat Westerhout .....................................................................................................................................534  
v. Eva Bernachi ...........................................................................................................................................536  
vi. Peter Steenbergen.................................................................................................................................538  
vii. Jeannette Harrop..................................................................................................................................539  
viii. Gary Raycroft .......................................................................................................................................541  
ix. Isaac Thiessen........................................................................................................................................543  
x. Lloyd and Ruth Hoffman.........................................................................................................................544  
xi. Kevin Hillman.........................................................................................................................................546  
xii. Andrew Eplen .......................................................................................................................................547  
. INDIVIDUALS INVOLVED IN MILLIONAIRE MORTGAGE PROGRAM ..................................................................550  
i. BARRY CUNNINGHAM ..................................................................................................................................551  
ii. CARIN SMITH ...............................................................................................................................................552  
iii. SHERRILL (MARTIN) STEVENSON ................................................................................................................554  
iv. BRAD ASHMAN ...........................................................................................................................................556  
v. LYNETTE CAIGER ..........................................................................................................................................559  
vi. PILITA GALANO ...........................................................................................................................................561  
vii. LINDA CHAFFE............................................................................................................................................563  
viii. PAUL MELEG .............................................................................................................................................564  
ix. PAUL AND LISA SCHNARR ...........................................................................................................................566  
x. CHERRIN MELEG ..........................................................................................................................................567  
xi. STEVE MANUEL...........................................................................................................................................568  
xii. DOUG THIEL ...............................................................................................................................................569  
. MARKET CRISIS – 2008 .....................................................................................................................................571  
. SWAN CREEK.....................................................................................................................................................571  
. CHERYL REEVE – SEPARATION AGREEMENT ....................................................................................................572  
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C. DANIEL REEVE – CROSS-EXAMINATION .......................................................... 587  
D. RE-EXAMINATION OF DANIEL REEVE............................................................... 634  
ANALYSIS .............................................................................................637  
CONCLUSIONS .....................................................................................661  
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A. FORENSIC ACCOUNTING EVIDENCE................................................................. 661  
B. THE 41 ALLEGED VICTIMS AND OTHER INVESTORS...................................... 666  
C. DAVID REEVE AND LINZIE BROWN ................................................................... 667  
D. THE PROPOSED REAL ESTATE VENDORS....................................................... 667  
E. CHERYL REEVE.................................................................................................... 668  
F. DPR FINANCIAL – THE INSIDERS ....................................................................... 671  
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. SHAREHOLDER LOANS, MAINLY TO CHERYL REEVE AND DANIEL REEVE .........................................................672  
. EXPENSES OF THE VARIOUS REEVE COMPANIES..............................................................................................675  
. REPAYMENTS TO THE ALLEGED VICTIMS AND OTHER INDIVIDUAL INVESTORS ..............................................686  
G. EVIDENCE OF THE INSIDERS ............................................................................. 687  
H. EVIDENCE OF DANIEL REEVE............................................................................ 688  
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. SPOUSAL SUPPORT AND EQUALIZATION PAYMENTS MADE TO CHERYL REEVE..............................................689  
. ALLEGED AGREEMENT BY DAVID REEVE TO PAY $1.2 TO $1.6 MILLION..........................................................696  
. KNOWLEDGE OF USE OF ALLEGED VICTIMS’ INVESTMENT MONIES ...............................................................703  
. INCONSISTENT EVIDENCE.................................................................................................................................722  
. INTENT TO INVEST IN LOW-RISK INVESTMENTS...............................................................................................749  
THE N.Y. PARK PLAZA INVESTMENTS ..............................................................................................................754  
THE BREADALBANE INVESTMENTS .................................................................................................................756  
THE JAKOBSTETTEL INVESTMENTS..................................................................................................................760  
THE MILLIONAIRE MORTGAGE INVESTMENTS................................................................................................762  
CONCLUSION REGARDING INTENT TO INVEST IN LOW-RISK INVESTMENTS ..................................................767  
. OVERALL CONCLUSION REGARDING THE CREDIBILITY OF DANIEL REEVE........................................................769  
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I. OVERALL CONCLUSIONS AS TO THE FACTS.................................................... 770  
POSITION OF THE DEFENCE...............................................................780  
POSITION OF THE CROWN..................................................................781  
LAW .......................................................................................................783  
A. COUNT 1 – FRAUD OVER $5,000 ........................................................................ 798  
1. ACTUS REUS OF FRAUD ....................................................................................................................................798  
2. MENS REA OF FRAUD .......................................................................................................................................801  
3. CONCLUSION REGARDING COUNT 1 – FRAUD OVER $5,000 ...........................................................................808  
B. COUNT 2 – THEFT OVER $5,000 ......................................................................... 809  
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. CONCLUSION REGARDING COUNT 2 – THEFT OVER $5,000.............................................................................810  
DECISION ..............................................................................................810  
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EXECUTIVE SUMMARY........................................................................812  
A. OVERVIEW ............................................................................................................ 812  
B. ISSUES .................................................................................................................. 812  
C. VERDICT................................................................................................................ 812  
D. STRUCTURE OF JUDGMENT AND SUMMARY OF EVIDENCE ......................... 813  
EXAMPLE 1............................................................................................................................................................821  
EXAMPLE 2............................................................................................................................................................822  
EXAMPLE 3............................................................................................................................................................823  
SCHEDULES..........................................................................................833  
Schedule A – Chronology of Investors and Absence of Any Repayment................ 1  
Schedule B – Repayments (Pre-Separation Agreement) to Investors 1-12  
Chronology.................................................................................................................... 1  
Schedule C – Investments and Losses of Investors (Pre-Separation Agreement) 1-  
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Schedule D – Repayments to Investors (Post-Separation Agreement) 13-41  
Chronology.................................................................................................................... 1  
Schedule E – Investments and Losses of Investors (Post-Separation Agreement)  
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Schedule F – Investments and Significant Uses of Investments (Pre-Separation  
Agreement) 1-12 Chronology....................................................................................... 1  
Schedule G – Investments and Significant Uses of Investments of Investors (Post-  
Separation Agreement) 13-41 Chronology and Evidence of Edward Nagel in  
Cross-Examination........................................................................................................ 1  
Schedule H – No Copies of Corporate Bonds Provided to Investors (Post-  
Separation Agreement) 13-41 Chronology.................................................................. 1  
Schedule I – Reimbursement of Deferred Sales Charges and Withholding Tax and  
Rate of Return in Final Year (Post-Separation Agreement) 13-41 Chronology........ 1  
Schedule J – Glossary of Terms and Acronyms ........................................................ 1  
Reasons for Judgment commence on the next page.  
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REASONS FOR JUDGMENT  
The Honourable Justice T. Skarica  
A. OVERVIEW  
1] Daniel Reeve (Daniel ) was a successful financial planner who owned and  
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operated a number of investment offices in Kitchener and the surrounding areas.  
He and his firms had an enviable reputation for integrity and success in the  
financial investment business. The Crown alleges that from the period of January  
2007 to September 2009, Daniel took advantage of his reputation and to defraud  
at least 41 victims of approximately $10 million.  
B. ISSUES  
[2]  
The issues to be resolved in this case are factual ones:  
1. The credibility of the witnesses;  
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. Whether a fraud over $5,000 (count 1) has been committed in the  
context of the credible and reliable evidence; and  
3. Whether a theft over $5,000 (count 2) has been committed in the  
context of the credible and reliable evidence.  
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I refer to the accused by his first name to distinguish from his brother, David Reeve. No  
disrespect is intended.  
 
 
 
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C. STRUCTURE OF THE FACTS  
3] The Crown called as witnesses many of the alleged victims who are said to  
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have lost money in their investment dealings with the accused and/or his  
companies. Their evidence will be summarized. Schedule J, attached to this  
judgment, provides a glossary of terms and acronyms. Hundreds of exhibits were  
filed; references to exhibits and critical documents have been bolded for easy  
reference. The Crown filed a USB flash drive containing further exhibits;  
references to documents on this device are denoted by “Exhibit Stick” and a file  
number.  
CROWN EVIDENCE  
A. THE INVESTORS  
1A. JOSEPHINE DESALVO  
[4]  
Ms. DeSalvo is an Italian immigrant. She has a Grade 9 education which  
she obtained in Italy. In Canada, she worked on a farm growing vegetables and  
brought them to a Toronto market. She also worked as a babysitter and a  
seamstress. She was able to save some monies and used these savings to buy  
two apartment buildings.  
[5] In 2007, Ms. DeSalvo decided to sell one of the apartment buildings, a six-  
unit building in Brantford.  
 
 
 
 
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[6]  
During the first week of June 2007, she met the accused’s brother, David  
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Reeve (David ), at her daughter’s home in Brantford. David suggested that once  
the building was sold, she could invest the proceeds with him and he would give  
her 8 to 10 percent on her investment. David worked for the accused’s  
investment business as a financial adviser and was, for a short time, president of  
DPR Financial, which was wholly owned by the accused.  
FIRST INVESTMENT – JAKOBSTETTEL INN  
[7]  
The apartment building was sold and Ms. DeSalvo netted $205,000. She  
called David and a meeting was set up at Ms. DeSalvo’s daughter Angela’s  
home in Brantford. David brought his brother, Daniel, the accused, to the  
meeting. Also present at this meeting, in addition to Ms. DeSalvo, were Angela,  
Joya (another daughter of Ms. DeSalvo) and Joya’s husband, Darcy.  
[8]  
David introduced Daniel to Ms. DeSalvo, stating that he had brought the  
president of DPR Financial with him and that Daniel could offer more than 10  
percent. David went to another part of the house with Darcy and Ms. DeSalvo  
never spoke to David again.  
[9]  
Daniel spoke to Ms. DeSalvo and her daughters for almost two hours. Ms.  
DeSalvo told the accused that she didn’t want risks; she had worked all her life  
for this money.  
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I refer to David Reeve by his first name to distinguish him from his brother, Daniel Reeve. No  
 
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[10]  
Daniel told her she could invest in the Jakobstettel Inn – a hotel he owned  
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and she would get 15 percent per year (in lieu of 12 percent plus a two-week  
stay at the Inn). Ms. DeSalvo visited the Inn on several occasions and confirmed  
it was a beautiful property.  
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She invested $200,000 in the property. She handed a cheque for  
200,000 personally to the accused. It appears as Exhibit 14, dated June 18  
007 and addressed to Emerald Met, one of the accused’s companies. Ms.  
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DeSalvo described the cheque as “all [her] sweat from 1971 to 2007.”  
[12]  
Ms. DeSalvo did not see or sign the Exhibit 14 written agreement until  
several months later around Christmastime. The accused, at the time he  
received the cheque, indicated that he had left the papers behind and needed a  
special stamp. Exhibit 15 is the agreement dated June 18, 2007 between  
Celebrity Management International Inc. (another one of the accused’s  
companies) and Ms. DeSalvo.  
[13]  
The accused promised Ms. DeSalvo in June of 2007 that she could get  
her money back at any time she wanted, provided she gave two weeks’ notice.  
Ms. DeSalvo found that after she gave the $200,000 to the accused, she could  
not make ends meet. Her other apartment was mortgaged and she no longer had  
the income from the apartment she had sold. After several months, she  
requested that the accused return to her $120,000. The accused did not return  
disrespect is intended.  
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this money to her; in fact the accused never paid her any of the $200,000 back  
and never paid her any of the 15 percent interest.  
SECOND INVESTMENT – BREADALBANE INN  
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home which was fully paid up. The accused convinced Ms. DeSalvo to obtain  
100,000 from the line of credit and invest it into a property that he was  
Instead, the accused convinced Ms. DeSalvo to get a line of credit on her  
$
purchasing in Fergus, but there were only four days left to get into the  
investment. The accused promised her he would pay her 20 percent interest on  
this Fergus investment and promised that he would pay $1,666.66 directly into  
her bank account every month.  
[15]  
Exhibit 16 is a Bank of Montreal bank draft, dated March 14, 2008, in the  
amount of $100,000 payable to Reeve Hotels and Resorts Inc. carrying on  
business as Breadalbane Inn (yet another company owned and operated by the  
accused). Ms. DeSalvo’s daughter Angela brought Ms. DeSalvo to the DPR  
Financial office in Cambridge and Ms. DeSalvo personally handed the cheque to  
the accused on March 15, 2008. As well, Ms. DeSalvo signed an agreement that  
was entered as Exhibit 17 – 13D. Angela and two female employees were  
present. There is no witness to the agreement. The accused told Ms. DeSalvo no  
witness was necessary. Ms. DeSalvo now had $300,000 invested with the  
accused.  
 
-
14 -  
SUBSEQUENT EVENTS  
[16]  
In June of 2008, Ms. DeSalvo had still not received any monies on her  
original $200,000 investment. She had many meetings with the accused who  
was often away on business or on holidays in the Caribbean or Europe. Exhibit  
18 is a corporate bond, dated June 18, 2008, between Jakobstettel Properties  
Inc. (a company owned and operated by the accused) and Josephine DeSalvo,  
in the amount of $200,000 expiring June 18, 2011, and paying 15 percent  
interest. This was a rollover of Ms. DeSalvo’s original $200,000 investment. Ms.  
DeSalvo remembers signing the document but thought it was only for a one-year  
period. She never received any monies in either capital or interest on this  
$200,000 and lost all of it.  
[
17]  
month for approximately six months, give or take a month, starting in March  
008, and then the payments stopped. According to Ms. DeSalvo, “he made [her]  
happy for six months and then abandoned [her].”  
On the second investment of $100,000, she received $1,666.66 per  
2
[18]  
Ms. DeSalvo phoned the office frequently but normally the secretaries  
would answer. Finally, Ms. DeSalvo went to a lawyer and then to the police. She  
discussed these efforts with the accused. On the morning before she went to the  
police, the accused told her that if she went to the police, she would never see a  
penny of her money. She took this as a threat.  
 
-
15 -  
[19]  
The police told Ms. DeSalvo that the accused was “good people.”  
Sometime after, the accused returned $100,000 to Ms. DeSalvo in two  
installments. Accordingly, her losses total the original $200,000 investment, plus  
the interest payments she did not receive on the original $200,000 investment,  
plus the missed interest payments on the second $100,000 investment.  
[20]  
In cross-examination, defence counsel attempted to portray Ms. DeSalvo  
as an aggressive and savvy investor/business woman. I do not accept this  
portrayal. As Ms. DeSalvo testified, her priority was to seek out the most secure  
investment available. Originally, David, the vice president of DPR Financial, had  
been recommended by a person who had invested in DPR. She had met Daniel,  
the president of DPR Financial, and she trusted him and that is why she did not  
go elsewhere.  
[21]  
It was also suggested that Ms. DeSalvo wanted to leave her money with  
the accused for four years so that she could double her money, as recommended  
by the accused (the combination of Exhibit 15, signed in June 18, 2007, and  
Exhibit 18, the rollover of the $200,000 in June 18, 2008 for another three years,  
totals four years). The June 18, 2008 document was signed at a time that the  
accused was paying Ms. DeSalvo $1,666.66 per month on the $100,000  
investment she made in March 2008 in order for her to make ends meet. The  
accused made one more payment of $1,666.66 in July (the fourth one) and the  
interest payments ceased thereafter on all of her investments.  
-
16 -  
[22]  
It is reasonable from the evidence to infer that Daniel did just enough in  
the form of promises and payments to continue to induce Ms. DeSalvo to have  
faith in his integrity and honesty.  
[23]  
Accordingly, I accept Ms. DeSalvo’s explanation that she trusted Daniel  
as the reason for why she signed documents that were backdated and not  
witnessed appropriately, which was not in accord with her usual practices.  
[
24] For the first time at trial, Ms. DeSalvo in cross-examination mentioned  
that the accused had tried to get her to leverage her other apartment for a  
400,000 investment. It just popped into her head and the defence clearly  
$
inferred that this was recent fabrication. However, in re-examination, the Crown  
produced Exhibit 19 which is a handwritten note prepared by Daniel regarding a  
$400,000 investment that was prepared in front of Ms. DeSalvo by Daniel in a St.  
Jacobs restaurant. This note had been previously produced to the police by Ms.  
DeSalvo. Accordingly, I reject the defence suggestion of recent fabrication on this  
point.  
[25]  
Similarly, the defence cross-examined Ms. DeSalvo on her original  
statement that she had prepared with her daughter. There is no mention in the  
statement of Ms. DeSalvo not getting the Exhibit 15 agreement many months  
after providing the $200,000 to the accused. Her explanation for this omission  
was that (1) she would have remembered better if she had dictated the statement  
-
17 -  
in Italian as opposed to English; (2) she did not include everything because she  
was going to talk to the police later; (3) she had never had this type of experience  
before; and (4) she left out other details as well, which is why she is testifying to  
“tell God’s truth” at this trial. Ms. DeSalvo is an uneducated woman who by force  
of will and determination saved a nest egg and bought rental properties. This  
does not make her a sophisticated investor or witness. I accept her explanations  
for this omission in her statement.  
1B. ANGELA DESALVO  
3
[26]  
Further, the Crown called Angela DeSalvo (Angela ), the daughter who  
accompanied Ms. DeSalvo when she had her meetings with the accused. Angela  
substantially corroborated her mother’s evidence. Angela provided significant  
details regarding a meeting that occurred on December 8, 2008 when Daniel  
visited her studio with her mother and lawyer present. By that time, they had  
found out that Daniel didn’t own the Breadalbane Inn; David had told them that  
on November 18, 2008. Daniel was asked how things at the Breadalbane were  
going. Daniel replied that it was the best year ever. Daniel never denied owing  
money to Ms. DeSalvo and signed something to the effect that he would pay  
back the money. Daniel only paid back $100,000 of the $300,000 he owed Ms.  
DeSalvo. Angela indicated that she assisted her mother when her mother  
3
I refer to Angela DeSalvo by her first name to distinguish her from her mother, Josephine  
DeSalvo. No disrespect is intended.  
 
-
18 -  
prepared her statement that was provided to the police.  
[27]  
On cross-examination Angela confirmed that on August 5, 2008, her  
mother gave written notice to Daniel that she wanted her Jakobstettel investment  
back. On September 11, 2008, a day before David Reeve’s wedding, there was a  
meeting involving David, Daniel, Angela, Ms. DeSalvo, and another sister,  
regarding Daniel’s failure to pay and return monies to Ms. DeSalvo. Daniel  
promised he would have a cheque for her on the following Monday but no  
payment was ever made. The wedding proceeded on September 12, 2008.  
Angela DeSalvo was there and spoke to a Gord Black who told her that David  
was leaving DPR Financial. Angela received correspondence from David in  
October 2008 that he was leaving DPR Financial.  
1C. CONCLUSION  
[28]  
As indicated in her preliminary hearing, at pages 76-77, Ms. Josephine  
DeSalvo invested a total of $300,000 with the accused. She eventually received  
payments of $30,000 and $70,000 from the accused and this $100,000 was used  
to pay off the line of credit on her house. She received a total of four interest  
payments of $1,666.64 plus another $2,500 for a total return of $109,166.64, or  
over a little of one third, on her total investment.  
[29]  
To put it simply, the evidence establishes that Ms. DeSalvo is a  
hardworking immigrant woman with little formal education who trusted the  
 
-
19 -  
accused due to his reputation and personal promises; he betrayed her trust in  
him and as a direct result, Ms. DeSalvo lost her life savings of $200,000 and  
significant interest payments due to her.  
[30] The DeSalvos’ evidence is prototypical of the evidence given by the other  
40 plus investors. Like the DeSalvos, the investors who lost money were  
generally decent, honest, hardworking people. I find the DeSalvos’ evidence to  
be credible as it was internally consistent and consistent with evidence given by  
other investors and witnesses. Their evidence was corroborated by exhibits and  
documentary evidence, and withstood extensive and exhaustive cross-  
examination.  
2
. NANCY HERLICK  
Nancy Herlick was married to Daniel’s personal driver, Tony Herlick. Mr.  
Herlick was the accused’s driver for four-and-a-half years, ending in October of  
009.  
[31]  
2
[32] On May 5, 2007 Ms. Herlick invested $100,000 in the Jakobstettel Inn  
(see Exhibit 22). The ownership agreement between her and Celebrity  
Management Inc. (the accused’s company) indicates she would receive 15  
percent annual interest (standard 12 percent plus 3 percent in lieu of a two-week  
stay at the Inn). Ms. Herlick testified it was for one term. On May 5, 2008 the  
principal and interest were due.  
 
-
20 -  
[33]  
In cross-examination, Ms. Herlick indicated that the $100,000 was to be  
used for renovating the basement of the Jakobstettel. She saw the basement – it  
was dingy and nothing was going on there. Daniel advised her that the Exhibit  
22 investment should go into Ms. Herlick’s name for tax reasons; she had less  
income than her husband.  
[34]  
The accused later told her that the interest would be paid on May 8, 2008  
and the principal would be paid later. She told Daniel this was unacceptable; it  
was all due on May 5, 2008.  
[35]  
On May 9, 2008, Daniel attended her home with a cheque in the amount  
of $115,000. Daniel said, “I assume this is for you.” Her husband took the cheque  
to the bank the next day and it was returned NSF. Ms. Herlick phoned Daniel and  
asked him what was going on. Daniel told her to leave it with him and he would  
see what he could do.  
[36]  
Ms. Herlick called every day or every other day. Daniel had lots of  
excuses, i.e., he was waiting for a “drop,” the bank was holding a large cheque,  
etc.  
[37]  
Ms. Herlick told Daniel that the money was given in good faith and asked  
him, “How did you get in this predicament?” Daniel agreed that he had not used  
the money as he was supposed to and he did not have the money. She told him  
that he was going to the police as this was her husband Tony’s pension money.  
-
21 -  
Daniel told her that he would see if he could get a loan on his house. He told her  
that he applied for a loan for his home and would get back to her.  
[38]  
About three weeks after these conversations, on July 14, 2008, Ms.  
Herlick received two cheques, one for $115,000 and the other for $3,000. Ms.  
Herlick accordingly got her full investment back with interest and suffered no  
losses.  
[39]  
Ms. Herlick is a credible witness. Her testimony was backed up by  
documentation regarding her investment and her testimony was not significantly  
challenged upon cross-examination.  
3. ANDREA MORGAN  
[40]  
Andrea Morgan in 2008 was a retired registered nurse. Her husband  
Gwyn was employed and their combined income in 2008 was $150,000 per year.  
They owned a house that was paid off and worth $400,000. She had no  
significant debts and had $300,000 in RRSPs and a further $200,000 in a  
deferred saving plan and a nurse’s pension. Her investing experience was limited  
and was basically limited to investing in RRSPs.  
[41] In 2007, she had RRSPs and equities with Rickard Financial. She had  
been with Tony Rickard for about ten years.  
[42]  
In January, 2007 Ms. Morgan and her husband met with Daniel and  
 
-
22 -  
Steve Haney at the Jakobstettel Inn. Daniel did most of the talking and spoke  
about the benefits of life insurance products, leveraged loans and segregated  
funds. Daniel said that RRSPs were a good product but there was a better  
method. The better method was to pay yourself first; monies would flow from life  
insurance policies tax-free. Daniel said that leveraging was very important.  
Daniel was in charge and Mr. Haney had little to say.  
[43] Daniel was the owner of DPR Financial and he had a number of books on  
the table. The Three Buckets was one of the books that he had authored.  
[44]  
In March of 2007, Ms. Morgan transferred her investments from Rickard  
Financial to DPR Financial. From January 2007 to April 2008, she met mostly  
with Mr. Haney. Mr. Haney was the “quarterback” in charge of her investments.  
[45]  
In early April of 2008, Mr. Haney called her regarding an investment  
proposal. She and her husband met with Daniel and Mr. Haney in a little room  
behind the Jakobstettel Inn. Daniel had an investment proposal. It involved a  
limited partnership with ten people and an investment involving a corporate bond  
that was to be used to purchase the Breadalbane Inn in Fergus. Reeve Hotels  
and Resorts was to be the purchaser. Daniel told Ms. Morgan and her husband  
that the purchase would be definitely done by the end of April 2008, and if they  
were interested, they would have to move quickly. Daniel told them on April 2  
that he would need the money by April 9 to purchase the property  
-
23 -  
[46]  
The Morgans decided to invest in the Breadalbane Inn and provided  
Daniel with two bank drafts: (1) an April 9, 2008 bank draft of $32,000, and (2) an  
April 15, 2008 bank draft of $144,739, which came from both her registered and  
non-registered accounts with DPR.  
[47]  
Daniel told them the $176,000 would be returned in five years, 16 percent  
interest would be paid annually on April 3 for the next five years, and that Daniel  
would reimburse them for all penalties and taxes incurred in cashing in the  
RRSPs. They were told the sale of the Breadalbane was imminent. The accused  
told them that RRSPs were a slow way to make money.  
[48]  
For months thereafter, no contract was received by the Morgans. Daniel  
told them they would get their contract when the Breadalbane sale went through.  
Finally, on August 11, 2008, the Morgans got a “sort of” contract (see Exhibit  
23). Exhibit 23 is an unsigned contract from Reeve Hotels and Resorts Inc.  
dated April 9, 2008. The Morgans were told that it would be signed when the  
Breadalbane Inn sale went through. At the end of May 2008, the dining manager  
at the Breadalbane told the Morgans that the Inn was not for sale. The accused  
said that the Breadalbane had not been purchased yet given a problem with the  
liquor licence. The accused told them not to worry and that they would collect  
interest from April 1.  
[49]  
The Morgans had concerns and discussed them with Mike Floyd, a DPR  
-
24 -  
financial planner who was creating a financial plan for them. Mr. Floyd told them  
no one should be worried; Daniel was surrounded by bricks and mortar. He told  
them that neither Mr. Haney nor he were worried. However, on September 8,  
2008, Mr. Haney left DPR. On September 28, 2008, Ms. Morgan spoke to Nancy  
Herlick who told her that Daniel was a pathological liar, mortgaged to the hilt and  
was greedy and conducting frauds. On September 29, 2008, Ms. Morgan told  
Daniel that the Breadalbane was a bogus deal and that he had taken her money  
on false pretences. Daniel replied that they were going to miss a great  
opportunity but yes, the Morgans would get their money back in thirty days.  
[
50] On September 30, the Morgans sent a letter to the accused asking for the  
return of $176,793. The accused provided them with a draft in the amount of  
200,000 payable on October 31, 2008. Ms. Morgan indicated that the $200,000  
$
exceeded the 16 percent interest they were owed but it didn’t include penalties  
and taxes that Daniel had agreed to pay when she cashed in her RRSP. Ms.  
Morgan flatly denied the suggestion on cross-examination that Daniel had only  
promised to pay the capital gains taxes. Ms. Morgan was adamant that Mr.  
Reeve promised to her withholding taxes from cashing in her RRSPs and was  
firm that capital gains taxes were never mentioned by the accused. Ms. Morgan  
indicated in cross-examination that the accused agreed to pay $200,000 and in  
fact paid $186,000 to prevent her from going to the police.  
[51]  
On the morning of October 31, 2008, Daniel told the Morgans not to cash  
-
25 -  
the draft; he had another plan in place. The Morgans told him that if the cheque  
did not go through, they were going to the police. At 4 p.m. on October 31, 2008  
Daniel contacted them and asked them to meet him at the TD Bank in  
Cambridge where he would have their money. He said he would give them  
$186,000 on the Friday and $14,000 on the Monday. She cashed the $186,000  
cheque on November 3, 2008 and she received $186,000. She never received  
the other $14,000. They tried to phone Daniel but were unable to contact him.  
The Morgans never saw Daniel again.  
[52]  
Again, I find Ms. Morgan to be a credible witness whose evidence was  
supported by documentation in the form of exhibits. There were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
4A. RONALD DEKONING  
[
53]  
54]  
Ronald DeKoning is 55 years of age and is a construction supervisor.  
In April 1977, Mr. DeKoning had significant assets which included a  
[
house worth $300,000 to $350,000 which was mortgage-free, $185,000 in  
RRSPs, $100,000 from the sale of his concrete cutting business, and h several  
heavily mortgaged residential rental properties with his brother.  
[55]  
Mr. DeKoning met Daniel in February 2007 at a wine and cheese party  
 
-
26 -  
where Daniel gave a presentation on his and DPR Financial’s investment  
philosophies. In April 2007 Mr. DeKoning transferred his investment assets to  
DPR and had Steve Haney as his financial adviser. Mr. DeKoning met regularly  
with Mr. Haney and with other DPR representatives including David.  
[56]  
On March 5, 2008, Mr. DeKoning met with Daniel at the Jakobstettel Inn  
regarding an investment opportunity Daniel wished to present. Present at this  
meeting were Mr. DeKoning, Mr. DeKoning’s wife, their 20-year-old son and  
Daniel.  
[57]  
Daniel told them that he had an opportunity to buy the Breadalbane Inn in  
Fergus. Daniel described it as a gem. The Inn was family-owned and the owner  
was ill. Daniel indicated that the sale had to take place immediately and that  
there was minimal risk due to it being a real estate investment.  
[58]  
Daniel indicated that he had the majority of funds but wanted to know if  
they wanted to contribute. Daniel told them they could cash in their RRSPs tax-  
free. They would pay the tax up front and Daniel would compensate them for the  
full amount of the RRSP and interest at the maturity date. Daniel said he would  
offer 20-percent return on the investment. Daniel said he needed another  
$200,000 to make the purchase but needed the money right away.  
[59] The following day, they decided to participate in the investment. They  
filled out the redemption forms for one RSP in the name of Frieda DeKoning and  
-
27 -  
RRSPs in the name of Frieda DeKoning and Ron DeKoning. The RSP  
redemption form has a note from “Janice” that the clients are withdrawing the  
funds to purchase a home. The listed financial advisor is noted as Steve Haney  
but one of the forms also has David Reeve listed underneath Mr. Haney’s name  
as the financial advisor. The RSP has a redemption charge. Daniel said he would  
cover all redemption charges.  
[60]  
The total of all three redemptions, after deductions for service charges  
and withholding taxes was approximately $187,000. The gross amount cashed in  
before service charges and withholding taxes was approximately $237,000. The  
withdrawal instructions indicate that Janice from Mr. Haney’s office should be  
contacted so that the advisor could pick up the cheques from the Canada Life  
offices.  
[61]  
Exhibit 24 – 12J shows that a Corporate Bond Agreement was signed  
between Reeve Hotels and Resorts carrying on business as Breadalbane Inn  
and Ronald and Frieda DeKoning. The amount listed as owing is $237,961.07  
which is the gross amount of monies cashed in from Canada Life before  
deductions for withholding taxes and surrender fees. The term is for two years  
and pays 20 percent interest for two years, paid annually. The document is dated  
March 10, 2008, but the documents were signed by the parties, including Daniel,  
a week later on March 18, 2008.  
-
28 -  
[62]  
Daniel told the DeKonings that “the deal had gone through” and that the  
Breadalbane had been purchased on March 10, 2008. There was no discussion  
of any other properties other than the Breadalbane. The DeKonings had invested  
their money solely for the Breadalbane Inn. Daniel said the next step was to have  
lunch at the Breadalbane. The deal had gone through!  
[63]  
In October 2008, Ron DeKoning heard from a lawyer Bob Waters, in  
Elmira, that the accused did not own the Breadalbane Inn. Mr. DeKoning phoned  
Daniel and confronted him with this information. A meeting was set up for  
November 2008 and Daniel admitted that he did not own the Breadalbane. Mr.  
DeKoning indicated he wanted his money back immediately. Daniel said he could  
not give the money back. It was invested for the long term. Daniel indicated he  
needed a 30-day written request. That request was made a day or two later –  
see Exhibit 24 – 12K. It is dated November 21, 2008 and is a written request for  
the return of $237,961.07. The accused agreed and signed this document at  
Waterloo in the Millionaire building.  
[64]  
Between November 21, 2008 and March 25, 2009, there were numerous  
meetings with the accused who made numerous promises to pay – see, for  
example, the March 25, 2009 demand payment for failure to pay interest. The  
accused had also promised, in December 2008, to pay $50,000 per month  
starting in January/February 2009.  
-
29 -  
The bottom line, however, was that no monies of any type were paid.  
There was no repayment of principal, interest, taxes or surrender charges.  
[65]  
[66]  
The DeKonings accordingly lost $237,961.07 plus any interest owing to  
them.  
[67]  
In cross-examination, Mr. DeKoning indicated that his financial advisors –  
Mr. Haney and David (who took over in January 2008), from February 2007 until  
January 2008 – suggested that there were private investment opportunities  
through Reeve Hotels and Resorts.  
[68]  
Mr. DeKoning denied the suggestion by the defence that the accused did  
not say that Mr. DeKoning could withdraw his RRSP tax-free. Mr. DeKoning was  
firm that the accused had said that “you could withdraw your RRSP tax-free.”  
[69]  
In October of 2008, Mr. DeKoning received an email from David that he  
was leaving DPR Financial. On November 18, 2008 Mr. DeKoning met with  
David at David’s new office. David advised Mr. DeKoning that Daniel did not own  
the Breadalbane. Mr. DeKoning was upset and shocked. In June of 2008, Mr.  
DeKoning had met David and was under the assumption that David was aware of  
the corporate bond investment details. David had been his financial advisor since  
January of 2008 and had told him that the accused did private investments.  
David suggested that Mr. DeKoning could call the police. Given the conflicting  
information given by David, Mr. DeKoning transferred his leveraged investments  
-
30 -  
to another firm in late 2008 or early 2009.  
4B. BRENT DEKONING  
4
[
70]  
71]  
Brent DeKoning (Brent ) is the son of Ronald and Frieda DeKoning.  
In 2008, his parents asked him to come to a meeting with them and  
[
Daniel Reeve at the Jakobstettel.  
[72]  
Daniel had a new investment idea: cash out RRSPs tax-free and get a 20  
percent interest rate. Daniel would pay for the deferred sale charges and  
withholding taxes and it was risk free. Daniel said that he was going to purchase  
the Breadalbane from a widowed lady and that it was a cash cow. He was getting  
investors together. Daniel was only $200,000 away and they only had 24 hours  
to make up their minds.  
[73]  
In cross-examination, Brent indicated that he did not recall deferred sales  
charges being discussed. Brent denied that Daniel said that it was Daniel’s  
intention to buy the Breadalbane. Daniel’s wording was that Daniel was going to  
purchase the Breadalbane and they had an opportunity to be involved. Brent told  
his parents to get more information but he did not tell them not to do it. At the  
time he was impressed by the 20 percent interest rate but now, with his  
subsequent education and experience, he would have seen bad signals and not  
4
I refer to Brent DeKoning by his first name to distinguish him from his father, Ronald  
DeKoning. No disrespect is intended.  
 
-
31 -  
been impressed. At the end of the meeting, Daniel told Brent that he might have  
an opportunity for him and to contact him in a couple of weeks. Brent was at  
school and was working part-time for TD bank.  
[74]  
His parents entered into the agreement that was entered into evidence as  
Exhibit 24 – 12J. Brent saw the paperwork regarding the $200,000 withdrawal at  
his parents’ home.  
[75]  
In June of 2008, Brent finished his first year at Conestoga College and  
received his life insurance licence in August, which permitted him to sell  
segregated funds and life insurance products.  
[76]  
Brent worked at DPR from June to approximately November of 2008,  
part-time for one to two days per week. Regarding the Millionaire Mortgage  
program, Daniel was of the opinion that you were an idiot not to do it. In cross-  
examination, Brent indicated that he was hired to work on the Millionaire  
Mortgage program and worked with Janice Berkin regarding filling out forms. He  
saw Daniel do the Millionaire Mortgage presentation.  
[77] Brent left in November or December of 2008 because the company was  
unethical and was misleading clients. For example:  
1. Daniel would steer clients’ answers by feeding clients answers when  
asking questions;  
-
32 -  
2. Clients were being told that they could get high rates of return risk-free;  
3
. Too many clients were leveraged, and were leveraged to 100 percent of  
equity (with which Brent was not comfortable); and  
4. Daniel did not have a licence.  
In cross-examination, Brent indicated that he knew Daniel didn’t have a licence  
and that is one of the reasons he left. Brent stated that clients would think that  
Daniel had a licence as he was always telling clients about the markets when  
making the Millionaire Mortgage presentation. Daniel would adjust the  
presentation to the particular client’s situation but would manipulate returns by  
adjusting the interest rates to get higher returns.  
[78] Brent was never aware of any difficulties of DPR and/or the other  
companies that Daniel owned.  
[79]  
I find the DeKonings to be credible witnesses. Their evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in their evidence in either examination-in-chief or cross-  
examination.  
5. WARREN BOLDT  
[80]  
Warren Boldt is disabled due to a car accident and last worked in 2003.  
 
-
33 -  
81] In 2006, Mr. Boldt received a settlement of $450,000 of which he netted  
315,000. He gave $300,000 to his brother-in-law Rob Pigeon who worked at  
[
$
DPR Financial in Windsor with David Reeve. Mr. Pigeon was managing to get  
Mr. Boldt about 15% monthly on his investment. Mr. Boldt, at that time, had no  
experience investing or university education.  
[82]  
In 2007 to 2008, he attended two wine and cheese parties put on by DPR  
Financial in Windsor. The second one was held in the new DPR building which  
was very posh and left him with a favourable impression. Daniel gave a  
presentation at one or more of these parties. Mr. Pigeon, for no reason, stopped  
managing Mr. Boldt’s money so Mr. Boldt went to see Daniel.  
[83]  
In February or March of 2008, Mr. Boldt spoke to Daniel personally at a  
meeting. Daniel brought up the Breadalbane Inn and Daniel said, “You know  
what? I’m going to invest your money in the Breadalbane Inn.” Mr. Boldt told  
Daniel that he was disabled and that his money was from his accident  
settlement, it was all the money he had, and he could not afford to lose it.  
[84]  
Daniel indicated that Mr. Boldt would get 20 percent per month for three  
years and that it was a special rate that Daniel wanted to help Mr. Boldt out with.  
Mr. Boldt decided to invest his $300,000 with Daniel. On February 29, 2008 a  
bank draft of $300,000 was made out in favour of Reeve Hotels and Resorts.  
[85]  
On March 3, 2008, a corporate bond in the amount of $300,000 was  
-
34 -  
made out between Reeve Hotels and Resorts Inc., c.o.b. as Breadalbane Inn,  
and Banyan Inc. Banyan Inc., which was Mr. Boldt’s company. The bond had a  
three-year maturity which provided monthly income of $5,000 which equalled a  
20 percent annual interest rate. Previous drafts had provided for only 15 percent  
per year. Daniel and Mr. Boldt signed the bond in each other’s presence. A  
secretary came in and saw them sign but the bond was already pre-signed by a  
witness before Mr. Boldt and Daniel signed it. At the preliminary hearing, Mr.  
Boldt did not mention anything about the pre-signing, explaining at trial that he  
was never asked about it at the preliminary hearing.  
[86]  
Previously, Daniel had said he was going to put the money into the  
Breadalbane Inn. On March 3, 2008, when Mr. Boldt and Daniel signed the bond  
agreement, Daniel told Mr. Boldt that he, Daniel, owned the Breadalbane Inn.  
The entire bond document was read to Mr. Boldt by Daniel.  
[87]  
Interest payments thereafter were late. Daniel made excuses to Mr. Boldt  
as to why, including (1) when his first interest payment was late, Daniel stated  
that “the girls had lost his void cheque” so Mr. Boldt had to provide a new one;  
and (2) Mr. Boldt did not bank at TD, and when they walked his cheque over to  
HSBC, the bank was closed.  
[88] Mr. Boldt received a total of seven payments of $5,000 for a sum of  
$35,000. He got a T5 in 2008 for a payment of $5,000 from Celebrity  
-
35 -  
Management but no T5s for the other $30,000. Mr. Boldt never dealt with  
Celebrity Management. In cross-examination, Mr. Boldt indicated he received  
$5,000 payments in April, May, June, July, and August of 2008 and then  
payments were missed, with the exception of a payment in October 2008 and the  
last one in January 2009.  
[89]  
A couple of months after March 3, 2008, Mr. Boldt told Daniel he was  
going to the Breadalbane, but Daniel told him not to do that and gave him a deal  
at the Jakobstettel.  
[90]  
After his problems with payment, Mr. Boldt went to a lawyer. Following a  
title search on Breadalbane, Mr. Boldt called the police. In cross-examination, Mr.  
Boldt indicated the title search revealed that Daniel Reeve was not the owner of  
the Breadalbane; another man owned it with an $85,000 mortgage on it.  
[91]  
In December of 2008, at a meeting at Starbucks in the Chapters Store at  
the Devonshire Mall in Windsor, Mr. Boldt spoke to Daniel about getting his  
money back. Daniel indicated he would make $100,000 payments in each of  
December, January and February, but nothing came of it. Mr. Boldt’s loss is  
therefore $300,000 plus unpaid accrued interest.  
[92]  
In cross-examination, Mr. Boldt confirmed he borrowed $50,000 with  
David in May 2008 (after the bond agreement) and put this money into  
segregated funds. Daniel was not involved. This investment was quickly down  
-
36 -  
$5,000 but David said “stay with it.” Soon after, the investment was down  
$15,000. David managed this fund for a short time, approximately 1.5 to two  
years.  
[93]  
In Exhibit 30, dated March 14, 2008, David Reeve met with Mr. Boldt and  
there was no indication of any wrongdoing. However, on April 6, 2009 (see  
Exhibit 35), in a letter signed by David Reeve, there was a reference to  
wrongdoing by DPR Financial and Daniel, with David was saying that he, that is,  
David, had not encouraged any investments at DPR Financial. Mr. Boldt felt that  
Exhibits 30 and 35 were contradictory, and he recalled being upset when he  
received the Exhibit 35 letter.  
[94]  
I find Mr. Boldt to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
6
. BARRY CUNNINGHAM  
Barry Cunningham owns an international trucking business. He has  
owned that business for about 23 years and has 48 employees. He has a grade  
2 education with no experience in the investing industry.  
[95]  
1
[96]  
Daniel was his financial advisor from 1993 to 2007. In 2007, Daniel told  
 
-
37 -  
Mr. Cunningham he was doing different things with Reeve Hotels and that David  
was taking over as his financial advisor. Daniel was working through DPR  
Financial and had Mr. Cunningham involved in segregated funds and leveraged  
loans.  
FIRST INVESTMENT – JAKOBSTETTEL INN  
[97]  
In 2007, Daniel arranged a meeting at Mr. Cunningham’s office. Present  
were Mr. Cunningham, his wife Sharon Hepburn (the Cunninghams), Daniel and  
David. Daniel discussed investing in the Jakobstettel. Daniel stated that he  
owned it and it had no mortgage; however, other investors were involved in loans  
against the Jakobstettel. Daniel recommended cashing in $200,000 in RRSPs,  
investing it in the Hendrick suite in the Jakobstettel and getting 18 percent  
interest. Daniel said, “Pay the piper now instead of later when retired.” Daniel did  
not indicate what was to be done with the money.  
[98]  
In 2005, Mr. Cunningham’s company had invested $100,000 in  
Jakobstettel for two years at 12 percent interest. The company got the money  
back in 2007 together with the interest owing. The money had been invested with  
Celebrity Management, one of Daniel’s holding companies.  
[
99]  
008, received another $100,000 back from an investment with Reeve Hotels  
along with $25,000 interest for a six-month investment – see Exhibit 40. The  
In cross-examination, it was revealed that Mr. Cunningham, in January of  
2
 
-
38 -  
$100,000 had been used to acquire the Waterloo office. Accordingly, Mr.  
Cunningham had made two prior private investments with Daniel, and all  
contracts had been honoured.  
[100]  
As indicated in Exhibit 39 – 11C through 11F, the Cunninghams  
cashed out their RRSPs with Manulife (which totalled approximately $250,000)  
and on May 31, 2007 provided two cheques to Celebrity Management for  
$100,000 each.  
[101]  
The Jakobstettel Joint Ownership Agreement is dated June 1, 2007 and  
is between Celebrity Management and the Cunninghams. The amount invested  
was $200,000 with an interest rate of 18 percent (in lieu of 15 percent plus two  
weeks’ stay at the Inn). There was no maturity date but Mr. Cunningham testified  
it was understood it was for a one-year period. The document was signed on  
May 31, 2007 when Daniel and the Cunninghams were present. It is initialled by  
those parties. Mr. Cunningham believes Daniel signed as seller and for Celebrity  
Management. The witness portion was not filled out.  
[102]  
Daniel was provided with the two $100,000 cheques. Daniel said he  
would pay interest every 30 days. Paragraph 34 of the ownership agreement  
st  
states that interest is to be paid annually on June 1 of each year and did not set  
out any monthly payments.  
[103]  
No interest was received by the Cunninghams over the next year. On  
-
39 -  
June 1, 2008, the Cunninghams were owed $36,000 in interest plus the original  
200,000 investment. Daniel said the stock markets had gone south and they  
should trust him. Daniel also recommended the Cunninghams roll over the  
$
$236,000 total owing into a new bond with Jakobstettel Properties Inc. Exhibit 39  
–
11H indicates that is what was done. A new bond, dated June 1, 2008 was  
drawn up and signed by the parties on that date. It was witnessed by Peter Briss,  
an employee of the Cunninghams. The consideration was $236,000 with a  
maturity date of June 1, 2011. The bond provided for monthly payments of  
$2,000 beginning on July 1, 2008 and on the first of each month thereafter.  
[104]  
The Cunninghams received a $2,000 payment in July of 2008 and  
another $1,000 cheque thereafter for a total of $3,000. They received no other  
payments on this particular investment.  
SECOND INVESTMENT – BREADALBANE INN  
[105]  
In the spring of 2008, in or around March (there was snow on the  
ground), David and Daniel Reeve met with the Cunninghams at their home on  
Spragues Road in Cambridge.  
[106]  
Daniel suggested that the Cunninghams take a mortgage on their home  
and invest in segregated funds. Mr. Cunningham remortgaged the house for $1  
million (previously the mortgage was for $326,000).  
[107]  
In May of 2008, the Cunninghams again met with David and Daniel at  
 
-
40 -  
their home. Daniel did 75 percent of the talking. Daniel said he was buying the  
Breadalbane Inn in Fergus and it was closing June 1, 2008. Daniel gave a  
personal guarantee that if something went awry, they could get their money from  
Daniel personally. Both Daniel and David said that the proposed investment of  
$500,000 would be invested with Ron Mark (Daniel’s lawyer) in trust.  
[108]  
After the May meeting, Mr. Cunningham was going to invest in  
segregated funds rather than with Daniel because it was not guaranteed money.  
There were two May meetings. The first meeting was to discuss the Breadalbane  
investment and the second time, they were thinking about not being involved and  
David and Daniel said the money was going to Mr. Mark’s trust account.  
Ultimately, he decided to invest in the Breadalbane Inn. Exhibit 39 – 11I is a  
$500,000 bank draft dated June 2, 2008 and was made payable to Reeve Hotels  
and Resorts. There were no dealings with any lawyer and the draft is not made  
out to a lawyer in trust. Mr. Cunningham’s wife gave the bank draft to Daniel.  
Daniel told his wife that the bank draft was going to be with his lawyer in trust.  
[109]  
A limited partnership agreement was drawn up between Reeve Hotels  
and Resorts (hereinafter referred to as Breadalbane Properties Inc.) and Sharon  
Hepburn and Barry Cunningham, dated June 2, 2008. The consideration was  
$500,000 and no interest rate is outlined on the document but it indicates that  
payment was to be made annually. Mr. Cunningham’s understanding was that  
interest was to be paid monthly at a rate of 18 percent. The signing date on the  
-
41 -  
document is June 11, 2008. Present for the signing were Daniel, Mr.  
Cunningham and his wife Ms. Hepburn.  
SUBSEQUENT EVENTS  
[110] Later David told Mr. Cunningham that David was jumping ship and  
leaving DPR and if he wanted to get his money back to give Daniel written notice.  
[111] On October 22, 2008, the Cunninghams gave Daniel written notice that  
they wanted $236,000 plus interest (given to Jakobstettel Properties Inc.) and  
$
500,000 plus interest (given to Reeve Hotels and Resorts Inc.) returned within  
0 days.  
3
[112]  
Near the end of November 2008, Mr. Cunningham went to see Daniel  
Reeve at the DPR office in Waterloo to get his money back. Daniel said he could  
only give him $25,000 at that time and gave him the $25,000.  
[113]  
On November 21, 2008 payment schedules were signed by Daniel  
Reeve and the Cunninghams. The payment schedules provided for the return of  
the $236,000 and $500,000 in installments to be completed by the end of  
January 2009. Other payment schedules were also drawn up at other times. The  
defence, in cross-examination, pointed out that Daniel never denied owing the  
Cunninghams their money.  
[114]  
The payment schedules were not complied with and in January 2009,  
 
-
42 -  
Mr. Cunningham again met with Daniel and received another $25,000.  
[115]  
The $53,000 returned in total was comprised two payments of $25,000  
and the $3,000 referred to earlier regarding Jakobstettel. Accordingly, the  
Cunninghams’ loss is $736,000, minus $53,000, for a total of $683,000, plus  
unpaid interest.  
[116]  
Ultimately, a $700,000 judgment was obtained against Mr. Reeve. This  
was an attempt by the Cunninghams to hold Mr. Reeve to his previous words  
that he would be personally liable for the investment regarding the Breadalbane  
Inn.  
[
117]  
cashing out the Cunninghams’ RRSPs – see the Exhibit 42 report dated May 31,  
007. David was aware of the private investments made with Daniel and never  
In cross-examination, it was pointed out that David was involved in  
2
said anything was wrong or improper. However, in the fall of 2008, David phoned  
Mr. Cunningham and attended Mr. Cunningham’s office to say he was leaving  
DPR and was starting his own company. David further stated that he had a  
number of clients not being paid by Daniel and that Mr. Cunningham should give  
Daniel written notice to get his money back.  
[118]  
I find Mr. Cunningham to be a credible witness. His evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
-
43 -  
examination.  
7
. BRIAN CROZIER  
Brian Crozier has a university degree in agricultural business and  
average investment experience.  
[119]  
[120]  
Mr. Crozier met Daniel in December 2006. Mr. Crozier went to a  
presentation given by Daniel at the Jakobstettel Inn and was very impressed.  
Daniel had a published a book called The Three Buckets. The three buckets  
consisted of (1) an RRSP, (2) borrowing, and (3) life insurance. Daniel’s goal was  
a 10 percent return.  
[121]  
In January of 2007, Mr. Crozier retained Daniel as his financial advisor  
and transferred his portfolio to DPR Financial by April of 2007. In April of 2007,  
Steve Haney became Daniel Reeve’s financial advisor because Daniel Reeve  
was too busy.  
[122]  
In early 2008, Daniel told Mr. Crozier that he could get a better deal than  
an RRSP. Daniel could get him 20 percent. In addition, Daniel would pay the  
taxes incurred from withdrawing the funds from the RRSP. Daniel said the money  
would be invested for a two-year term. Interest would be paid annually and if not  
paid, all monies would be due.  
[123]  
Mr. Crozier met with Daniel in March of 2008. Daniel was raising money  
 
-
44 -  
to purchase the Breadalbane Inn. He indicated that he was going to raise  
300,000 to $400,000 and was looking for investors to get in and that it would not  
take long to get those funds.  
$
[124]  
There was no discussion of risk and no discussion of exactly how the  
money would be used, other than to purchase the Breadalbane Inn. Daniel said  
that he had not purchased the Inn yet; he was going to raise the money and then  
make an offer.  
[125]  
Mr. Crozier decided to cash in his entire RRSP and invest in the  
Breadalbane Inn. Exhibit 43 – 10C indicates that Mr. Crozier signed the RRSP  
instructions on March 4, 2008. Mr. Crozier is positive that Daniel signed the  
instructions, despite Steve Haney being listed as the financial advisor. Mr.  
Crozier stated that Daniel did the paperwork as Daniel said that Mr. Haney was  
on holidays. Exhibit 43 – 10D is the confirmation of withdrawal dated March 5,  
2008; this document indicates that $166,325.09 was withdrawn, and after a  
service charge deduction of $6,723.14, $159,601.95 was issued to Mr. Crozier.  
Withholding taxes should have been deducted, but for some reason, were not.  
Daniel said he would cover the service charge that Mr. Crozier had to pay.  
[
126] Mr. Crozier, on March 6, 2008, made out a cheque in the amount of  
159,601.95 to Celebrity Management which Daniel had told him was a company  
within Reeve Hotels and Resorts.  
$
-
45 -  
[127]  
A corporate bond agreement was entered into between Reeve Hotels  
and Resorts Inc., carrying on business as Breadalbane Inn, and Mr. Crozier in  
the amount of $166,325.09 (which is the full amount of the RRSP before  
deductions for service charges). The document had a two-year term and paid 20  
percent annual interest. Mr. Crozier saw Daniel initial and sign the corporate  
bond agreement on March 10, 2008, which is the date on the document. Mr.  
Crozier also signed, and Annie Smith witnessed. The funds were to be used for  
the purchase of the Breadalbane Inn.  
[128] Mr. Crozier’s T4RSP slip indicates RRSP income of 159,601.95 with no  
taxes paid.  
[129]  
Mr. Crozier met with Daniel on December 9, 2008. Daniel signed a  
document, Exhibit 43 – 10H, indicating that Reeve Hotels and Resorts Inc.  
would pay the owing taxes on the transaction involving the withdrawal of Mr.  
Crozier’s RRSP in the gross amount of $166,325.09 in order to enter the  
corporate bond transaction. The taxes payable were listed as $47,880.59, which  
would be the normal 30 percent withholding tax. This document had originally  
been given unsigned to Mr. Crozier by Daniel at the time of the signing of the  
corporate bond agreement on March 10, 2008. Daniel Reeve never paid anything  
on this signed document.  
[130]  
Accordingly, when Mr. Crozier filed his income taxes, he owed  
-
46 -  
$65,839.77 in taxes. To pay that sum, Mr. Crozier had to take out a line of credit,  
which he is still paying down. It was conceded by Mr. Crozier in cross-  
examination that Daniel did not promise to pay this entire amount but only the  
amount listed in Exhibit 43 – 10H.  
[
131] On January 7, 2009, Mr. Crozier gave Ms. Ruggle Exhibit 43 – 10I. This  
document gave Daniel and Reeve Hotels and Resorts 30 days’ notice to return  
166,329.09 plus interest. Mr. Crozier never received any money on the  
$
corporate bond agreement and lost $166,329.09. The reason Mr. Crozier  
prepared Exhibit 43 – 10I was that he had learned (through lawyer Bob Waters)  
that Daniel Reeve had not actually purchased the Breadalbane Inn; thereafter he  
went to the police. Daniel was surprised when he received this exhibit and  
promised a week later that money would be returned in 30 days. No money was  
returned.  
[132]  
In cross-examination, Mr. Crozier confirmed that his money was to be  
used only for the purchase of the Breadalbane Inn. He assumed he would get his  
money back if the Breadalbane Inn deal did not go through. Daniel had told Mr.  
Crozier that he could withdraw his monies from his RRSP tax-free as Daniel  
would pay all of the withholding tax. Daniel never offered to pay his adjusted  
income taxes.  
[133]  
I find Mr. Crozier to be a credible witness. His evidence was supported  
-
47 -  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
8
. DOUG THIEL  
Mr. Thiel is a professional engineer with Nalco Canada and has,  
obviously, a university education. He estimates his assets to be $900,000.  
[134]  
[
135]  
David gave him a book: The Three Buckets. It is one of the books filed in Exhibit  
and Mr. Thiel recognized it.  
From March of 2003 until 2008, David Reeve was his financial advisor.  
7
[136]  
In 2004 and 2005, Mr. Thiel took out leveraged loans. The interest on  
the loans was written off against investment gains. Mr. Thiel was happy with  
David as his financial advisor.  
[137]  
In 2008, David said that Mr. Thiel should be looking to take out some  
money. David referred to Daniel’s credentials and asked if Mr. Thiel would be  
interested in meeting Daniel. Mr. Thiel said that he would.  
[138]  
On May 19, 2008 Mr. Thiel met Daniel at a Tim Horton’s with David  
present. Daniel said he owned the Jakobstettel Inn and was looking at the  
Breadalbane. Daniel outlined the benefits of a limited partnership. Any losses  
could flow through and would offset other capital gains. Daniel also said that he  
 
-
48 -  
was thinking of expanding into the U.S. Mr. Thiel decided to invest $200,000 but  
needed to withdraw approximately $340,000 in order to pay taxes.  
[139]  
Exhibit 44 – 40B is the Manulife withdrawal instructions. They are dated  
May 19, 2008 and were filled out by David at the Tim Horton’s meeting with  
Daniel. At the meeting, Daniel said he did not have full financing for the  
Breadalbane and would like to have the money transferred as soon as possible.  
The withdrawal instructions do have notes which state: “please rush,” and “Client  
initiated closing RSP. Client is aware of tax withdrawal. Please withdraw 40%  
withholding tax.” The latter note appears to have the initials “DR” and appears to  
be signed by David Reeve as the authorized representative. Exhibit 44 – 40D is  
the 2008 T4RSP slip, which shows approximately $335,000 was withdrawn with  
taxes of approximately $134,000 being deducted upon withdrawal.  
[140]  
The following Thursday morning, Mr. Thiel met Daniel at the TD Bank at  
8
a.m. A limo pulled up and Daniel was in it and asked, “Do we want to do this?”  
and Mr. Thiel responded yes. Mr. Thiel gave $200,000 to Daniel. Daniel told Mr.  
Thiel to meet him on Monday, May 26 to get a temporary receipt. Exhibit 44 –  
40A is a TD receipt showing a transfer of $200,000 on May 22, 2008 at 8:10 a.m.  
from Mr. Thiel’s account to the account of Reeve Hotels and Resorts  
[141]  
On May 26, 2008, Mr. Thiel met with Daniel and they both signed and  
initialled an agreement for a limited partnership, dated May 26, 2008, between  
-
49 -  
Reeve Hotels and Resorts Inc. for $200,000 with payments consisting of annual  
flow back of unused losses.  
[142] On October 30, 2008, Mr. Thiel received an email from David advising  
that David was leaving DPR and forming a new company, Davlyn Financial.  
[143]  
Mr. Thiel booked an appointment with David Reeve at his new office on  
Frederick Street on November 17, 2008. David was nervous and said that he left  
DPR because he did not feel comfortable with where Daniel was taking the  
company. David said that he believed Daniel was taking money for certain  
businesses but using money for other businesses. In cross-examination, Mr.  
Thiel clarified that David said that Daniel was accepting money and using it for  
purposes it was not intended for. David suggested calling CrimeStoppers, which  
Mr. Thiel did but was told to contact the fraud division of the Waterloo police  
instead.  
[144]  
Mr. Thiel asked about the Breadalbane and David replied that he did not  
know if Daniel owned the Breadalbane or the Jakobstettel. David gave Mr. Thiel  
some addresses and told Mr. Thiel to draft a letter requesting his money back  
within 30 days and to attach a void cheque. In cross-examination, Mr. Thiel  
indicated that he found this information upsetting and shocking as it contradicted  
his own experience. Further, he was surprised that David did not know the details  
as this did not seem reasonable.  
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[145]  
Mr. Thiel drafted the Exhibit 44 – 40F email that very night requesting  
the return of his $200,000 within 30 days. The email indicates that Mr. Thiel  
contacted the Breadalbane and learned that Daniel did not own it.  
[146]  
Mr. Thiel met Daniel on December 20, 2008. Daniel said he did not own  
the Breadalbane but was working on it and the deal was not dead yet. Mr. Thiel  
said that he wanted out of the deal. December was way beyond when the deal  
was supposed to happen and he wanted his $200,000 back. Daniel said the  
money was in guaranteed investments and there would be no problem in  
returning it. Mr. Thiel said it was acceptable to have the money returned in three  
payments over 90 days. Daniel said to come back on December 27, 2008. Daniel  
would know about the Breadalbane and would provide a repayment schedule  
and perhaps details about another property he might be interested in.  
[147]  
The December 27 meeting did not happen. Daniel’s cell phone was  
disconnected. A number of meetings were set up but fell through. Finally, Mr.  
Thiel met Daniel on January 27 at 8:45 p.m. Daniel, at that meeting, said the  
Breadalbane was not going to happen. Daniel said the $200,000 would be repaid  
in three payments over 90 days. Daniel said someone would call back next week  
to provide a schedule but that did not happen – see Exhibit 44 – 40I emails,  
dated January 30, 2009 and February 6, 2009.  
[148]  
Mr. Thiel had no further contact with Daniel. On February 19, 2009, Mr.  
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Thiel met with a lawyer and initiated a civil suit against Daniel and his company  
and David as well. He contacted the police on March 14, 2009. In June of 2009,  
David was still managing Mr. Thiel’s assets but Mr. Thiel transferred his account  
at that time to a different financial advisor.  
[149] Mr. Thiel never received any money on his investment. No interest or  
principal was ever paid. His loss is $200,000 at a minimum.  
[150]  
I find Mr. Thiel to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
9. DR. IRA BERNSTEIN  
[151]  
Dr. Ira Bernstein has been a medical doctor since 1992. In 2004, he had  
a number of investments with RBC, CIBC and Altamira. He was at that time  
looking to consolidate his investments with one financial advisor. Dr. Bernstein  
was referred to David Reeve by a friend.  
[152]  
Dr. Bernstein had approximately $500,000 in RRSPs and non-registered  
funds. The investments were mainly mutual funds with some stocks and bonds.  
He considers himself an average investor.  
[153]  
In the spring of 2004, David and Daniel picked up Dr. Bernstein and had  
 
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supper at Red Lobster.  
[154]  
They discussed a variety of investment concepts including getting a  
leveraged loan to buy investments and deducting the interest payments; this  
would require long-term investments. Dr. Bernstein was impressed by the  
conversation and transferred almost his entire portfolio to David. Approximately  
$400,000 to $500,000 was transferred. Dr. Bernstein also agreed to purchase a  
universal life shelter and did a leveraged loan of $200,000 in order to purchase  
segregated funds.  
[155]  
From 2004 to 2008, David was Dr. Bernstein’s financial advisor. Further  
he attended presentations given by the Reeve brothers in 2005 and 2007. Dr.  
Bernstein held Daniel in high regard due to Daniel publishing investment books,  
having a variety of investment offices, and appearing on the TV show Canada  
AM. Further he was impressed that Daniel owned the Jakobstettel Inn. In  
addition, his investments had done well from 2004 to 2008.  
FIRST INVESTMENT – BREADALBANE INN  
[156]  
In March of 2008, Dr. Bernstein received an email from Daniel’s  
assistant, Linzie Brown, that Daniel would like to speak to him. This was followed  
by a phone call from Daniel. Daniel said that the markets were not doing well in  
2008 and he could not see them doing well in the future. Daniel said he had a  
proposal that Dr. Bernstein might like. Daniel mentioned that Dr. Bernstein had  
 
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53 -  
helped Daniel in a medical matter and Daniel would like to help him. Daniel  
indicated that he had an Inn, the Jakobstettel, and was planning on buying  
another inn, the Breadalbane Inn, on July 1, 2008, which he planned to renovate.  
Daniel was looking for investors.  
[157]  
Daniel proposed that Dr. Bernstein collapse all his leveraged loans and  
related investments as well as his non-registered savings. Daniel indicated he  
would provide a two-year term providing 20 percent interest. Daniel indicated he  
would pay any penalties and deferred service charges.  
[158]  
Daniel continued saying over the phone that, “There is no risk. This is  
guaranteed. You are giving money to Reeve Hotels and Resorts. If something  
goes wrong, you can place a lien.” Dr. Bernstein believed that Reeve Hotels and  
Resorts owned the Jakobstettel Inn. Dr. Bernstein had no reason to question  
anything; he had four years of comfort due to legitimate dealings with David. In  
cross-examination, Dr. Bernstein indicated that it never occurred to him that the  
deal would not go through due to the assurances given to him by Daniel.  
[159]  
Exhibit 48 consists of two letters of direction to Manulife dated March  
27, 2008. There is no letterhead. Dr. Bernstein signed this document when Karen  
Gingrich attended his office. He had never met her before. The second  
paragraph of the letters indicates that Dr. Bernstein was withdrawing the money  
against the recommendation of David Reeve; Dr. Bernstein testified that he was  
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not withdrawing the money against the recommendation of David Reeve for  
personal reasons. Dr. Bernstein was not provided with a copy of this letter and  
only saw it for the first time in a subsequent civil law suit against Daniel Reeve.  
[160] The net proceeds after deductions for deferred services charges was  
$494,807.70. Exhibit 49 – 3A is a cheque for that amount dated March 28, 2008  
payable to Reeve Hotels and Resorts, signed by Dr. Bernstein. The endorsement  
on the cheque indicates it was deposited to the account of Reeve Hotels and  
Resorts on March 28, 2008.  
SECOND INVESTMENT – BREADALBANE INN, AGAIN  
[161]  
On April 28, 2008, Daniel attended Dr. Bernstein’s office to present and  
sign an agreement between Reeve Hotels and Resorts Inc. and Dr. Bernstein.  
The consideration was $507,126.33 (which is $494,807.70 plus the deferred  
service charges). The terms were 20 percent interest with a two-year maturity.  
The document was back-dated to March 28, 2008 per Daniel’s instructions, since  
March 28 was the date of payment to Reeve Hotels and Resorts. The document  
was signed and initialled by Dr. Bernstein. Dr. Bernstein believes Daniel signed  
and initialled it in his presence but was not 100 percent sure. The document was  
witnessed by Annie Smith who was not present. Daniel indicated that they had  
her signature on file at the office.  
[162]  
At the time of the signing the March 28 document on April 28, 2008,  
 
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Daniel discussed another proposal. Daniel had a convincing story about RRSPs  
not being a good long-term investment and proposed that Dr. Bernstein cash in  
his RRSPs and do a second investment in the Breadalbane. Daniel said there  
would be initial losses but they would be deductible. Dr. Bernstein did not really  
understand the proposal, but he trusted Daniel. Exhibit 49 – 3E is instructions to  
Canada Life to redeem his RRSPs dated April 28, 2008. Dr. Bernstein said the  
document was not filled out in his presence and is not sure if Daniel or Karen  
Gingrich presented it. The document, however, bears his signature and he  
consented to redeem his RRSPs.  
[163]  
Exhibit 49 – 3F is specific instructions to Canada Life to redeem Dr.  
Bernstein’s RRSPs, dated April 28, 2008. It has the same proviso that the  
redemption was against David’s recommendation. Dr. Bernstein was not sure if  
Ms. Gingrich or Daniel filled it out.  
[164]  
Exhibits 49 – 3D and 3G confirm that on April 29, 2008, Dr. Bernstein’s  
RRSPs, in the amount of approximately $281,154.84, were redeemed. After the  
deferred service charge of approximately $10,000 and federal withholding tax of  
approximately $81,000 were deducted, $189,698.78 was left over. On May 1,  
2008, a cheque in the amount of $189,698.78 was made out to Reeve Hotels  
and Resorts. No agreement forms were signed until September 2008.  
[165]  
Dr. Bernstein had never redeemed RRSPs before and was not sure of  
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56 -  
how it worked. Daniel told him that the tax would be paid up front and what was  
left is what is left. In cross-examination, Dr. Bernstein indicated that Daniel told  
him that all you will ever have to pay (in tax) will be deducted at source. Daniel  
also indicated that he would rebate the approximate $10,000 deferred service  
charge deduction.  
[166]  
Dr. Bernstein testified that Daniel never told him that the 30 percent  
withholding tax was just the first stage. The redemption would be ultimately taxed  
at his 47 percent marginal rate.  
SUBSEQUENT EVENTS  
[
167]  
office to provide him with Dr. Bernstein’s financial plan. It appears at Exhibit 49 –  
J. At pages 20, 62 and 65 of Exhibit 49 – 3J, the two private equity agreements  
In June of 2008, Mike Floyd and David Reeve attended Dr. Bernstein’s  
3
and amounts involving Dr. Bernstein and Reeve Hotels and Resorts Inc. are  
listed. Dr. Bernstein asked if everything was okay, and David answered that  
David had nothing to do with Daniel’s private equity deals and knew very little  
about them.  
[168]  
In September of 2008, Daniel attended Dr. Bernstein’s office and  
presented the Exhibit 49 – 3I agreement for signing. This document is a  
corporate bond agreement between Reeve Hotels and Resorts Inc. and Dr. Ira  
Bernstein in the amount of $189,678.78 with 16 percent interest to be paid  
 
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annually on the anniversary date. It was to mature on May 2, 2013. The  
document was back-dated to May 2, 2008 per Daniel’s instructions. Originally the  
discussion was that there would be a limited partnership but Dr. Bernstein  
testified that it morphed into this. Dr. Bernstein signed and initialled the document  
and believes Daniel did so as well. There are no witness signatures.  
[169]  
Daniel, at the time of signing of Exhibit 49 – 3I, indicated that the  
Breadalbane Inn was doing well; given the economy, people were basically  
travelling less and travelling locally. Daniel said the Inn was booked well into next  
year.  
[170]  
Sometime in August or September of 2008, Dr. Bernstein spoke to his  
accountant who was very upset about what Dr. Bernstein had done. Dr.  
Bernstein wanted to talk to Daniel but this did not happen.  
[171] Further, Dr. Bernstein contacted the Breadalbane Inn regarding  
bookings in spring of 2009 and was told there was lots of availability.  
[172]  
Further, in September of 2008, Dr. Bernstein met with David who was  
still his financial advisor. David suggested contacting Daniel’s accountant Sarah  
Snow regarding details of Reeve Hotels and Resorts and to ask for a financial  
statement. Sarah told Dr. Bernstein that she did not have that information and  
told him to contact Daniel. In September or October of 2008, Dr. Bernstein did  
have a conversation with Daniel who told him things were going well at the Inn.  
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58 -  
[173]  
In October of 2008, Dr. Bernstein received written correspondence by  
either email or letter that David was leaving DPR and setting up Davlyn Financial,  
along with forms for the transfer of his investments. This came as a shock to Dr.  
Bernstein as David was the president of DPR Financial. This state of affairs  
made Dr. Bernstein nervous and uneasy.  
[174]  
On December 3, 2008, Dr. Bernstein’s life “changed forever.” David  
asked how things were going with the private equity investments with Daniel. Dr.  
Bernstein stated that he had no idea and that maybe David could tell him. David  
said that he did not know if Daniel owned the Breadalbane Inn. David said some  
of his other clients were not getting paid by Daniel. Daniel had lost his licence  
and had gone through three accountants and was not paying staff. David  
suggested that Dr. Bernstein send a written notice to Daniel requesting his  
money back. David went on Dr. Bernstein’s computer and drafted an email  
requesting the return of monies, which Dr. Bernstein sent off to Daniel after  
reviewing what David had written.  
[175] Dr. Bernstein phoned the Breadalbane and talked to the owner’s wife  
who confirmed that Daniel did not own the Breadalbane Inn.  
[176]  
Subsequent to December 3, 2008, Dr. Bernstein phoned Daniel. Daniel  
confirmed that he did not own the Breadalbane. Daniel had not bought it due to a  
debt of several hundred thousand dollars that was on it. Dr. Bernstein wanted his  
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money back and Daniel said that was possible but the return would have to be  
staggered. Dr. Bernstein asked where his money was. Daniel said it was in first,  
second and third mortgages. There had been no discussion regarding what  
would happen if the Inn was not purchased.  
[177]  
Dr. Bernstein was very upset. For months he had thought that Daniel  
owned the Breadalbane Inn. Daniel had said that he had owned it when in fact he  
did not own it. Dr. Bernstein now just wanted his principal back and did not care  
about the interest. Daniel said he would pay the money back but needed time to  
make staggered payments.  
[178] At a meeting in Toronto between Daniel and Dr. Bernstein in February  
2009, Dr. Bernstein received an email from Daniel that was an acknowledgment  
of funds owing. At the meeting, Daniel proposed a repayment schedule starting  
March 1, 2009 with a $100,000 payment and staggered payments for months  
afterward. Dr. Bernstein accepted the schedule and just wanted his money  
returned.  
[179] Dr. Bernstein never received any return of his investment as of the date  
of his testifying in July 2015. His loss is approximately $700,000 plus interest.  
[180]  
Dr. Bernstein proceeded with civil litigation against Daniel and Reeve  
Hotels and Resorts Inc., and against David Reeve when he found out that Daniel  
did not own the Breadalbane Inn.  
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[181]  
Exhibit 48 is a letter of direction absolving David Reeve of any  
responsibility for the initial private investment. The letter indicates the investment  
is being done against David’s advice. Dr. Bernstein’s signature is on the  
documents but he disagrees that he agreed to the contents of the letter. It was  
one of many papers that he signed.  
[182]  
In cross-examination, Dr. Bernstein said the purpose of the Breadalbane  
investment was to renovate and improve the property. Daniel said that the  
investment would incur some capital losses. Dr. Bernstein trusted Daniel and did  
not call David. They were part of the same company. Further, in June of 2008,  
David never said anything was awry. The June 10, 2008 financial plan – see  
Exhibit 49 – 3J – reviewed by David Reeve and Mike Floyd sets out the two  
private investments with Reeve Hotels and Resorts Inc. The people on Dr.  
Bernstein’s advisory team were clearly aware of the private investments and no  
red flags were raised.  
[183]  
I find Dr. Bernstein to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
10. MICHELLE KEDDIE  
[184]  
Michelle Keddie and her husband Mark of 21 years had investments in  
 
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RRSPs. Ms. Keddie’s mother had a stroke in 2005 and Ms. Keddie was looking  
after her affairs. Ms. Keddie’s mother had memory problems and required a  
wheelchair.  
[185]  
In the fall of 2006, Mr. and Ms. Keddie met Daniel. Ms. Keddie trusted  
Daniel because (1) her husband’s friend, Gary Spencer, had investments with  
Daniel that had done well and he highly recommended Daniel, (2) she had seen  
Daniel on Canada AM, (3) Daniel had authored several books (two of which she  
read), and (4) Daniel had a very impressive office.  
[186]  
In February and March of 2007, Mr. and Ms. Keddie transferred their  
RRSPs to Daniel P. Reeve and Associates. Ms. Keddie’s financial advisor was  
listed as Steve Haney. The Keddies had approximately $170,000 in RRSPs.  
[187]  
Ms. Keddie talked to Daniel about her mother’s $100,000 in a CIBC  
account. That was all the money her mother had. Ms. Keddie transferred her  
mother’s account to Daniel P. Reeve and Associates and the money was put into  
segregated funds.  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE  
[188]  
In late 2007, Daniel told Ms. Keddie that his Millionaire Mortgage  
company would be the best investment for her mother. Daniel guaranteed a 20  
percent return annually. Ms. Keddie did not want an annual payment. Daniel said  
that was fine and that Ms. Keddie’s mother would instead get quarterly payments  
 
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of $5,000. Daniel said that the worst-case scenario was 20 percent guaranteed.  
[189]  
When the papers were presented, it was a two-year deal but Daniel told  
Ms. Keddie that there was no need to worry. If her mother wanted the money  
back after one year, that would be no problem. Gary, Ms. Keddie’s friend, had  
told her that Daniel was always late with interest payments but not to worry if that  
happened.  
[190]  
A month after Daniel discussed the Millionaire Mortgage investment, Ms.  
Keddie decided to proceed with it on behalf of her mother. Accordingly, $97,000  
was withdrawn from her mother’s segregated funds. After penalties and her  
mother deciding to hold a few thousand back, a $90,000 cheque dated Feb. 5,  
2008 was made out to Millionaire Mortgage Inc. Daniel said he felt terrible about  
all the penalty fees and said he would make it up.  
[191]  
The agreement, located at Exhibit 50 – 23C, indicates a corporate bond  
between Millionaire Mortgage Inc. and Ms. Keddie in the amount of $97,691 with  
terms of payment of 20 percent annual interest with a two-year maturity. It is  
dated February 5, 2008. Ms. Keddie signed this agreement when Steve Haney  
dropped it off. She knew Mr. Haney as Daniel’s right-hand man. The initials and  
other signatures on the document were not there when she signed. Nothing was  
signed in front of her. Ms. Keddie had no conversations with Mr. Haney regarding  
the Millionaire Mortgage investment.  
-
63 -  
[192]  
Ms. Keddie did the Millionaire Mortgage investment because Daniel said  
there was no risk. It was a guaranteed investment of 20 percent with interest  
being paid every quarter, and she could get the money back in one or two years  
if she so desired.  
[193]  
Her mother in fact only received three $5,000 interest payments for a  
total of $15,000. All of the payments were from a week to a month late. The  
fourth payment was very important because her mother needed the money to  
buy a wheelchair. Ms. Keddie called a month before the fourth payment was due  
but the payment was never made. In fact, Ms. Keddie’s mother never received  
any further interest payments and the principal was never paid back. Exhibit 50  
–
23K is a T5 form showing interest payments of $10,000 in 2008 from Celebrity  
Management to Ms. Keddie.  
SECOND INVESTMENT – BREADALBANE INN  
In March of 2008, Daniel set up an appointment with the Keddies at their  
[194]  
home. Daniel told them he was getting the Breadalbane Inn; it was just a matter  
of time. Daniel also stated it was a “hot property.”  
[195]  
Daniel said they could claim the investment on their income tax return.  
For example, on a $150,000 investment, they could write off $75,000 the first  
year and declining amounts thereafter. Further, they would earn 12 to 14 percent  
annual interest on their money and the return of the principal in five years. They  
 
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asked if they could stay in longer than five years but Daniel said the Breadalbane  
Inn was his. Ms. Keddie did not really understand the arrangement, but she got in  
because she believed Daniel Reeve knew how to do things that other people did  
not know how to do.  
[196]  
Daniel said that the worst-case scenario was 12 percent interest on their  
money and that the money was to be returned after five years. The discussion  
was always regarding the Breadalbane; there was no discussion of the money  
going anywhere else.  
[197]  
Daniel said that the minimum investment was $150,000 but after paying  
taxes and penalties for withdrawing their RRSPs, the Keddies had less than that.  
They had RRSPs with Manulife and Canada Life. Daniel said that if they cashed  
in their RRSPs, they would probably have to pay a couple of thousand dollars  
more in income tax.  
[198]  
Exhibit 50 – 23D is a bank draft for $100,000 payable to Reeve Hotels  
and Resorts, dated April 24, 2008, from the Keddies. Ms. Keddie remembers that  
there were problems getting the draft immediately; the bank said she would have  
to wait an hour. Daniel was upset it would take so long and was irritated – he  
wanted it really quickly. Ms. Keddie got the draft that day and took the draft  
directly to Daniel’s office.  
[199]  
Exhibits 50 – 23E and 23F are RRSP withdrawal instructions signed by  
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65 -  
the Keddies. Steve Haney is listed as the financial advisor, and he signed the  
documents. Mr. Haney confirmed that they would have to pay extra taxes in the  
amount of a few thousand but looked uncomfortable when he told them that.  
Exhibits 50 – 23G and 23H are Canada Life confirmation forms of the RRSP  
withdrawals. They confirm that the Keddies withdrew approximately $153,000,  
and after paying for approximately $6,400 in fees and approximately $44,000 in  
withholding taxes, the Keddies had about $103,000 left for their corporate bond  
investment.  
[200] The cashing in of their RRSPs eventually cost the Keddies another  
$16,000 in taxes but Ms. Keddie was able to reduce it to $12,000 after getting  
her mother’s credits. In cross-examination, Ms. Keddie testified that despite  
doing her own taxes, Ms. Keddie completely believed Daniel regarding paying  
just a few extra thousand dollars when cashing in her RRSPs and she did not  
feel a need to talk to her accountant and/or third parties. Daniel was close in  
estimating the withholding taxes but was way off on the additional taxes that she  
had to pay after doing her income tax forms.  
[
201]  
that appears at Exhibit 50 – 23J. The agreement was back-dated to May 1,  
008. The consideration is for $150,000. Daniel bumped it up to $150,000  
On May 26, 2008, the Keddies signed the corporate bond agreement  
2
because he felt bad about their losses and Daniel was confident about the deal.  
The agreement provided for annual flow back of unused losses (for renovations  
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66 -  
and improvements). Daniel said that the worst-case scenario was getting their  
money back and 12 percent a year. The agreement indicates the parties are the  
Keddies and Reeve Hotels and Resorts (hereinafter referred to as Breadalbane  
Properties Inc.). The Keddies equated Reeve Hotels and Resorts with Daniel  
Reeve. The other signatures on the agreement document were not there when  
they signed the document.  
[202]  
Exhibit 53 is Daniel’s notes regarding his calculations that $100,000  
would be left over after cashing in their RRSPs and their investment in the limited  
partnership at the hotel would be $150,000. Daniel knew what the Keddies’  
income was and they took his word what the tax consequences would be as  
Daniel gave direct, quick answers as if he had done it many times before.  
[203]  
Daniel said that he was buying the Breadalbane for sure. Daniel said  
that a father and son owned the Breadalbane and they were having arguments.  
Daniel said he was getting the Inn and they were going to get their 12 percent  
per year.  
SUBSEQUENT EVENTS  
[204]  
Ms. Keddie phoned once per month after providing Daniel with the  
$100,000 cheque and Daniel said it was still happening with reference to the  
purchase of the Breadalbane Inn. However, after several months, Daniel said the  
Inn was not happening but not to worry as their money was sitting and making 12  
 
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67 -  
percent. Daniel said that he was going to do something with it. Ms. Keddie  
expressed concerns about their money and the economy, and Daniel got really  
upset stating that there was no recession.  
[205]  
Their interest payment was supposed to be once per year. Over time, it  
was harder and harder to get a hold of Daniel. Four meetings were scheduled but  
each was cancelled at the last moment.  
[206] The Keddies never received anything on their Breadalbane investment.  
They received no interest and received no return of their principal.  
[207]  
Their total losses are the $150,000 on the Breadalbane investment  
made by the Keddies plus the approximate $97,000 owed to Ms. Keddie’s  
mother on the Millionaire Mortgage investment plus the unpaid interest payments  
on both the investments.  
[208]  
I find Ms. Keddie to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
1
1. LORNA EADIE  
Ms. Eadie is a retired school teacher with four degrees. Her husband  
David Hocking is a retired principal. She testified that neither one of them have  
[209]  
 
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much investing experience.  
[210]  
In January of 2007, Ms. Eadie attended an investment presentation by  
Daniel. The presentation was well done and she felt that Daniel knew what he  
was talking about. She got his card and skimmed one of his books, The Three  
Buckets. She also read about Daniel in a magazine article.  
[211]  
In February of 2007, she met with David and Daniel. They told her that  
they would monitor Ms. Eadie and Mr. Hocking’s accounts 24/7 and reset their  
investments twice per year. She and her husband had about $70,000 each in  
RRSPs and they owned a $350,000 home with no mortgage. Their income was  
$150,000 per year and they owned a $150,000 rental property.  
[212]  
In April of 2007, Ms. Eadie and Mr. Hocking decided to give DPR  
Financial a try. They met with David and Daniel again and transferred their  
RRSPs from CIBC to Canada Life.  
[213] On May 3, 2007, Ms. Eadie and Mr. Hocking met with David Reeve who  
was now their financial advisor.  
[214]  
In September of 2007, Tom Handler from DPR Financial phoned and  
spoke to Ms. Eadie and Mr. Hocking. The stock market was not doing well so Ms.  
Eadie instructed Tom to do a reset on their RRSPs to prevent further losses. This  
was not done for her husband and her husband’s account was $22,000 less than  
if the reset had been done. They met Daniel and told him they were  
-
69 -  
disappointed.  
[
215]  
216]  
In March of 2008, Steve Haney became their financial advisor.  
[
On April 21, 2008, Ms. Eadie and her husband arranged an appointment  
at the Jakobstettel to ask about their portfolio. They were met by David and not  
Mr. Haney. David acknowledged the company had disappointed them but Daniel  
had an exciting proposal for them. They met with Daniel who told them that “‘we’  
would like to make it up to you guys.” Daniel told them that they had an  
opportunity to invest in the Breadalbane Inn. They would need $150,000 each.  
Daniel said that he had not yet purchased the Breadalbane. Daniel said that he  
wanted the deal done by August 2008. In cross-examination, Ms. Eadie indicated  
that Daniel said the money was being held by lawyers in a trust account. She had  
no idea that money being held in a lawyer’s trust account was not available to  
pay interest.  
[217]  
Daniel said that they could raise the money by cashing in their RRSPs  
and that Ms. Eadie could take a line of credit against her home. Ms. Eadie  
indicated that she could not afford to lose money because she planned to retire  
in six months. Daniel said his team had looked over the tax implications and it  
was a worthwhile investment. Daniel told them that they would have to pay taxes  
and withdrawal charges when cashing in their RRSPs. Ms. Eadie and Mr.  
Hocking said that they would think about it. This was Monday, April 21, 2008.  
-
70 -  
Daniel said that he needed the money by April 25, 2008.  
[218]  
Ms. Eadie and Mr. Hocking thought about it. In cross-examination, Ms.  
Eadie said that they never spoke much with Mr. Haney. They were impressed by  
the renovations at the Jakobstettel. They decided to proceed with Daniel’s  
proposal and signed the paperwork on April 23, 2008. The withdrawal  
instructions were signed by Mr. Haney, Ms. Eadie and Mr. Hocking on April 22,  
2008 – see Exhibits 69 – 14C through 14F. On April 25, 2008, Ms. Eadie and  
Mr. Hocking met Annie Smith outside a CIBC branch and gave her two bank  
drafts: $150,000 from a line of credit on their house and $90,000 from cashing in  
their RRSPs. Exhibits 69 – 14A and 14B are two bank drafts both made out to  
Reeve Hotels and Resorts Inc. in the amounts of $150,000 and $94,235.49  
respectively.  
[219]  
On May 13, 2008, Ms. Eadie and Mr. Hocking met Daniel at a restaurant  
near his office. Exhibits 69 – 14E and 14F are limited partnership agreements in  
the amount of $150,000 for each of Lorna Eadie and David Hocking. Ms. Smith is  
the witness on both documents but she was not there. The documents are dated  
May 12, 2008 but were signed the following day. The party for Daniel on the  
agreement is noted as “Reeve Hotels and Resorts Inc. hereinafter referred to as  
Breadalbane Properties Inc.” Both documents refer to annual flow back of  
unused losses. Ms. Eadie and Mr. Hocking thought that this entitled them to write  
off any capital losses against capital gains. The amount listed for David  
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71 -  
Hocking’s agreement is $150,000 but all they gave for that agreement was  
94,000. Daniel said the corporation would take care of this over five years.  
$
Daniel told them that they had an option after five years to stay in or get their  
money back. The document does not spell out a 15 percent interest payment per  
year. Daniel said that, and Ms. Eadie trusted him. The interest payment was to  
be from May 2008 until the deal closed. After that, they would get the capital loss  
to write off.  
[220]  
Daniel said that ten investors would invest at $150,000 and they would  
be limited partners in Breadalbane. The money was designed only for the  
purchase of the Breadalbane Inn. Daniel led Ms. Eadie and Mr. Hocking to  
believe that their money would be safe; a lawyer was involved and the money  
was with hedge funds. There was no discussion of risk. Daniel said the money  
was safe in holding accounts and would be available for the purchase of the  
Breadalbane Inn. Daniel told them that he would pay them 15 percent interest but  
only one monthly interest payment would ever be made.  
[221] In August 2008, Daniel said that he was waiting for the liens to clear and  
they had no concerns at that time.  
[222]  
In October 12 and 29 of 2008, Ms. Eadie and Mr. Hocking met Daniel at  
the Jakobstettel Inn. They asked if their money was safe. Daniel replied that it  
was safer than if it were in the bank. At this point, no interest had been paid and  
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72 -  
they were asking for their interest payment. Daniel said he was waiting for a lien  
on the Breadalbane to be lifted. Ms. Eadie and Mr. Hocking know nothing about  
Cheryl Reeve. On November 12, 2008, they had a meeting with Daniel about  
their interest payments. Daniel said someone had screwed up and he would  
need another void cheque and he would ensure that they would receive their  
interest payments. At that point, Daniel had possessed their money since April of  
2008 with no interest payments being made.  
[
223]  
On November 17, 2008, they received a single interest payment of  
1,800. Exhibit 69 – 14I is a T5 slip that says Celebrity Management paid them  
15,000 interest. They had never heard of Celebrity Management and only  
$
$
received $1,800. This amount was far less than the 15 percent over eight months  
that Daniel had promised them.  
[224]  
In November of 2008, Daniel told them that the Breadalbane deal was  
not happening and asked if they were interested in another deal. They said no.  
Daniel said he would give their money back with 30 days’ written notice. Exhibit  
69 – 14J is a letter signed by Ms. Eadie and Mr. Hocking, dated December 18,  
2008, demanding the return of $150,000 and $94,235.49 and interest owed to  
them by January 20, 2009. This letter was delivered to Daniel.  
[225] Exhibits 69 – 14K and 14L, dated February 12 and 13, 2009  
respectively are unsigned letters purporting to be authored by Daniel Reeve  
-
73 -  
indicating a repayment schedule of $10,000 every Friday starting February 20,  
009 until all amounts were repaid. Ms. Eadie was unsure of how she received  
2
these letters. They never got any monies on this repayment schedule. In cross-  
examination, Ms. Eadie confirmed that Daniel never denied owing her money but  
on the other hand, he never paid it.  
[226]  
Exhibit 69 – 14M is a cheque dated April 1, 2009 for $20,000 from  
Jakobstettel Inn to David Hocking. It was returned NSF. In the result, Ms. Eadie  
and Mr. Hocking never recovered any of the $150,000 or $94,235.49 invested  
with Daniel Reeve. With interest payments not being paid, their loss is at least  
$250,000.  
[227]  
I find Ms. Eadie to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
1
2. MARK MCGUIRE  
Mark McGuire is 66 years of age and is self-employed in the tool selling  
business. He has a common law spouse named Inger Aas.  
[228]  
[229]  
Mr. McGuire’s highest level of education is Grade 10. He rates his  
investment knowledge as low: 2 on a scale of 1 to 10, with 1 being lowest  
 
-
74 -  
knowledge and 10 highest knowledge. He was comfortable investing in blue chip  
stocks.  
[230]  
In 2006, he was referred to Daniel by a colleague. He had no financial  
advisor but had about $400,000 in RRSPs and $100,000 in a group pension  
plan. He had a house worth $300,000 to $350,000 with a $125,000 mortgage.  
His company, at its peak, had nine employees and he had family income of  
$200,000.  
[231]  
At a second meeting with Daniel, Daniel said that Mr. McGuire could  
improve his investments through a “Three Buckets” strategy. Mr. McGuire signed  
the forms transferring his investments and Daniel became his financial advisor.  
Daniel gave the Three Buckets book to him and he read it.  
[232]  
At a third meeting with Daniel, Mr. McGuire stated that his target return  
was 10 percent as that was what he was getting. Daniel said that was no  
problem; DPR, at that time, was getting 18 percent over the last three to four  
years.  
[233]  
Mr. McGuire got a $100,000 loan per the “Three Buckets” approach and  
invested it in segregated funds. He also transferred his RRSPs to Canada Life  
and Manulife.  
-
75 -  
FIRST INVESTMENT – BREADALBANE INN  
[234]  
Daniel approached Mr. McGuire regarding getting a better return  
through a corporate bond. Mr. McGuire met Daniel at the 46 Cambridge Street  
office in Cambridge; Mr. McGuire does not think anyone else was there. David,  
his financial advisor, was not there. Daniel suggested that a corporate bond  
would give Mr. McGuire a higher rate of return. The bond that Daniel wanted to  
get him into was offering 18 percent annually. Daniel indicated that the corporate  
bond was to be used to purchase the Breadalbane Inn. Daniel had coveted the  
Breadalbane for a long time and it was part of a package of hotels he wanted to  
purchase.  
[235]  
Daniel said that the Breadalbane had not been purchased yet but its  
purchase was imminent. Accordingly, Mr. McGuire had to move quickly if he was  
to invest. No specific time was given. Daniel did not discuss risk. Daniel said that  
property values were going up and there was little risk. The purpose of Mr.  
McGuire’s investment was the purchase of the Breadalbane Inn.  
[236]  
Mr. McGuire thought about it for one or two days and then decided to do  
the investment and cash in his RRSPs. On April 2, 2008, Mr. McGuire signed the  
withdrawal instructions to fully redeem his RRSPs. David was his financial  
advisor and signed the document – see Exhibit 73 – 28B. Page 4 of Exhibit 73  
–
28B is a Letter of Direction dated April 2, 2008 signed by Mr. McGuire  
indicating that the withdrawal was being made against the advice of his financial  
 
-
76 -  
advisor (who was David). Mr. McGuire explained that David said that he had to  
tell us he was advising against this. Mr. McGuire also explained that the letter  
contradicted what happened. In cross-examination, Mr. McGuire retreated from  
this position somewhat. He conceded that David had suggested a meeting with  
Daniel regarding the private investments. At page 19 of his video statement  
taken in 2010, Mr. McGuire made no mention of David advising against the  
withdrawal. The statement indicates that David pushed in front of Mr. McGuire a  
whole bunch of papers to sign.  
[237]  
After paying approximately $73,000 in withholding taxes and $8,000 in  
service charges, $169,590.39 was left over. This was the amount of a bank draft,  
dated April 4, 2008, made out to Reeve Hotels and Resorts Inc. Daniel said that  
the income tax deductions and fees that were paid by Mr. McGuire were to be  
paid on the maturity of the bond. This did not happen. Eventually, Mr. McGuire  
had to pay an additional $9,000 of additional tax on the RRSP withdrawal.  
[238]  
Approximately eight to ten weeks later, an agreement was signed, back-  
dated to April 3, 2008 between “Reeve Hotels and Resorts Inc. (c.o.b. as  
Breadalbane Properties Inc.)” and Mark McGuire. The consideration was  
$169,590.39 and provided for the “annual flow back of unused losses.” Mr.  
McGuire received no disclosure as to what that meant. This bond did not reflect  
Mr. McGuire’s agreement with Daniel. Mr. McGuire provided Daniel with the  
numbers of their agreement and a second bond was drawn up.  
-
77 -  
[239]  
The second agreement between Reeve Hotels and Resorts Inc. and  
Mark McGuire, also backdated to April 3, 2008, provided for an 18 percent  
interest rate. Paragraph 1 of the document provided that, on maturity of the bond  
on April 3, 2013, Mr. McGuire would be repaid his original deposit of $169,590.35  
plus the penalty and prepaid taxes paid when withdrawing his RRSPs of  
$9,751.71 and $72,681.59 respectively. Mr. McGuire believes that he and Daniel  
signed this document in July of 2008 and that it was provided to him by Daniel at  
that time. Mr. McGuire never received any interest payments on this agreement.  
SECOND INVESTMENT – JAKOBSTETTEL INN  
[240]  
After the first bond agreement payment but before he received the  
temporary bond agreement, Lee-Anne Ruggle from DPR Financial phoned to call  
for an appointment with Daniel. A meeting took place sometime in April of 2008.  
Daniel had another bond investment and the money was to be used to buy the  
Jakobstettel Inn although Mr. McGuire could not remember who owned the Inn.  
This time Daniel wanted Mr. McGuire’s wife to cash in her RRSPs for a corporate  
bond deal similar to what Mr. McGuire had gotten, i.e., 18 percent interest and  
the return of prepaid tax and penalties upon maturity of the bond.  
[241]  
Mr. McGuire had a power of attorney over his spouse’s affairs; he  
signed the instructions to redeem Inger Aas’ RRSP account. These instructions  
were entered as Exhibit 73 – 28H. Mr. Haney’s name is crossed out and  
replaced by David Reeve’s. The document is dated July 9, 2008. There is  
 
-
78 -  
another Letter of Direction, dated July 9, 2008 attached to these withdrawal  
instructions. It again indicates that the financial advisor has advised against this  
withdrawal. In examination-in-chief, Mr. McGuire testified that he thought David  
was not there but was on holidays. In cross-examination, Mr. McGuire stated that  
David told him that he had to say he was against the withdrawal. Mr. McGuire  
doesn’t recall when he signed it but believes the July 9 date is right. Further, in  
cross-examination, Mr. McGuire testified that somebody gave him a ton of  
documents to sign and this could be one of them.  
[242]  
After payment of approximately $74,700 in prepaid taxes and $10,300 in  
service charges, there was $171,932.54 left over from the cashing in of Ms. Aas’  
RRSPs. A bank draft in that amount dated July 14, 2008 was made out to  
Jakobstettel Properties Inc.  
[243]  
Later in July, Mr. McGuire received a copy of the Jakobstettel corporate  
bond. It appears as Exhibit 73 – 28K. The parties to the bond are Jakobstettel  
Properties Inc. and Inger Aas. The consideration is $171,932.54 and pays 18  
percent annually on the anniversary date. The bond was back-dated to July 10,  
2
008 and Mr. McGuire believes it is initialled by Daniel and himself. Paragraph 1  
of the bond indicates that on the five-year anniversary date of the bond on July  
0, 2013, the original deposit is payable along with overdue interest and the  
1
penalties paid of $10,348.66 and prepaid tax of $73,685.37. There was no  
discussion of any other investment other than Jakobstettel. Daniel was present  
-
79 -  
when this document was signed.  
THIRD INVESTMENT – MILLIONAIRE MORTGAGE  
[244]  
There was yet another investment to be made. It was around August  
2008, when David did a PowerPoint presentation regarding Millionaire Mortgage  
with Inger Aas and Mr. McGuire present. The concept had been brought up by  
Daniel as another way of getting money to get a good return. David told them not  
to invest in any more of Daniel’s private equity deals. David said that they had  
enough of Daniel’s stuff. David went through the details of taking the equity out of  
your house, getting a mortgage, and investing it in one of three vehicles:  
laddered GICs, Fidelity T-SWP with an 8 percent return, or private equity.  
[245]  
David never really explained what a T-SWP was but Mr. McGuire told  
David to go ahead with the T-SWP with the 8 percent return. Mr. McGuire did not  
sign any specific forms for the T-SWP and never received anything from Fidelity.  
[246]  
Exhibit 73 – 28L is a bank draft, dated October 15, 2008, made out to  
Millionaire Mortgage for $173,765.85. Mr. McGuire dropped off the bank draft at  
the DPR offices. He did not know that making the draft to Millionaire Mortgage  
was not a T-SWP investment. Mr. McGuire never decided to do anything other  
than a T-SWP investment. Again, the formal documents were not signed until  
later.  
[247]  
Exhibit 73 – 20M – is an agreement between Millionaire Mortgage Inc.  
 
-
80 -  
and Mark McGuire for $173,736.85 paying annual 18 percent for a one-year  
term. The document was signed by Mr. McGuire, Daniel, and Lee-Anne Ruggle.  
The document is dated October 14, 2008 but Mr. McGuire says it was signed  
four to eight weeks after this date. In cross-examination, it was noted that the  
interest rate was the same rate as his Breadalbane investment.  
[248]  
When Mr. McGuire pointed out to Daniel that he was only expecting 8  
percent, Daniel told him that he should be happy and that the money was  
invested in first and second mortgages. Mr. McGuire asked for some  
documentation to confirm that but Daniel never produced it.  
SUBSEQUENT EVENTS  
[249]  
Regarding the Breadalbane, Daniel told Mr. McGuire over the months to  
be patient; it hadn’t been purchased yet due to the lack of a liquor licence.  
Finally, in late 2008, Daniel told Mr. McGuire that he had not bought the  
Breadalbane but it didn’t matter; the money was invested in Reeve Hotels and it  
was safe. Also in late 2008, Mr. McGuire received a cheque for $1,000 but it  
bounced. At the end, Mr. McGuire told Daniel he would prefer to have his  
investments in something that he could see.  
[
250]  
agreement, Daniel also provided him with an interim statement indicating that  
13,030.35 was payable on March 15, 2009. This was provided to Mr. McGuire  
At around the time that Daniel gave him the final Millionaire Mortgage  
$
 
-
81 -  
by Daniel in the new Waterloo DPR building. Daniel said that Mr. McGuire had  
agreed to this schedule but could not produce any documentation to prove that.  
Mr. McGuire remembers telling Daniel that he wanted all three investments  
collapsed because Daniel could not show where the money was. Mr. McGuire  
never had any discussion with Daniel or anyone else that the three investments  
were to be used for any other purpose than the stated purpose set out in  
discussions with Daniel.  
[251]  
In the end, Mr. McGuire, on all three investments, never received any  
return of capital or interest at all. His and his spouse’s combined losses therefore  
are $169,590.39 plus $171,932.54 plus $173,736.85 for a total loss of  
$515,259.78. This total does not include unpaid interest or the amounts promised  
for prepaid taxes and penalties from cashing in the RRSPs.  
[252]  
I find Mr. McGuire to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
13. HEATHER GARDNER  
[253]  
Heather Gardner is a nurse. She employed Daniel as her financial  
advisor since the early 1990s. She has had investments in RRSPs, RIFs,  
segregated funds, GICs and leveraged loans with Canada Life with the funds  
 
-
82 -  
borrowed from the National Bank.  
[254] In 2003, she gave Daniel a business loan for the Jakobstettel Inn. She  
was paid her interest until 2007 and thereafter the payments stopped.  
[255]  
In 2007, Ms. Gardner’s husband became ill with pancreatic cancer and  
death was imminent. She went to Daniel’s office and wanted safe investments  
with a reasonable rate of return.  
FIRST INVESTMENT – JAKOBSTETTEL INN  
[256]  
Daniel suggested an investment in the Jakobstettel; it was safe, it was  
backed by bricks and mortar. She decided to put $200,000 into it in the form of  
two cheques dated June 27, 2007. Daniel told her to make the cheques out to  
Celebrity Management, Daniel’s holding company. She did so – see Exhibit 75 –  
17A and 17B.  
[
257]  
they signed Exhibit 75 – 17C, a joint ownership agreement, dated June 28,  
007, between “Celebrity Management International Inc. carrying on business as  
A day or so later, Ms. Gardner and her husband met with Daniel and  
2
the Jakobstettel Inn” and Heather and Albert Gardner. The document was in the  
amount of $200,000 with 15 percent interest payable and was with reference to  
the Bauman Suite.  
 
-
83 -  
SECOND INVESTMENT – N.Y. PARK PLAZA  
[258]  
Before the Jakobstettel investment, Daniel also spoke to Ms. Gardner  
regarding an investment in the New York Plaza hotel. Daniel told her a group of  
people were going to invest in a suite named the Wellington Suite. Daniel  
indicated that the investors had the option of periodic stays, but if you did not  
choose the periodic stays, you would get a higher interest rate. The bulk of the  
time the suite would be rented out at Plaza rates. Daniel said that he went down  
to see it and they were renovating and he was involved in negotiations.  
[259]  
Ms. Gardner decided to invest in the Plaza. When she did so, she  
thought Daniel had already bought it, but could not say for sure whether or not he  
had bought it. She cashed in some RRSPs and invested $100,000 in the Plaza –  
see Exhibit 75 – 17D cheque dated July 12, 2007 for $100,000 made out to DPR  
Financial. Exhibit 75 – 17E is a joint ownership agreement, dated July 12, 2007,  
regarding the Wellington Suite of the Plaza Hotel, N.Y., N.Y. between Reeve  
Hotels and Resorts Inc. and Heather and Albert Gardner. It is for consideration of  
$100,000 with annual interest of 18 percent.  
[260]  
On August 3, 2008, she gave two more cheques made out to DPR  
Financial and gave them to Daniel for the N.Y. Plaza investment. The total of the  
two cheques was $100,000. This raised her investment in the Plaza to $200,000.  
Accordingly, another Plaza agreement was drawn up. It is Exhibit 75 – 17K  
dated August 13, 2007. It is between Reeve Hotels and Resorts and Heather  
 
-
84 -  
Gardner and Albert Gardner. This document is for $100,000 and the interest rate  
was 18 percent annually.  
[261]  
Daniel, at some point, told Ms. Gardner he was giving up his licence and  
was transferring her portfolio to David, but promised he would keep an eye on  
her investments.  
THIRD INVESTMENT – BREADALBANE INN  
[
262]  
263]  
On April 8, 2008, Ms. Gardner’s husband died.  
[
Later, Ms. Gardner attended the office to provide a death certificate to  
David. Daniel entered and talked about the Breadalbane Inn. Daniel said that he  
could operate it at a loss while renovating it and write the capital losses off  
against the capital gains with the client receiving 12 to 15 percent. This was  
similar to Ms. Gardner’s experience with the Jakobstettel. David said that the  
Breadalbane and real estate investments were good investments.  
[264]  
In cross-examination, Ms. Gardner testified that subsequent to the David  
Reeve meeting but before the Breadalbane investment, Daniel met with her at  
her home and discussed the Breadalbane investment. She used proceeds from  
one of her husband’s life insurance policies to come up with the $375,000. Daniel  
said she could cash in RRSPs but she used up nearly all of the policy to do the  
Breadalbane investment.  
 
-
85 -  
Ms. Gardner provided two cheques to Reeve Hotels and Resorts Inc. for  
the Breadalbane investment. The first cheque was dated May 19, 2008 for  
100,000 and the second cheque was dated June 27, 2008 for $275,000.  
[265]  
$
[266]  
Exhibit 75 – 17N is an agreement between Reeve Hotels and Resorts  
Inc. and Heather Gardner for consideration of $375,000 for a corporate bond  
paying 12 percent annually and maturing on June 27, 2013. Ms. Gardner  
indicated that it was signed at the Jakobstettel on December 6 of 2008 but back-  
dated by her and Daniel to June 27, 2008. In the beginning, Daniel told her he  
was getting investors for the Breadalbane, but by December of 2008, she thought  
Daniel had bought the Breadalbane Inn. He told her that he had permission to  
build condos.  
SUBSEQUENT EVENTS  
[267]  
To summarize, Ms. Gardner, in 2007 to 2008, put $200,000 into the  
Jakobstettel, $200,000 into the Plaza and $375,000 into the Breadalbane for an  
investment total of $775,000.  
[268]  
From July 2007 until July 2008, she received $3,000 interest per month  
on her Plaza investment for a total of $33,000. She never received any interest  
payments on Jakobstettel or Breadalbane.  
[269]  
Daniel attended Ms. Gardner’s home before Christmas of 2008 and  
provided her with a $30,000 cheque dated November 6, 2008. It was returned  
 
-
86 -  
NSF on November 10, 2008 – see Exhibit 75 – 17R.  
[270]  
On December 6, 2008, Daniel provided Ms. Gardner with another  
agreement (see Exhibit 75 – 17P) between Jakobstettel and herself. This  
document is dated December 6, 2008 and the consideration is $338,021.97,  
which consists of $138,021.90 on a 2003 investment in the Jakobstettel (see  
Exhibit 77) and the $200,000 invested in 2007. On this day, Daniel provided her  
with three separate agreements to catch up on all the investments she had made  
with him and to take out her deceased’s husband’s name. They are Exhibits 75  
–
17P, 17N and 17F. They were all made out in different colours.  
[271]  
In January of 2009, Daniel deposited $10,000 into Ms. Gardner’s bank  
account. This was the last money she ever received from him. Accordingly on her  
investment of $775,000, all she ever received was $43,000 in interest payments.  
She never received any principal back.  
[272] Accordingly, her total loss is $775,000 plus unpaid interest for 2007 to  
2008 plus the $138,000 from 2003.  
[273]  
Exhibit 75 – 17Q is a letter to Daniel dated October 22, 2008. In that  
letter, Ms. Gardner indicates she wants to sell her room at the Plaza and have  
her $200,000 returned together with interest owing from 2007. She gives 60  
days’ notice. This money, of course, was not returned.  
[274]  
Exhibit 75 – 17S is a letter dated January 26, 2008 wherein Ms.  
-
87 -  
Gardner confirms that she still wants her money back as set out in her October  
8, 2008 letter.  
2
[275]  
It was her understanding that DPR Financial was the holding company  
that was to take her money and then pay it out to purchase the inns and  
investments. It was her understanding that the Jakobstettel and Plaza were  
bought and the Breadalbane was to be bought once a $100,000 lien was  
removed. At the December 6, 2008 meeting, she understood Daniel had bought  
the Breadalbane because Daniel had said that he had approval to build condos.  
She wanted paperwork but he did not provide it. She admitted in cross-  
examination that he never said he bought the Breadalbane; he left her with the  
impression that he had it.  
[276]  
In cross-examination, Ms. Gardner testified that she met with David in  
October of 2008 when David was leaving DPR. This was a shock to her. David  
said he did not like the way that Daniel was running things and David didn’t want  
to be sued by his clients. David advised her to write letters to pull out of the  
corporate bond investments and this inspired her to write the letters in October  
and January. She took them down to Daniel and gave them to Sarah Snow. In  
early 2009 she went to the police.  
[277]  
In cross-examination, Ms. Gardner was referred to Exhibit 77 which is  
an agreement with Celebrity Management for a $138,021.90 loan at 15 percent  
-
88 -  
interest. There were no problems with the payments until the fall of 2008. This  
loan money had been used to purchase the Jakobstettel. Per Exhibit 76,  
complete interest payments were made in 2004 to 2007 but nothing after 2007.  
[278]  
Exhibit 75 – 17F is an agreement between Reeve Hotels and Resorts  
Inc. and Heather Gardner, dated July 12, 2007, for $200,000 at 18 percent  
interest. This was executed by Daniel at the December 6, 2008 meeting to  
replace the two $100,000 agreements for the Plaza (Exhibits 75 – 17E and 17K)  
that had her husband’s name on them.  
[279]  
I find Ms. Gardner to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
14. PATRICIA WESTERHOUT  
[280]  
Patricia Westerhout has a Grade 12 education. She is retired and  
formerly operated a salon. She testified that she had little investment experience.  
Her husband was deceased in 1998.  
[281] In 2006, her net worth was approximately $4 million. She met Daniel  
through a friend at her house. She was looking to buy life insurance.  
[282]  
She invested $1.75 million with Manulife and $1.60 million with Canada  
 
-
89 -  
Life. She paid $8,000 for Wealth Institute education. She attended three classes  
in September to November 2008.  
[283]  
On July 15, 2006, she purchased an interest in the Paris Suite of the  
Jakobstettel Inn for $100,000. The agreement was with Celebrity Management  
and it was understood that the agreement was to pay 12 percent interest plus 3  
percent if she did not use the suite – see Exhibits 82 and 78 – 42A.  
[284]  
On September 5, 2006, Ms. Westerhout purchased an interest in the  
Presidential Suite of the Jakobstettel Inn also for $100,000 and for the same  
agreement of 12 percent interest plus 3 percent if she did not use the suite  
FIRST INVESTMENT – LOAN TO DPR  
[
285]  
a loan of $100,000 on each date for a total loan of $200,000 – see Exhibits 78 –  
2A and 42C bank draft and cheque. There was no paperwork. Daniel was  
On April 10 and 17, 2007, Ms. Westerhout provided DPR Financial with  
4
always late with paperwork and at first, this did not concern her. The interest to  
be paid was 18 percent. She provided the money to Daniel for whatever he  
wished to use it for. Daniel had asked for the loan and was offering 18 percent on  
the $200,000 for two years.  
SECOND INVESTMENT – BREADALBANE INN  
[286]  
Ms. Westerhout got the $200,000 loan back in June of 2008. This  
 
 
-
90 -  
occurred due to a meeting that took place with Daniel, David and herself in April  
of 2008. Daniel did most of the talking. Daniel told her that he owned the  
Breadalbane Inn, that he had purchased it, and that it had closed and he wanted  
to do renovations. Ms. Westerhout flatly denied the suggestion in cross-  
examination that Daniel said that he was going to purchase it. She felt she was  
being pressured into the Breadalbane investment. She told Daniel that she did  
not have a balanced portfolio and was not comfortable with this investment. She  
felt pressured by the tone in which Daniel was speaking to her. Daniel said to  
her, “You have real estate. You have fixed income. What more do you want?”  
David went along with Daniel: it would be fixed income. Eventually it was agreed  
that she would leave her $200,000 that she already had with Reeve Hotels, she  
would get back the $200,000 loan (which was paid back in June 2008), and she  
would do the Breadalbane investment for a return of 20 percent for approximately  
$4,000 per month.  
[287]  
Accordingly, Exhibit 78 – 42D was entered into between Reeve Hotels  
and Resorts Inc. and Ms. Westerhout. The document is dated April 11, 2008 but  
she signed it at a later date. The agreement is for consideration of $237,286.46  
which is the amount of the cheque provided to Daniel and Reeve Hotels and  
Resorts on April 11, 2008 – see Exhibit 78 – 42C. The terms are 20 percent with  
monthly payments of $3,945.47. The maturity date is April 11, 2011. The  
document says that it was signed in Waterloo on April 11, 2008 but Ms.  
-
91 -  
Westerhout indicated it was signed at the Jakobstettel at a later date. She  
received two $4,000 interest payments in September and October of 2008 but  
received no interest payments thereafter.  
THIRD INVESTMENT – MILLIONAIRE MORTGAGE  
[288]  
In November or December of 2007, Ms. Westerhout and her boyfriend  
Tim met with Daniel at the Jakobstettel. Daniel explained his Millionaire Mortgage  
concept to them (i.e., remortgage home for 40-year term and use equity to get  
line of credit and then write off interest on leveraged loans for investment  
purposes). Daniel said he had a patent on it and was going to sell it to RE/Max.  
Daniel was offering 25 percent on their money and needed a loan for three  
months.  
[289]  
Exhibits 78 – 42A and 42C are two cheques in the amount of $700,000  
and $100,000 made out to DPR Financial, dated November 28, 2007. This was  
for the Millionaire Mortgage loan. Ms. Westerhout provided all of the money  
except for $50,000 which came from Tim. She gave the cheques to Daniel at the  
Jakobstettel. She got a letter, dated December 4, 2007, confirming the  
investment – see Exhibit 84.  
[
290]  
Westerhout got an interest payment of $175,000 (which is 25 percent of  
700,000). Daniel asked to keep the $700,000 for another three months to which  
After three months, in April of 2008, Tim got a $100,000 cheque and Ms.  
$
 
-
92 -  
Ms. Westerhout agreed.  
[291]  
Accordingly a new agreement was drawn up – see Exhibit 78 – 42B.  
This document is dated March 1, 2008 but was signed on April 7, 2008. The  
consideration was for $700,000 with 25 percent interest for a 90-day term. Ms.  
Westerhout testified it was understood that she would be paid the 25 percent in  
three months and not 12 months. Paragraph 2 of the document provides for  
return of the $700,000 and 25 percent interest on June 1, 2008.  
[292]  
Accordingly, on June 1, 2008, $875,000 was due to Ms. Westerhout.  
She received $100,000 on this investment in July of 2008 and $100,000 in  
October of 2008. She also received a payment in July of 2008 of $15,000 for her  
Jakobstettel investment. Accordingly her loss on the Millionaire Mortgage  
investment was $875,000, minus $200,000, equalling $675,000 plus accrued  
interest.  
FOURTH INVESTMENT – JAKOBSTETTEL INN  
[293]  
On June 18, 2008, Ms. Westerhout renewed her Jakobstettel investment  
of $200,000. She had received the $30,000 interest payment in July of 2007 and  
received the second year interest payment of $30,000 as well in July of 2008 (a  
$15,000 payment and an $115,000 payment which included $15,000 for  
Jakobstettel and $100,000 for MM). Exhibit 78 – 42E is the rolled-over $200,000  
Jakobstettel investment. The document appears to indicate she signed it on  
 
-
93 -  
September 15, 2008. It is a corporate bond. In cross-examination, Ms.  
Westerhout indicated the document was supposed to be for joint ownership of  
two suites at the Jakobstettel but she didn’t notice until she got home. Ms.  
Westerhout indicated she rolled over the investment because it was profitable in  
the past at 15 percent per year. By July of 2008, she had received $60,000 on  
the original 2006 investment of $200,000. However, there was a NSF cheque  
dated July 21, 2008 for $15,000 (see Exhibit 78 – 42F) but she got the $115,000  
payment shortly after.  
[294]  
In cross-examination, Ms. Westerhout indicated she met with David  
Reeve at the Cambridge office in October of 2008 and he said he was leaving  
and was setting up Davlyn Financial with his wife. David provided her with  
contact information and documents to transfer her investments. She did not sign  
at that point. In early 2009, she visited David with Tim; David told her he would  
lose his licence if he stayed at DPR Financial. His wife would lose her licence as  
well. David did not say why.  
[295] Ms. Westerhout was shown her preliminary hearing evidence from July  
4, 2013 wherein she testified that David also told her that Daniel had lost his  
licence. She did not stay with David because she did not feel comfortable with  
him. In June of 2009 transferred her investments back to Bank of Montreal –  
Nesbitt Burns.  
-
94 -  
[296]  
Daniel provided Ms. Westerhout with repayment schedules in  
September 2008, October 2008 and January 2009 on the Millionaire Mortgage  
investment (see Exhibits 78 – 42G, 42H, and 42I). Aside from a $100,000  
payment made in October of 2008, she never received any money after October  
2
008 on any of her investments. She had a meeting with Daniel on January 23,  
009 and Daniel told her that a $4,000 payment was being made at her bank as  
2
they spoke, but no such payment was ever made.  
[297]  
Ms. Westerhout confirmed that there were no discussions with Daniel  
that he was using her money to give to other people and there were no  
discussions that her money would go to Daniel’s ex-wife.  
[298]  
Ms. Westerhout’s losses can be summarized as follows:  
1
. On the original $200,000 Jakobstettel investment, made in 2006 and  
rolled over in 2008 (see Exhibit 78 – 42E), she received her interest on  
the original investment but received nothing – principal or interest – on  
the rolled-over investment. Her loss is $200,000 plus accrued interest.  
2. On the $200,000 loan to DPR Financial for 18 percent, made in April of  
2007, she received the principal back in June of 2008 but received no  
interest. Her loss on the loan is $36,000 in unpaid interest.  
3. On the Breadalbane – Reeve Hotels and Resorts Inc. investment, made  
on April 11, 2008, for consideration of $237,286.46, with interest  
-
95 -  
payments of approximately $4,000 per month for three years (see  
Exhibit 78 – 42D), she received two interest payments of $4,000 each  
on September and October of 2008 and received nothing thereafter. Her  
loss on the Breadalbane investment is $237,286.46 and accrued  
interest.  
4
. On the rolled-over Millionaire Mortgage investment of $700,000 (see  
Exhibit 78 – 42B), her loss, as previously calculated, is $675,000 plus  
accrued interest.  
5. Her loss, accordingly, is $200,000, plus $36,000, plus $237,286.46, plus  
$
675,000, plus various accrued interest amounts, for a total loss of  
1,148,286.46 plus accrued interest.  
$
[299]  
I find Ms. Westerhout to be a credible witness. Her evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
15. LAURA KERR  
[300]  
In 2007, Laura Kerr was married but was leaving her husband and knew  
she was going to come into some money. She was going to get a lump sum from  
the sale of the matrimonial home pursuant to a separation agreement.  
 
-
96 -  
Ms. Kerr met with David Reeve in June of 2007 and filled out the client  
profile form – see Exhibit 85 – 24A.  
[301]  
[302]  
Ms. Kerr met with David at the Jakobstettel Inn for a second meeting.  
She was interested in putting her money where it was safe. In cross-examination  
she indicated it was an emotional time for her and she was handing herself over  
to David. She had next-to-no investment knowledge, did not know anything about  
leveraged loans at that time, and had very vague knowledge regarding  
segregated funds. David provided her with three options: (1) interest return of 3  
to 4 percent; (2) investment in property which would return 7 to 8 percent; or (3) a  
private real estate investment with Daniel that would return 18 percent. In cross-  
examination, she indicated she was not thinking at that time that higher returns  
meant higher risk. Further, Ms. Kerr was also directed to her preliminary hearing  
testimony wherein she stated that David, at the second meeting, gave her two  
options: (1) a low-interest account at 3 to 4 percent, or (2) a real estate option at  
7
to 8 percent.  
[303]  
Her separation agreement was signed in August of 2007 and there was  
a third meeting with David at the Jakobstettel Inn. She had $100,000 to invest.  
Daniel joined the meeting and Ms. Kerr told him that she could not tolerate any  
risk. Daniel told her that he had bought suites in the Plaza Hotel in New York City  
and he was looking for people to buy into it. Daniel stated, “What could be safer  
than the Plaza Hotel?”  
-
97 -  
[304]  
Daniel explained that the terms were $100,000 with an 18 percent return  
to be paid annually at the end of the term. Ms. Kerr wrote out a cheque in that  
amount and gave it to Daniel. She received no documentation at that time. The  
cheque is dated September 13, 2007 and is made out to Reeve Hotels and  
Resorts Inc. – see Exhibit 85 – 24B.  
[305]  
Exhibit 85 – 24C is a joint ownership agreement between “Reeve  
Hotels and Resorts Inc. – The Plaza” and Laura Kerr for $100,000 (CAD), with 18  
percent annual interest, regarding the Wellington Suite. The document was  
signed at the Benjamin Restaurant with just Laura Kerr and Daniel being present.  
It is dated September 14, 2007 and purports to be witnessed by Annie Smith.  
Daniel said that he had already purchased the suites at the Plaza but did not  
provide the date of purchase. Daniel said, “I have bought some suites at the  
Plaza Hotel.” Daniel further indicated that the suites were being continually  
rented.  
[306]  
In July or August of 2008, Ms. Kerr asked DPR Financial for $3,000  
back on the investment. Barb Menard gave this money to Ms. Kerr at the  
Jakobstettel Inn.  
[307]  
In October of 2008, the interest was past due on the Plaza investment.  
On October 6, 2008, Ms. Kerr met with Daniel and told him she was having  
difficulties getting her interest and asked if her investment was okay. Daniel said  
-
98 -  
that everything was safe and on track. Daniel told her she could give written  
notice to withdraw the investment. He indicated there was just a little glitch in the  
office handling the interest and the interest would be paid in a day or two. She  
received $18,000 shortly after. She also received a T5 indicating that she had  
received the $18,000 interest from Celebrity Management – see Exhibit 85 –  
24D. She had no idea what Celebrity Management was.  
[308]  
In cross-examination, it was brought out that Ms. Kerr met with Ms.  
Menard regarding the Plaza investment on October 22, 2008. Ms. Menard told  
Ms. Kerr that she and David were leaving and asked her to transfer her RRSP  
accounts to David’s new firm, Davlyn Financial. Ms. Kerr signed the forms but  
later changed her mind. Ms. Kerr did not know what David’s departure meant, but  
two weeks later she asked for her money back from the Plaza investment.  
[309]  
On November 5, 2008, she sent a letter to Daniel asking for the return of  
her $100,000 investment – see Exhibit 85 – 24E. In cross-examination, Ms. Kerr  
testified that Daniel had told her before that with 30 days’ notice she could expect  
the return of her investment.  
[310] Ms. Kerr didn’t get her money back within the 30 days and started to  
hassle DPR Financial by way of threatening emails.  
[311] Exhibit 85 – 24F is one such threatening email, dated January 15,  
2009, wherein Ms. Kerr demanded the immediate return of her money even if  
-
99 -  
Daniel had to “pull it out of [his] ass.” She also threatened to call the police and  
the newspapers. Lee-Anne Ruggle from DPR Financial responded to the email  
and eventually dropped off a cheque to Ms. Kerr.  
[312]  
Exhibit 85 – 24G is the cheque for $100,000 made out to Laura Kerr  
from Millionaire Mortgages Inc. for $100,000. It is dated January 30, 2009. When  
deposited, the cheque was returned NSF.  
[313] Ms. Kerr’s total loss is the $100,000 investment minus the $3,000  
returned in July or August 2008 for a total of $97,000.  
[314]  
I find Ms. Kerr to be a credible witness. Her evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
1
6. AMOS LICHTY  
Amos Lichty is an 83-year-old retired truck driver and heavy equipment  
operator. He has a grade 8 education.  
[315]  
[316]  
He was introduced to Steve Haney by his daughter at a meeting where  
his daughter was present. Mr. Lichty sold his home in Listowel for $98,000 and  
wished to invest $100,000 and use the interest to pay his rent. In possibly 2003,  
he had dissolved his mutual funds to buy a van and he put about $10,000 in a  
 
-
100 -  
RRIF.  
[317]  
Two weeks after his initial meeting with Mr. Haney, Mr. Lichty and his  
wife met with Daniel and Mr. Haney at a meeting at the Jakobstettel Inn. Mr.  
Lichty told Daniel that he was retired and his only income was a CPP pension  
and that he had $100,000 to invest.  
[318]  
Daniel told Mr. Lichty to invest in the Plaza Hotel in New York. Daniel  
was using the money to renovate the Wellington Suite in the Plaza Hotel. Daniel  
showed him pictures of the Plaza Hotel and Mr. Lichty decided to invest his  
money there.  
[319]  
Exhibit 86 – 25A is Mr. Lichty’s cheque dated September 4, 2007 in the  
amount of $100,000. It is made out to Reeve Hotels and Resorts Inc. pursuant to  
Daniel’s instructions to Mr. Lichty.  
[
320]  
which was provided to Mr. Lichty at the time of making out the cheque for  
100,000. It is dated September 5, 2007 and is between Reeve Hotels and  
Exhibit 86 – 25B is the joint ownership agreement regarding the Plaza  
$
Resorts Inc. and Amos and Dorothy Lichty. The consideration is $100,000 for an  
ownership interest in the Wellington Suite in the N.Y. Plaza Hotel with interest  
payments to be 18 percent annually and paid out monthly at $1,500 per month.  
The initials on the document were made by Mr. Lichty, his wife and Daniel. The  
document was signed by those three parties and witnessed by Mr. Haney who  
-
101 -  
was present at the September 5, 2007 meeting. At that time, Mr. Lichty  
understood that his money was to be used to purchase the suite and renovate it  
and then rent the unit out.  
[321] After this investment, Mr. Haney arranged for a $100,000 leveraged loan  
investment. In June of 2013, Mr. Lichty got rid of the leveraged loan.  
[322]  
Mr. Lichty received interest payments of $1,500 in 2008 and 2009 that  
were not always on time. After October 8, 2008, the payments stopped  
altogether. As indicated in cross-examination, Mr. Lichty received the first 13  
months of interest payments for a total of $19,500.  
[323] After the payments stopped, Mr. Lichty met with Daniel. Exhibit 86 –  
25C is a letter dated March 20, 2009 sent by Daniel to the Lichtys. Mr. Lichty  
does not recall how he received it. In the letter, Daniel promised to pay the  
Lichtys $5,000 monthly commencing April 3, 2009 with all money to be returned  
by December 2009.  
[
324]  
but this would be the last payment he ever received. He received a total of  
22,500 in interest payments but never received any of his principal back.  
Subsequent to the letter, on April 8, 2009, Mr. Lichty received $3,000  
$
[325]  
Accordingly, Mr. Lichty’s loss is $100,000 plus unpaid interest. As a  
result, Mr. Lichty had to look for work, but at his age, it was tough to get any  
employment.  
-
102 -  
[326]  
I find Mr. Lichty to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
1
7. ANNE COLQUHOUN  
Anne Colquhoun lives in Toronto. She has a B.Sc. and was a dietician.  
Her husband was an architect.  
[327]  
[
328]  
003 her assets consisted of (1) life insurance proceeds of $238,000, which were  
placed in a Desjardins daily interest account; (2) a Toronto home valued at  
Her husband died in 2003 and she received life insurance proceeds. In  
2
$
700,000; (3) RRSPs of $300,000; and (4) stocks in the amount of approximately  
100,000.  
$
[
329] She read the Three Buckets book authored by Daniel and met him one  
or two times. She met Daniel and David and a Najeem Rafi at the DPR office in  
005.  
2
[330]  
In 2007, she sold her Toronto home for $825,000. She bought a condo  
for $500,000 and, after helping her children, she had $150,000 left to invest. She  
wanted $50,000 to go into a life insurance vehicle which left a further $100,000 to  
invest. She decided to approach Daniel and David regarding how to invest this  
 
-
103 -  
$100,000.  
FIRST INVESTMENT – JAKOBSTETTEL INN  
[331]  
Daniel said that he had a good investment for her. She could put  
$100,000 into a limited partnership in the Jakobstettel Inn. The money was to be  
used to renovate the Inn and it would pay 18 percent interest. If she was not  
satisfied, she could sell the condo back to Daniel in one year’s time (he was the  
only person she could sell to). The money was to be used to renovate the Inn.  
There was no discussion that the money was to be used to pay any other  
investors.  
[332]  
In cross-examination, Ms. Colquhoun confirmed that Daniel told her that  
he owned the Inn. She attended at the Inn and saw renovations and stayed at  
the Inn. Daniel told her that it was guaranteed she would get her money and he  
would buy the unit after one year.  
[333]  
Exhibit 87 – 9B is a bank draft dated September 12, 2007 for $100,000  
payable to Celebrity Management International Inc. Exhibit 87 – 9C is a joint  
ownership agreement between Celebrity Management International Inc. and Ms.  
Colquhoun for $100,000 for the Bauman Suite with a term of 18 percent interest.  
The Bauman Suite was one of the suites to be renovated. The document was  
pre-witnessed but she signed and initialled it and assumes that Daniel did so as  
well. Paragraph 13 of the document refers to named beneficiaries which she  
 
-
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gave to Daniel in face-to-face meetings.  
[334]  
A year later, as of September 12, 2008, the $100,000 was owed to Ms.  
Colquhoun, as well as $18,000 in interest, for a total of $118,000. She eventually  
got $40,000 as return of capital from September 2008 to January 2009.  
[335]  
Her loss on this investment is $78,000 plus unpaid interest.  
SECOND INVESTMENT – N.Y. PARK PLAZA  
[336]  
During the meetings regarding the Jakobstettel Inn investment, Daniel  
presented another investment – the Park Plaza in New York.  
[337]  
Daniel said the Park Plaza Hotel in New York would bring 18 percent.  
She could stay there once the renovation was completed. Daniel presented it as  
an opportunity to purchase and do renovations. In cross-examination, she  
indicated that she was not aware of the exact details. Daniel said there was a  
timeline and a limited opportunity to invest in the suite so the deal had to be  
arranged quickly.  
[338]  
Ms. Colquhoun told Daniel that she didn’t have $200,000. Daniel said  
she did; she could cash in $200,000 in non-registered investments. The capital  
gain on the investment was $100,000 which would result in an additional $30,000  
additional tax. She decided to do the Plaza investment. Exhibit 87 – 9E is the  
withdrawal instructions to Manulife, which she signed on September 19, 2007.  
 
-
105 -  
Box 9 was signed by David who was her main adviser. She was later told by  
David that Daniel did not have a licence.  
[
339] Exhibit 87 – 9D is a cheque dated September 20, 2007 in the amount of  
200,000 payable to Reeve Hotels and Resorts Inc. Ms. Colquhoun testified that  
this cheque was for the Plaza investment.  
$
[
340]  
dated September 20, 2007. There were service charges of approximately  
13,000 to $14,000 on the withdrawing of approximately $214,000 of segregated  
Exhibit 87 – 9F is the confirmation notice of withdrawal from Manulife,  
$
funds. Ms. Colquhoun indicated in cross-examination that Daniel told her to cash  
the whole thing in and denies that he advised her regarding the services charges,  
but specifically she does not remember.  
[341]  
Exhibit 87 – 9I is the joint ownership agreement for the Wellington Suite  
in the Plaza dated September 20, 2007 for consideration of $200,000. The  
interest rate was 18 percent annually. She initialled the document and guessed  
that Daniel did so as well. Daniel told her the Wellington Suite was to be  
renovated and that was what her money was to be used for. There was no  
discussion that her money would be used for anything else. She signed it on  
September 27, 2007 and it was back-dated. Also it was pre-witnessed, which  
Daniel said was to save time.  
[342]  
Over the next year, Daniel told her that the renovations were ongoing  
-
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and would be finished by the fall of 2008. In cross-examination, Ms. Colquhoun  
indicated that Daniel never said the deal went through but never said it did not go  
through.  
[343] She never received any payments or return of principal on this  
investment. Her loss is $200,000 plus accrued interest.  
THIRD INVESTMENT – BAYFIELD PROPERTY  
On July 23, 2008, Ms. Colquhoun received a phone call from Daniel  
[344]  
Reeve. Daniel said he had a real estate investment in Bayfield Ontario. He had a  
list of potential investors. In cross-examination, she indicated she told Daniel that  
she could not cash in her RRSPs unless Daniel could guarantee income. She  
told Daniel she had a lot of expenses and needed $3,000 per month. Daniel said  
that he would contact his accountant and ask if it was doable. Lee-Anne Ruggle  
phoned later and said that the accountant had said yes.  
[345]  
On July 24, 2008, Daniel phoned and said he could pay $3,000 per  
th  
month on the 15 of the month. She knew there would be a large tax hit but she  
did not run the investment by her own accountant because she trusted Daniel  
and there were time pressures. She was not aware there would be tax  
consequences over and above the 30 percent withholding tax. Daniel was aware  
that her RRSPs were not preforming well and Daniel knew her financial situation  
thoroughly.  
 
-
107 -  
[346]  
Exhibit 87 – 9G is a T4RSP that indicates she withdrew $299,947.34  
and the withholding tax deducted was just under $90,000. On top of this  
withholding tax, she eventually paid an additional $30,417 in tax.  
[347]  
Exhibit 87 – 9J is an RBC bank draft dated July 30, 2008 in the amount  
of $200,000 payable to Reeve Hotels and Resorts Inc. Daniel said that a bank  
draft was required as the deal was to close on July 31, 2008.  
[348]  
Eventually, after a lot of cajoling, Ms. Colquhoun got the documentation  
on the deal on September 23, 2008. Exhibit 87 – 9K is a three-year corporate  
bond between Ms. Colquhoun and Reeve Hotels and Resorts. It is in the amount  
of $200,000 with interest payable annually at 16 percent. In cross-examination, it  
was pointed out that paragraph 1 of the document makes no mention of the  
Bayfield property. Further the document later refers to the Breadalbane Inn. Ms.  
Colquhoun indicated in cross-examination that she had not heard of Breadalbane  
until she received this document. All her discussions with Daniel were about  
Bayfield, not Breadalbane. Daniel phoned her and told her that his driver would  
deliver the document. Daniel instructed her to back-date her signature to July 30,  
2008. The document was pre-witnessed.  
[349]  
Daniel had told Ms. Colquhoun that she would get a limited partnership  
for three years and would be able to write off tax losses; this would enable her to  
recover the tax she had paid to cash in her RRSP. She signed the document in  
-
108 -  
the lobby of her building. Afterwards, she discovered that it was a bond and not a  
limited partnership.  
[350]  
She phoned Daniel about why it was a bond and not a limited  
partnership. Daniel told her that due to the problems with the liquor licence, a  
bond was needed. There was no discussion regarding using the money for any  
other purpose other than using it for the Bayfield property. Due to the success of  
her prior investments with Daniel over at least three years, she trusted him and  
believed what he told her. However she became concerned when she received  
no documents on this third investment and when she phoned, she got a variety of  
excuses.  
SUBSEQUENT EVENTS  
[351]  
Things fell apart in the fall of 2008:  
1. Regarding the first investment, the Jakobstettel Inn, on September 12,  
2
008, principal of $100,000 and interest of $18,000 was due but Ms.  
Colquhoun received no money on that date. She eventually received  
40,000 by January 2009.  
$
2
. Regarding the second investment, the N.Y. Plaza, on September 20,  
008, interest of $36,000 was due but did not come. No money was ever  
paid, either in interest or principal.  
2
 
-
109 -  
. Regarding the third investment, the Bayfield property, on September 15,  
008, the $3,000 interest was not paid. No money was ever paid, either  
3
2
in interest or principal.  
[352]  
Ms. Colquhoun believed that the Plaza had been purchased. When she  
asked about the renovations, Daniel said they were going fine. Further, Daniel  
never told her the Bayfield investment never went through. Daniel appeared  
annoyed with her when she would not do things on the spot, i.e., sign for a large  
life insurance policy.  
[353]  
At the end of September 2008, David said he was leaving DPR  
Financial and setting up a new company. Ms. Colquhoun agreed to stay with  
David for a short period of time and stayed for about six months. David told her  
that Daniel had not had a licence since early 2007. She was upset that Daniel,  
the regulatory agency, and David (if he knew) did not advise her that Daniel had  
no licence.  
[354]  
Her losses are:  
1
. On the first investment, $78,000 plus accrued interest;  
. On the second investment, $200,000 plus accrued interest; and  
. On the third investment, $200,000 plus accrued interest.  
2
3
Her total losses, therefore, amounted to $478,000 plus accrued interest.  
-
110 -  
[355]  
I find Ms. Colquhoun to be a credible witness. Her evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
18. GLEN BRUBACHER  
[356]  
Glen Brubacher is 52 years old and is a farmer with a Grade 8  
education. He has limited investment experience, mainly with mutual funds (he  
had around $60,000 in mutual funds, which aside from his house, were his only  
assets).  
[357]  
In August or September of 2006, Mr. Brubacher met Daniel at a wine  
and cheese party at the Jakobstettel Inn in St. Jacobs. Daniel introduced himself  
as a financial advisor and investor. Mr. Brubacher’s impression was that Daniel  
was a licenced financial who knew his stuff but was a bit arrogant. One to two  
weeks later, Daniel introduced Steve Haney to Mr. Brubacher as his quarterback.  
[358]  
In September of 2006, Mr. Brubacher sold the dairy division of his farm.  
After the sale, he had $400,000 to $500,000 left over. He decided to invest it with  
Daniel.  
FIRST INVESTMENT – JAKOBSTETTEL INN  
[359]  
Daniel explained that Mr. Brubacher’s money was to buy shares in the  
 
 
-
111 -  
Jakobstettel Inn. Daniel said he owned it. Daniel said he would pay 12 percent  
interest or $4,000 per month. Exhibit 89 – 6A is a cheque in the amount of  
$400,000, dated October 17, 2006, from Mr. Brubacher’s company, Glendra  
Farms, payable to Jakobstettel Inn. The agreement was tendered in cross-  
examination as Exhibit 90. The agreement is between Celebrity Management  
and the Brubachers, and provides for annual interest of 12 percent with the buyer  
buying 40 percent of the Presidential Suite of the Jakobstettel Inn.  
[360]  
After providing the cheque to Daniel, Mr. Brubacher had to wait six  
months for his first payment. He got $24,000 in April of 2007. In 2007, he  
received a total of $56,000 in interest payments.  
SECOND INVESTMENT – N.Y. PARK PLAZA  
[361]  
In April of 2007, Mr. Brubacher sold the poultry division of his farm for  
over $1 million. After payments, he had an additional $400,000 to invest. Of  
those funds, $350,000 went into mutual funds and segregated funds.  
[362]  
In August of 2007, Daniel strongly recommended that Mr. Brubacher pull  
his investments out and put the proceeds into the Plaza Hotel in New York. Mr.  
Brubacher indicated in cross-examination that he was reluctant to follow this  
advice because (1) he would have to cash in his mutual funds, and (2) this  
property was in the U.S. He did not like to deal with the U.S. with farm products.  
The Americans had abruptly halted cattle trading in in May 2003 due to mad cow  
 
-
112 -  
disease concerns. After May 2003, Mr. Brubacher preferred to just make  
Canadian sales.  
[363]  
However, Daniel indicated that he owned portions of the Plaza Hotel,  
namely some of the suites. Daniel said that Mr. Brubacher would get better  
cashflow, 18 percent, and that there was more stability in real estate, whereas  
mutual funds go up and down with the market. Under cross-examination, Mr.  
Brubacher indicated that he himself preferred real estate investments, since  
mutual funds go up and down and are prone to crashes. Daniel said he owned  
suites in the Plaza Hotel in New York. Mr. Brubacher thought he was getting  
ownership of a Plaza suite; Daniel said it was similar to the Jakobstettel  
arrangement. By this time, Mr. Brubacher was receiving consistent interest  
payments on his Jakobstettel investment. Mr. Brubacher was never told that  
Daniel did not own the suite; if that was the case, he would never have invested  
his monies with Daniel.  
[364] Further, Daniel said that the Plaza investment was low-risk, involving  
real estate and a high-end hotel frequented by celebrities.  
[365] On August 14, 2008, Mr. Brubacher made out two cheques totaling  
$350,000 to Reeve Hotels and Resorts Inc. – see Exhibit 89 – 6A.  
[366] This $350,000 was raised by cashing in his segregated funds in addition  
to the sale of his turkey quota from his farm business. Exhibit 89 – 6B indicates  
-
113 -  
that on February 6, 2007, Mr. Brubacher transferred his mutual fund investments  
to Canada Life with Steve Haney as his financial advisor. However, Mr.  
Brubacher said that it was always Daniel that advised him and managed  
everything. Exhibit 89 – 6C shows that on April 18, 2007 Mr. Brubacher  
deposited $370,000 to Canada Life which was put into mutual fund tranches of  
$200,000 and $170,000.  
[367]  
Exhibit 89 – 6D shows that the $200,000 tranche was cashed in on  
August 15, 2007. The investment had gone down by over $6,000 and after  
service charges, $185,887.37 was left over for the Plaza investment. In cross-  
examination, Mr. Brubacher indicated that he had arguments about cashing in  
this investment and paying all these fees and losses. However, he went along  
with it because he trusted Daniel. Further, Mr. Brubacher did it because of the  
promised 18 percent return and the fact that real estate was more stable.  
Accordingly, he felt the Plaza was a better investment than the limited gains he  
was seeing in the Canada Life statement of April 18, 2007 – see Exhibit 89 –  
6C.  
[
368] Mr. Brubacher did not get the Plaza agreement right away. On  
September 1, 2007 he received the agreement from Daniel himself – see Exhibit  
9 – 6E. The agreement is dated September 1, 2007 and is between Mr.  
Brubacher and his wife and Reeve Hotels and Resorts Inc. in the amount of  
360,000. It provides for 18 percent annual interest with an ownership interest in  
8
$
-
114 -  
the Wellington Suite at the Plaza. Daniel said that the Wellington Suite was one  
of the suites he owned. Mr. Brubacher thought the money was going to buy the  
suites. Daniel said he owned several suites. Mr. Brubacher pointed out that the  
document was for $360,000 and Mr. Brubacher had only paid $350,000. Daniel  
told him not to worry about it and said, “Let’s move forward.”  
[369]  
In cross-examination, Mr. Brubacher denied the suggestion that Daniel  
was discussing a future project to buy the suite. Mr. Brubacher indicated Daniel  
led him to believe Daniel was purchasing the suite and that he owned several  
suites.  
[370]  
Daniel stated that the return was 18 percent due to the high-end,  
celebrity nature of the hotel. Clause 3 of the agreement provided that the 18  
percent was to be paid monthly in the amount of $5,400, as orally agreed to by  
Daniel. The document was initialled by the Brubachers. Mr. Brubacher assumes  
it was initialled by Daniel as it was Daniel who gave him the document.  
SUBSEQUENT EVENTS  
[371]  
Mr. Brubacher got interest payments until November of 2008 and then  
they stopped. After November 2008, Daniel kept reassuring him that everything  
was okay.  
[372] Meanwhile, on June 12, 2008, Mr. Brubacher and his wife sent Daniel a  
letter requesting termination of the Plaza investment and the return of the  
 
-
115 -  
$360,000 plus interest by September 1, 2008 – see Exhibit 89 – 6F. Mr.  
Brubacher thinks he hand-delivered this letter to Daniel. Daniel said it was not  
necessary for Daniel to sign it; he told Mr. Brubacher to send it and Daniel would  
honour it. Daniel said these things in June 2008.  
[373]  
Mr. Brubacher heard rumours that Jakobstettel had problems. He met  
Daniel at a restaurant and Daniel told him not to worry; he would get his money.  
On a Sunday afternoon, Daniel gave Mr. Brubacher two cheques: (1) a cheque  
for $50,000 from Jakobstettel Inn dated October 24, 2008; and (2) a cheque for  
$100,000 from Jakobstettel Inn dated November 7, 2008 – see Exhibit 89 – 6G.  
The $50,000 cheque was returned NSF and Mr. Brubacher did not attempt to  
cash the other one. Daniel Reeve also provided him with payment schedules  
dated November 21, 2008 providing for the return of the Plaza investment of  
$
360,000 in installments in November and December of 2008, as well as the  
return of the Jakobstettel investment of $400,000 in installments in December of  
008 – see Exhibits 89 – 6H and 93. None of these payments were made.  
2
[374]  
In cross-examination, Mr. Brubacher indicated that he and his wife also  
took out leveraged loans in excess of $1 million to invest in mutual funds. He also  
took out a life insurance policy in excess of $1 million with Universal Life. In re-  
examination, Mr. Brubacher indicated these investments were Daniel’s idea.  
[375]  
Exhibits 91 and 92, introduced in cross-examination, showed that  
-
116 -  
interest payments of $111,700 and $86,400 were made on the Jakobstettel and  
Plaza investments respectively. The final payment regarding the Jakobstettel of  
$10,000 was made on January 3, 2009, and the final payment regarding the  
Plaza was made in December 2008.  
[
376] No payments were made on the principal amounts owing on either  
investment. Mr. Brubacher’s total losses were $400,000 on the Jakobstettel  
investment made in 2006 before the January 2007 date outlined in the  
(
indictment) and $350,000 on the Plaza investment for a total loss of $750,000.  
Only $350,000 of this loss can be attributed to the time period set out in the  
indictment.  
[377]  
I find Mr. Brubacher to be a credible witness. His evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
19. CLAUDETTE TAYLOR  
[378]  
Claudette Taylor has been married for 38 years. In 2007, she lived in  
Georgetown. Her 2007 assets consisted of ownership of two farms and  
machinery, while she and her husband had $25,000 each in RRSPs with Sun  
Life. She had no experience in investing.  
 
-
117 -  
[379]  
In 2007, she sold one of the farms. Her friends, the Austins,  
recommended their financial advisor, Steve Haney, to her. In September or  
October of 2007, she and her husband met with Mr. Haney in Mississauga.  
[380]  
At the first meeting with Mr. Haney, the investment philosophies of DPR  
Financial were discussed. This was new territory for her. In cross-examination, it  
was brought out that Mr. Haney had told them that their investments would be  
watched closely and checked regularly. Mr. Haney also told them that Daniel was  
looking for a large sum of money for private equity investments.  
[381]  
A second meeting took place at the home of Ms. Taylor on October 31,  
2007, attended by herself, her husband, Mr. Haney and Daniel. Ms. Taylor’s  
impression of Daniel was that he was smart and knew what he was talking about.  
Daniel provided more in-depth information about DPR Financial’s investment  
philosophy and referred to the books he had authored such as The Three  
Buckets and Millionaire Mortgage. Daniel confirmed that he was looking for large  
sums of money to be used for renovations in real estate investments in the New  
York Plaza and the Jakobstettel Inn. At these meetings Ms. Taylor made it clear  
that they had $800,000 but needed access to the money to pay capital gains  
taxes over five years.  
[382] At this second meeting, Daniel had paperwork for these private equity  
investments. They discussed 18 percent interest. Ms. Taylor wondered how  
-
118 -  
Daniel could pay 18 percent when most people were paying 6 to 8 percent.  
Daniel said that there were companies out there who needed money to finish  
their businesses and were willing to pay a higher rate. Ms. Taylor asked Daniel  
how safe the money in the U.S. was and he told her it was safe. The money was  
going to Reeve Hotels and Resorts and then into the U.S. She decided to sign  
the paperwork and write the cheques.  
FIRST INVESTMENT – JAKOBSTETTEL INN  
[383]  
Exhibit 94 – 39A is a cheque dated October 31, 2007 made out to  
Celebrity Management for $300,000. The money was for renovations at the  
Jakobstettel Inn. Daniel told Ms. Taylor he wanted to update the Inn so that it  
could accommodate weddings. There was no other discussion of any other use  
for the money. Daniel gave the impression that he owned Jakobstettel Inn. He  
used expressions such as, “We are having weddings,” and “We are doing an  
expansion.” In cross-examination, it was conceded that Daniel never specifically  
said he owned anything.  
[384]  
Exhibit 94 – 3C is the joint ownership agreement between “Celebrity  
Management carrying on business as Jakobstettel Inn” and the Taylors, dated  
November 1, 2007. The consideration was for $300,000 with an interest rate of  
18 percent and the joint ownership was in the Cress Suite (paragraph 1 of the  
documents specifies the Taylors owned one tenth of the suite). The document  
has no maturity date but in cross-examination, Ms. Taylor indicated it was  
 
-
119 -  
understood between the parties that this was a loan for a short two-year term.  
Paragraph 34 at page 7 of the document specifies that the 18 percent interest  
totals $54,000 annually and would be paid out at $4,500 per month.  
[385]  
The Taylors had not heard of the suite name before that night and  
Daniel breezed over it. The document is witnessed by Annie Smith, who was not  
there; Ms. Taylor indicates that signature was not done in her presence.  
Basically, the $300,000 was a loan to the Jakobstettel Inn. Daniel said they could  
spend a week there if they wished and they presumed this meant they could stay  
at the Cress Suite.  
SECOND INVESTMENT – N.Y. PARK PLAZA  
[386]  
Ms. Taylor also decided to invest in the Plaza Hotel at the same meeting  
when the Jakobstettel Inn loan investment was made. Exhibit 94 – 3B is a  
cheque made out to Reeve Hotels and Resorts Inc. for $400,000, dated October  
31, 2007.  
[387]  
Exhibit 94 – 3D is the joint ownership agreement regarding the Plaza  
Hotel between Reeve Hotels and Resorts Inc. and the Taylors, also dated  
November 1, 2007. It is for consideration of $400,000 with an interest rate of 18  
percent and is in regard to the Wellington Suite. There is no maturity date and in  
cross-examination, Ms. Taylor indicated that they understood they could pull out  
at any time. Paragraph 3 of the document provides for interest payments of  
 
-
120 -  
$72,000 annually to be paid in monthly installments of $6,000. Paragraph 3 also  
stipulates that Reeve Hotels is the only buyer on resale and must refund principal  
and interest after 60 days’ notice. Mr. Haney was at the meeting and witnessed  
the document.  
[388]  
Daniel told Ms. Taylor that the agreement was a loan for renovations to  
the Park Plaza Hotel that the hotel wanted to finish. The money would go to  
Reeve Hotels and Resorts Inc. and then to the Plaza. Daniel didn’t explain the  
connection. The suite name of Wellington was not really explained and she  
wondered whether that was the suite to be renovated. There was no discussion  
that the money would be used for anything other than the renovations for the  
Park Plaza. Daniel said that, if they want to stay there, to let him know and he  
would arrange it. Mr. Haney was there but he did not talk about the agreements.  
Earlier he had talked about life insurance and segregated funds.  
[389]  
Daniel gave Ms. Taylor books he had authored: Butterfly Effect,  
Millionaire in You. She read them over time. Mr. Haney did some investments  
with segregated funds with the Taylors but Daniel was not part of that.  
SUBSEQUENT EVENTS  
[390]  
The interest on the two agreements was to be paid monthly starting  
December of 2007 but payments did not come on time; they were sporadic. They  
contacted Daniel by phone and he said it was a software problem. She made it  
 
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clear to Daniel that payments were not coming in regularly, especially in the fall  
of 2008. At a meeting at the Jakobstettel, she provided him with a spreadsheet  
regarding payments and non-payments. Daniel made copies and he said his staff  
would look into it.  
[391]  
The spreadsheets were entered in as Exhibits 95A (Jakobstettel Inn  
interest payments) and 95B (Plaza interest payments). Regarding the  
Jakobstettel, there was a $13,500 shortfall by December 2008. This was covered  
by a $22,500 lump sum payment in October 2008. By the end of 2008, there was  
a $9,000 overpayment for the year. This covered $9,000 that owed for January  
and February of 2009. After this date, nothing was paid, so the loss on the  
Jakobstettel investment is the principal of $300,000 and accrued interest.  
Regarding the Plaza investment, at the end of 2008, only $39,000 out of $78,000  
owing had been paid (a $39,000 shortfall). There were two $6,000 payments to  
be made in January and February of 2009 which would make $51,000 to be paid  
by the end of February. Twenty-one thousand dollars in interest was paid in  
January of 2009. Accordingly, $30,000 interest was owing in interest by the end  
of February 2009. No further payments were made and the principal was never  
repaid. The loss on the Plaza investment is therefore $400,000 plus accrued  
interest.  
[392] The Taylors also had leveraged loans totalling $550,000 which were  
invested in segregated funds with Canada Life (which plunged in 2008 and took  
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a year to recover) and a life insurance policy arranged by Mr. Haney. In August  
008, they received a letter that Mr. Haney was leaving DPR Financial and that  
David was looking after their investments with Canada Life.  
2
[393]  
Between August and October of 2008, the Taylors had no contact with  
David. In October of 2008, David told them he was leaving DPR by way of a  
letter. David told them over the phone that DPR was a mess and that no one was  
looking after their investments. In cross-examination, Ms. Taylor indicated that  
David didn’t say specifically that DPR was in a mess but that he had no idea who  
was looking after their investments.  
[394]  
The Taylors met with David on November 30, 2008 at Davlyn Financial  
and made him their agent of record regarding their investments. They asked  
David about their private investments with Daniel. David told them to send Daniel  
an e-mail and tell him they wanted their money back, and/or to contact Daniel’s  
lawyer, Ron Mark. The Taylors were getting worried. They had been told their  
investments would be monitored by DPR Financial and they would be contacted  
if their investments went down about 10 percent. This was their first meeting with  
David and their segregated funds were down about a third of their value. In  
cross-examination, Ms. Taylor indicated that David never told them he was  
president of DPR Financial.  
[395]  
On November 30, 2008, they met with their lawyer. They took no action  
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but sent Daniel an email dated December 1, 2008. This email appears as Exhibit  
4 – 39E. It indicates that $30,500 in interest payments is owing on their  
9
investments and they require the money to pay capital gains taxes to Canada  
Revenue Agency, as was discussed previously. The email concludes that after  
receiving legal advice, they are seeking the return of their capital of $700,000  
immediately. In cross-examination, Ms. Taylor indicated that the last payment at  
that time for the Jakobstettel agreement had been on November 4, 2008 and the  
last monthly payment on the Plaza agreement had been in August 2008. In  
cross-examination, Ms. Taylor indicated that they had received $5.7 million on  
the sale of their farm and had to pay capital gains tax of $70,000 to $100,000 for  
five years.  
[396]  
On December 10 or 11, 2008, Ms. Taylor met with Daniel at Benjamin’s  
Restaurant. Daniel indicated that there were people who had lost their jobs and  
needed their money and his payment to them had exhausted his resources.  
Daniel stated that, by early January, he could give $100,000 back.  
[397]  
Subsequently, on February 11, 2009, Daniel came to the house and told  
the Taylors he would pay back the money. He agreed to pay $10,000 every  
Friday and lump sums periodically. Daniel indicated that things were looking up;  
he was hiring other assistants and had other investors. He told them not to panic.  
[398]  
The Taylors received no other payments ever. In April 2009, they met  
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Daniel at a restaurant. Daniel admitted that there were problems but asked them  
to be patient as he was trying to get their money back. He told them that if they  
went to court, they would get nothing. In cross-examination, Ms. Taylor indicated  
that they felt that they had no other choice but to try to work with him. Daniel  
confirmed that there were a number of upset clients.  
[399]  
In April 2009, a notice was posted on the Jakobstettel Inn that it was  
closed. The Taylors thereafter eventually went to the police and contacted  
Constable De Boer.  
[400]  
The loss on the two investments is their entire capital of $700,000,  
which was paid to enter into the two agreements, plus unpaid accrued interest.  
The Taylors were very stressed over what happened. They do not trust anyone  
anymore and this has affected the way they live.  
[401]  
I find Ms. Taylor to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
2
0. PETER STEENBERGEN  
Peter Steenbergen has been a farmer since 1973 and lives in Drayton,  
Ontario. In 2006, he had some investing experience with mutual funds,  
[402]  
 
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segregated funds and RRSPs, and had a financial advisor named Tony Mensch.  
[403]  
Mr. Steenbergen spoke to an Andy Martin who talked about DPR  
Financial and Daniel Reeve. Mr. Steenbergen came to the conclusion that his  
investments were doing worse than the investments of DPR Financial‘s clients.  
[404]  
Accordingly, in October of 2006, Mr. Steenbergen attended a DPR  
Financial presentation at the Jakobstettel Inn. Daniel made the presentation and  
talked about the Three Buckets book and leveraged loans. Daniel said that funds  
were monitored daily and it sounded like they were doing a really good job.  
[405]  
In November of 2006, after thinking about it, Mr. Steenbergen  
transferred his portfolio to DPR Financial. Both Steve Haney and Daniel were  
present at the Jakobstettel Inn when the transfer occurred. Mr. Haney’s name  
was on the paperwork. In cross-examination, Mr. Steenbergen indicated that, in  
the first year, his investments did well.  
[406]  
In early 2008, Daniel phoned Mr. Steenbergen and told him that he had  
a good investment opportunity and asked if Mr. Steenbergen would be willing to  
cash in his investments to invest in a building.  
[407]  
On January 6 or 7, 2008, Mr. Steenbergen attended a meeting at  
Jakobstettel Inn with just Daniel. Daniel said he had a good offer which would do  
better than Mr. Steenbergen’s current investments. Daniel said he was building a  
new building—the Millionaire Mortgage Building—and was starting a new  
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business to invest in mortgages. Mr. Steenbergen felt special for being chosen  
for this opportunity.  
[408]  
Daniel said Mr. Steenbergen should cash in his mutual funds of  
$259,000 which was his whole portfolio, except his RRSPs. Daniel said there  
would be a $10,000 penalty for withdrawing the mutual funds but Daniel would  
compensate him by giving him 25 percent interest on the investment.  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE  
[409]  
Exhibit 96 – 36E is a bank draft (Daniel wanted a bank draft) in the  
amount of $249,437.90, dated January 16, 2008, which was made out to  
Millionaire Mortgage Inc. by Mr. Steenbergen. The money was raised from the  
proceeds gained from cashing in his mutual funds – see Exhibit 97.  
[410]  
Exhibit 96 – 36F is an agreement between Millionaire Mortgage Inc.  
and Peter Steenbergen, purportedly signed on January 16, 2008, for  
consideration of $249,437.90, paying 25 percent interest with a maturity date of  
September 1, 2008, at which time the original deposit and interest were to be  
paid. In cross-examination. Mr. Steenbergen indicated, that although the  
agreement has no specifics as to how the money was to be used, it was his  
understanding that the money was for the building and anything else to get the  
new business running over the next eight months. The document was signed a  
few weeks after January 16, 2008 as Daniel did not have the document ready at  
 
-
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the time of the meeting.  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE  
[411]  
Mr. Steenbergen had the idea that he would like to do two $100,000  
investments for his children, Ken and Lisa. He borrowed $160,000 against his  
line of credit and they had $40,000. The money was to be used to get the  
Millionaire Mortgage building built and to get the business going. There was no  
discussion about the money going anywhere else. There was no discussion  
about the money going to Cheryl Reeve or to pay for the expenses of DPR  
Financial. Mr. Steenbergen does not recall what he told Daniel but he would have  
told Daniel that he was helping out his children and assumed that he told Daniel  
where the money was coming from.  
[412]  
Exhibit 96 – 36A is a bank draft for $200,000dated January 8, 2008 and  
payable to Millionaire Mortgage Inc. for the investment for Mr. Steenbergen’s  
children. Exhibits 96 – 36C and 36D are similar agreements of $100,000 each  
with interest payable at 18 percent with the deposit and interest to be paid on  
August 31, 2008. One of the agreements is between Millionaire Mortgage Inc.  
and Ken Steenbergen and the other agreement is between Millionaire Mortgage  
Inc. and Lisa Steenbergen. They both purport to be signed on January 8, 2008  
but one of the documents was in fact not signed until a year later in early 2009.  
 
-
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THIRD INVESTMENT – N.Y. PARK PLAZA  
[413]  
In June of 2008, Daniel called Mr. Steenbergen and suggested he cash  
in his RRSPs to invest in a land investment in New York. When Daniel was  
asked about taxes to be paid upon withdrawal, Daniel said that the renovations  
would generate tax credits. Daniel took Mr. Steenbergen out to lunch to discuss  
this investment. Daniel stated that he was buying a hotel in New York and was  
completing the same concept as the Jakobstettel Inn. In cross-examination, Mr.  
Steenbergen indicated that he had been at the Jakobstettel Inn. There was no  
discussion of risk. Daniel stated that he had bus tours in Niagara for clients.  
[414]  
Mr. Steenbergen decided to withdraw his RRSPs. He cashed in $75,000  
and after $25,000 in withholding tax was deducted, he had $50,000 left over.  
Exhibit 96 – 36G is a bank draft, dated June 27, 2008, payable to Reeve Hotels  
and Resorts Inc. Mr. Steenbergen assumed that this was the company that  
owned the Jakobstettel Inn and the hotel in New York.  
[415]  
Mr. Steenbergen did not receive any documentation right away; it was a  
challenge to get it. In January of 2009, he finally got Exhibit 96 – 36H, which is  
an agreement between Reeve Hotels and Janice and Peter Steenbergen for  
$
50,000 with an interest rate of 15 percent payable annually commencing June  
7, 2009 and maturing June 27, 2011. Mr. Steenbergen indicated the agreement  
2
was supposed to be for five years. It was signed by Daniel and the Steenbergens  
and back-dated to June 27, 2008. In cross-examination, it was pointed out that  
 
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paragraph 1 of the agreement indicated that the 15 percent interest was to be  
paid on corporate debt secured against Jakobstettel property and the principal  
was to be returned on the maturity date. The money was to be used for  
renovations for a hotel in New York. Mr. Steenbergen indicated in cross-  
examination that Daniel never named the hotel. There were no discussions that  
the monies were to be paid to Ms. Reeve or to be used to pay general expenses  
of DPR Financial Inc.  
SUBSEQUENT EVENTS  
[416]  
With the three investments, Mr. Steenbergen had invested $250,000 (he  
still owed $200,000 for the leverage loans initially entered into in order to  
purchase the mutual funds that he had cashed in), plus $200,000 (he still owed  
$
160,000 on his line of credit), plus $50,000, for a total of $500,000. His debt was  
200,000 for the leveraged loan and $160,000 from the line of credit for a total  
$
debt load of $360,000.  
[417]  
Mr. Steenbergen called Daniel before August 31, 2008; he was buying a  
house on September 1, 2008 and needed his money. Daniel told him over the  
phone that someone had made a mistake and had re-invested his money by  
mistake and that Mr. Steenbergen had to wait for his money.  
[418]  
Daniel met Mr. Steenbergen in January of 2009 in a restaurant in order  
to sign the documents as previously outlined. Daniel asked Mr. Steenbergen  
 
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what the rush was as Mr. Steenbergen was getting 25 percent. In cross-  
examination, Mr. Steenbergen indicated that Daniel mentioned a hotel in Fergus.  
[419]  
After this restaurant meeting, Daniel was hard to get hold of. Mr.  
Steenbergen finally secured a meeting with Daniel and asked him when he was  
going to get paid. Daniel provided him with a schedule of payments. It appears  
as Exhibit 96 – 36I and is dated January 21, 2009. Daniel printed the letter out  
after preparing it and gave it to Mr. Steenbergen. It outlines payments from  
February 6, 2009 until July 15, 2009 at a rate of $10,000 per week escalating to  
$50,000 per week. Mr. Steenbergen never received anything.  
[420]  
In cross-examination, Mr. Steenbergen indicated that in February or  
March of 2009, he went to the Millionaire Mortgage premises in Waterloo. The  
doors were locked.  
[421] No payments were ever made either on principal or interest on the three  
agreements. The loss to the Steenbergens is $500,000 plus accrued interest.  
[422] Currently, of his initial $360,000 debt load, Mr. Steenbergen has paid a  
little more than half off.  
[423]  
I find Mr. Steenbergen to be a credible witness. His evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
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21. MARINA OGNJANOVSKI  
[424]  
Marina Ognjanovski has a high school education and works as an  
administrative assistant. She has minimal investment experience. Her husband  
died on November 16, 2006 and she inherited $2 million from a life insurance  
policy. Her only other asset was her house which had a mortgage.  
[425]  
In February of 2008 Ms. Ognjanovski was introduced to Daniel Reeve  
by her financial advisor Chris Bendo. In cross-examination, Ms. Ognjanovski  
indicated that Mr. Bendo was working for Daniel and had his own business as  
well. Daniel told her he had an investment that was risk free and would pay 16  
percent. Daniel also indicated that she could withdraw her money at any time. In  
cross-examination, Ms. Ognjanovski indicated that she told Daniel that she did  
not want to lose the money because it was eventually to go to her children.  
Daniel told her not to worry and that she would make good money on her  
investment.  
[426]  
Daniel told her that she could invest $400,000 in the Jakobstettel Inn  
and would get partial ownership. She made out two cheques to Celebrity  
Management in the total amount of $400,000 – see Exhibits 98 – 31A and 31B.  
[427]  
Ms. Ognjanovski got the contract on March 4, 2008. It appears as  
Exhibit 99 and is between Celebrity Management and Marina Ognjanovski in the  
amount of $400,000 paying 16 percent interest (stipulated as $7,000 monthly)  
 
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and maturing in March of 2010. In cross-examination, it was pointed out that 16  
percent annually works out to $64,000 total interest per year or $5,300 per  
month. Exhibit 98 – 31D is a letter written by Ms. Ognjanovski which indicates  
that part of the monthly payment was repayment of principal. The contract also  
stipulates that she owes four-tenths of a suite but it is not named on the title page  
of the document. She understood that Daniel was the Chief Executive Officer of  
Celebrity Management. The document was signed on March 4, 2008 and  
witnessed by Mr. Bendo who was there at the time of signing.  
[428]  
Ms. Ognjanovski testified in chief that she received nine months of  
payments of $7,000 each. However in cross-examination and pursuant to her  
letter to Daniel, dated February 17, 2009 (see Exhibit 98 – 31D), she in fact  
received ten monthly payments of $7,000. The payments were always late but  
she received them in the month they were due.  
[
429] Finally, in January of 2009, Ms. Ognjanovski did not receive any  
payment. She called Mr. Bendo who called Daniel. Daniel called in February of  
009 and told her that that the money would be deposited in her bank and she  
2
should check. She checked and no money was there. Accordingly she prepared  
the Exhibit 98 – 31D letter with Mr. Bendo’s help and requested the return of her  
investment within 30 days. As of the date of the letter, February 17, 2009,  
$368,333.30 was still owed to her.  
-
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[430]  
Ms. Ognjanovski required the $7,000 per month to live and pay bills.  
Daniel had told her that her money was to be invested in the Jakobstettel Inn and  
that she had partial ownership. There was no discussion of her money being  
used for any other purpose. Daniel had said the investment was risk-free and  
guaranteed and that she could pull out her money any time. Daniel further had  
said that the Jakobstettel Inn was worth $10 million and Mr. Bendo had said that  
there was only $2 million in debt. Mr. Bendo had been supportive of the  
investment.  
[431]  
In addition to the private investment with Daniel, Ms. Ognjanovski  
invested $800,000 with David. Of the $2 million she had received in life  
insurance, $1.3 million had been put in the bank after paying bills. Another  
$400,000 was invested with Daniel as described above and $800,000 was  
invested with David in segregated funds. She just wanted the interest as the  
money was for her children. However, when Daniel stopped making the $7,000  
interest payments, she started taking money out of her other investments. In the  
fall of 2008, David told her he was leaving DPR Financial and she transferred her  
investments to David’s new firm, Davlyn Financial. She is still with David.  
[432] In the spring of 2009, she sued Daniel for the $400,000 minus the  
payments she had made.  
[433]  
Her loss is $368,333.30.  
-
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[434]  
I find Ms. Ognjanovski to be a credible witness. Her evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
22. WILMA JORDAN  
[435]  
Wilma Jordan is the mother of Karen Gingrich who worked for DPR  
Financial in the Cambridge office until she quit in 2008. Ms. Jordan has no  
investment experience.  
[436] In 2007, Ms. Jordan had an approximately 20-year relationship with  
Cheryl Reeve and a ten-year financial relationship with Daniel.  
[437] Ms. Jordan’s husband passed away in 2006 and she inherited her  
husband’s RRSP.  
[438]  
In early 2007, Daniel went to Ms. Jordan’s home and talked her into  
investing in the Smith Room at the Jakobstettel Inn. She had received her  
RRSPs from her husband and paid the income tax when she cashed it in.  
[439]  
Ms. Jordan decided to do the Jakobstettel Inn investment. Exhibits 21A  
and 21B are two cheques made out to Celebrity Management Inc. or Corp.,  
dated January 29, 2007 and February 1, 2007, in the amount of $96,000 by  
Wilma Jordan.  
 
-
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[440]  
Exhibit 21C is a joint ownership agreement in the amount of $100,000  
between Celebrity Management International Inc. and Wilma Jordan dated  
February 2, 2007. Paragraph 34 at page 7 indicates that Ms. Jordan was to be  
paid 12 percent interest in monthly instalments of $1,000. The document was  
signed on or about February 2, 2007. In cross-examination, Ms. Jordan testified  
that she was obtaining partial ownership of the Smith Suite and that Daniel  
bumped up the amount to $100,000 but she does not remember why.  
[441]  
In May of 2007 Ms. Jordan received her first payment in the amount of  
$3,000. Ms. Jordan kept a record of the interest payments on a spreadsheet –  
see Exhibit 101. It was brought out in cross-examination that from May 9, 2007  
to January of 2008, Wilma received $11,000 in interest. From March 5, 2008 until  
January 5, 2009, Wilma received $12,000 in interest for a total of $23,000 in  
interest payments.  
[442] From February 2009 onwards, Ms. Jordan received no further interest  
payments. She never received any of her principal back.  
[443]  
On October 7 of 2008, Ms. Jordan gave 30 days’ written notice to Daniel  
that she wanted her investment returned with interest by November 7, 2008. In  
cross-examination, Ms. Jordan indicated that she does not remember why she  
wanted her money back but that she had told Daniel orally on September 30,  
2008 that she wanted her money out. Ms. Gingrich, her daughter, had resigned  
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at that point. Up until 2009, all of Ms. Jordan’s investments with Daniel were  
profitable. No payments after 2009 were a gross deviation from the past.  
[444]  
In 2007, David took over Ms. Jordan’s portfolio because Daniel was too  
busy with his hotel business. She did not meet David until April 2008. In October  
or November 2008, she transferred her investments from David to another  
financial advisor as she was dissatisfied with David.  
[445] In August 2008, Daniel wanted another $50,000 from Ms. Jordan but  
she did not provide this money.  
[
446]  
447]  
Ms. Jordan’s loss is $96,000 plus accrued interest.  
[
I find Ms. Jordan to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
23. CHIN TAN  
[448]  
Chin Tan is a research scientist with a Ph.D. who works for Agriculture  
Canada. In 2007 to 2008, he had a medium knowledge of stock and mutual fund  
investing.  
[449] In August of 2007, Mr. Tan and his wife attended a seminar given by  
Daniel Reeve. Daniel’s strategies appealed to him and at some point Daniel gave  
 
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him a copy of the Three Buckets and Mr. Tan read it.  
[450]  
Mr. Tan made an appointment at the Millionaire building in Windsor. The  
meeting was on September 14, 2007 and was attended by David Reeve and Mr.  
Tan and his wife. The notes of the meeting were introduced by the defence in  
cross-examination as Exhibit 103. They discussed segregated funds and David  
said his brother Daniel had a fixed investment in the New York Plaza that they  
might be interested in. The Tans had paid off their mortgage and had a $250,000  
line of credit. In cross-examination it was brought out that David said that  
Daniel’s investments had higher interest rates than the average investment.  
[451]  
David then left the room and Daniel came in. Daniel indicated that he  
had investments in the New York Plaza and the per-unit cost was $100,000 and  
Daniel had a couple left. In cross-examination, Mr. Tan was referred to his  
statement and indicated that Daniel was offering 18 percent on the Plaza  
investment. Further, Mr. Tan cannot say that Daniel said he owned the units but  
Mr. Tan assumed that he did. There was no discussion what the money invested  
was to be used for. Mr. Tan understood that the money was to be invested in the  
Plaza.  
[
452]  
They indicate that on the $200,000 investment at 18 percent Mr. Tan would earn  
36,000, and after paying the $12,500 interest on his line of credit, his profit  
Exhibit 102 – 38A is notes written by Daniel dated September 17, 2007.  
$
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would be $23,500 which would be tax-deductible.  
[453]  
Exhibit 102 – 3B is a cheque dated September 17, 2007 (the same  
date as Daniel’s notes) in the amount of $200,000 payable to Celebrity  
Management International Inc. He gave the cheque to Daniel who had told him to  
make out the cheque to Celebrity Management International Inc. In cross-  
examination, Mr. Tan indicated that the $200,000 came from his line of credit  
secured with his family home.  
[454]  
Exhibit 102 – 38D is a joint ownership agreement regarding the  
Wellington Suite in the Plaza, between Reeve Hotels and Resorts Inc. and Chun  
Tan (Mr. Tan’s wife) in the amount of $200,000. In cross-examination it was  
brought out that Mr. Tan was the primary beneficiary and paragraph 3 of the  
document stipulated an annual interest of 18 percent to be deposited in the  
amount of $36,000. The agreement was in Ms. Tan’s name as she had no  
income and would be taxed at a lower rate. Mr. Tan assumed that Daniel owned  
Reeve Hotels and Resorts which in turn owned hotels and property and  
accordingly that it was Daniel and his company that were responsible to Mr. Tan.  
Further, the Tans think Daniel signed that agreement on September 14, 2007.  
Present at the signing were Daniel and the Tans. Mr. Tan thought that Daniel  
already owned the Plaza suite.  
[455]  
Approximately a year later, near September 14, 2008. Mr. Tan phoned  
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Daniel, who said that there would be no problem and $36,000 would be  
deposited in Mr. Tan’s account on September 14, 2008.  
[456]  
However the deposit was not made on September 14, 2008. In cross-  
examination, Mr. Tan indicated that between September 14 and 21, 2008 he  
phoned Daniel to tell him the deposit was not there and Daniel acknowledged it  
was owing. Mr. Tan was in Taiwan between September 21 and October 11, 2007  
and no deposit was made.  
[457]  
Mr. Tan phoned Daniel and got an appointment on October 20, 2008 at  
the DPR office in the Millionaire Building in Windsor. Mr. Tan and his wife met  
with Daniel. Daniel provided him with a $37,000 cheque and Daniel said the  
$1,000 extra was due to the delay. There were no discussions regarding Plaza  
ownership.  
[458]  
The $37,000 cheque, dated October 20, 2008, appears as Exhibit 102  
–
38E. Mr. Tan’s wife deposited it right away. She later got a call from the bank.  
The cheque bounced and was marked account unknown or invalid. Mr. Tan  
phoned Daniel and asked why the cheque was invalid. Daniel gave an excuse:  
they were buying equipment and there was not enough money in the account.  
[459]  
On October 22, 2008 a direct deposit of $10,000 was made into Mr.  
Tan’s account – see Exhibit 102 – 38F. On November 3, a further $27,000 was  
deposited in Mr. Tan’s account for a total of $37,000.  
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[460]  
On December 4, 2008, Mr. Tan wrote Daniel a letter and handed it to  
Daniel during an appointment with Daniel at the Jakobstettel attended by Daniel  
and the Tans. The letter asks for the return of the Tans’ $200,000 within 60 days  
–
see Exhibit 102 – 38H. At that meeting. Mr. Tan asked Daniel how the profit  
was at the Plaza. Daniel replied that he wished more people had invested in the  
Plaza. Mr. Tan did not understand the details, but the Plaza was making money.  
[461]  
On December 19, 2008. Mr. Tan read in the Windsor Star that the  
Millionaire Building was being closed down. He called Daniel and a meeting was  
set for December 19 at Starbucks. Daniel was asked where Mr. Tan’s investment  
was. Daniel told him that he should see money in his account on January 17,  
2009.  
[462]  
Mr. Tan received nothing on January 17, 2009. Daniel was now  
becoming hard to get a hold of. Daniel told him eventually that he would get his  
money any Friday.  
[463]  
On February 20, 2009, Mr. Tan sent Lee-Anne Ruggle an email  
demanding his money – see Exhibit 102 – 38I. Daniel told him that he would  
meet with Mr. Tan on March 19 and bring him a cheque. Shortly before the  
meeting, Daniel called to cancel; Daniel did not have the money.  
[464] Regarding the $400,000 requested for segregated funds (see Exhibit  
38A notes of Daniel and Exhibit 103 notes of David), Mr. Tan only received  
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$200,000 leveraged loans to be invested in segregated funds. In the fall of 2008,  
Mr. Tan met with David who told him that he was leaving DPR to set up his own  
firm, Davlyn Financial.  
[465]  
In cross-examination, Mr. Tan testified that at some point he told David  
about his problems with his private investment with Daniel. David told him that he  
was a victim also. Mr. Tan was at Davlyn for a couple of months but then  
transferred to another financial advisor as he did not trust David anymore.  
[466] Mr. Tan went to the police after reading newspaper articles and doing  
Internet searches and reading blogs.  
[467] In cross-examination, Mr. Tan indicated that his last contact with Daniel  
was on March 31, 2009 when a schedule of payments was offered.  
[468] No payment of principal on Mr. Tan’s investment was ever made. His  
loss is $200,000 plus unpaid accrued interest.  
[469]  
I find Mr. Tan to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
24. THERESA KAUP  
[470]  
Theresa Kaup is a retired school teacher. Her husband died in 2005 and  
 
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she has five children. In 2007 to 2008, she had moderate investment experience  
dealing mainly with banks in mutual funds and RRSPs.  
[471]  
In 2007, she supported herself with her teacher’s salary plus income  
from investments and rentals from farm properties. In 2007 to 2008, she had  
approximately $104,000 in RRSPs and some mutual funds with DPR Financial in  
the amount of $300,000.  
[472]  
In 2005, after her husband’s death, she was looking for a financial  
advisor due to the fact that her husband had left her some RRSPs. Her friends  
recommended David Reeve and she contacted him. She liked David’s Three  
Buckets approach and the reset options in segregated funds. Accordingly, she  
transferred her investments to David, after meeting with David several times –  
see Exhibit 105. She met Daniel briefly and shook his hand but that was it  
initially.  
[473]  
In June of 2008, Lee-Anne Ruggle phoned her and set up an  
appointment with David and Barb Menard at the DPR Financial offices. She was  
told her RRSPs were losing money and the possibility of collapsing them was  
discussed. Ms. Kaup did not agree to collapsing her RRSP (due to concerns  
about taxation) at that time and as indicated in her cross-examination, a reset  
was done instead – see Exhibit 106.  
[474]  
In July of 2008, Lee-Anne Ruggle phoned again. She had a time-  
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sensitive investment proposal. An appointment was set up for Ms. Kaup to meet  
Daniel on July 10, 2008 to discuss this investment.  
[475]  
On July 10, 2008, Ms. Kaup met with Daniel at the Jakobstettel Inn.  
Daniel told her that Jakobstettel was going to expand and there was an  
opportunity to invest in it. Daniel offered to pay her 18 percent without any  
negotiation. She asked Daniel why they did not go to the bank and Daniel said  
that the banks do not like to give construction loans. This explanation was similar  
to her own experience.  
[476] Daniel told her to cash in her RRSPs to obtain the money for this  
investment. She agreed to do so this time because she was told:  
1
2
3
. Her RRSPs were losing money;  
. The RRSPs would be a tax burden on her children; and  
. She would be getting 18 percent interest plus the Jakobstettel Inn  
trustees would pay her $3,000 in deferred sales charges plus $31,000 in  
withholding taxes.  
[477]  
Ms. Kaup asked who owned the Jakobstettel Inn and Daniel said a  
group of trustees owned it and were taking care of the building. Due to privacy  
reasons, Daniel would not say who the owners were. In cross-examination, Ms.  
Kaup indicated that Daniel never said he owned the Jakobstettel Inn; Daniel  
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referred to trustees over and over again. If she had known that Daniel owned it,  
she would not have done the investment. In cross-examination, she testified that  
she would not have invested in Jakobstettel due to the conflict of interest in  
Daniel having his client invest in a building that Daniel owned. However she did  
not tell him that. Further, she denied the defence suggestion that Daniel said that  
he could not reveal the identity of other investors. Ms. Kaup was definite that  
Daniel told her that trustees owned the Jakobstettel and that he talked about a  
group of owners, which implied that a group of people owned the Jakobstettel.  
She understood that Daniel was acting as an agent.  
[478]  
Daniel told her the investment was safe – it was a corporate bond  
registered by the Ontario government and she could get her money out at any  
time.  
[479]  
Ms. Kaup cashed in her RRSPs. Exhibit 104 – 22B is the direction to  
Canada Life to redeem RRSPs signed by Ms. Kaup on July 10, 2008. Ms. Kaup  
did not discuss it with David although it is David who is listed as the financial  
advisor on the redemption form. Ms. Kaup paid $3,893.34 in deferred service  
charges to cash in the RRSP. Further, $31,321.37 in withholding taxes was  
deducted – see Exhibit 104 – 22C. This left a total of approximately $73,000 to  
be invested.  
[480]  
On July 14, 2008, Ms. Kaup obtained a bank draft for $100,000 (see  
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Exhibit 104 – 22A) and she gave this bank draft to Daniel on July 14, 2008,  
which was four days after meeting with him on July 10, 2008.  
[481]  
Exhibit 104 – 22D is an agreement between Jakobstettel Properties Inc.  
and Theresa Kaup, dated July 14, 2008. It is a corporate bond providing that Ms.  
Kaup be paid 18 percent annually for five years. Paragraph 1 of the bond  
provides that upon maturation of the bond (on July 14, 2013) the principal of  
$
100,000 was to be paid, plus there would be a payment of $3,893.34 penalty  
for cashing in the RRSPs), plus there would be a payment of $31,321.37 for  
prepaid tax.  
(
[482] In cross-examination, it was pointed out that Daniel signed the  
document but did not say he was acting as agent.  
[483] In addition to the withholding tax, Ms. Kaup paid an additional $16,000  
in income tax in 2009.  
[484]  
In March of 2009, Ms. Kaup wished to buy an apartment building and  
she wanted her money out of the Jakobstettel investment. She approached  
Daniel at the Millionaire building in Waterloo and requested the return of her  
principal. Daniel told her he would have to approach the trustees and she would  
have to wait a few days and he would be in touch.  
[485]  
By the end of March 2009, she could not get a hold of Daniel to set up  
an appointment. In the end, Ms. Kaup never received any money at all – no  
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interest and no return of her original $100,000 investment.  
[486]  
Daniel did not disclose any financial problems he was having with Ms.  
Kaup. He never discussed that her money was going to Cheryl Reeve, Nancy  
Herlick, or any other entity.  
[
487]  
488]  
Ms. Kaup’s loss is $100,000 plus unpaid accrued interest.  
[
I find Ms. Kaup to be a credible witness. Her evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
2
5. RENE BROSSARD  
Rene Brossard is a high school teacher and is married to Gabrielle, also  
a teacher who retired in 2005.  
[489]  
[490]  
Mr. Brossard met Daniel at his home at 1220 Shaw Street in Toronto.  
Daniel used a lot of key phrases and made a lot of sense. Daniel drove Mr.  
Brossard in his limo to his office and the totality of it all was that Mr. Brossard  
was very impressed by Daniel.  
[491]  
Mr. Brossard, in February of 2005, received inheritance money when his  
father passed away. He received approximately $320,000 and wanted to invest  
it. Of that money, $200,000 was put in a private investment with Daniel in 2005 at  
 
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12 percent interest and in 2006 the principal and interest of $224,000 were  
invested with Daniel again for a five-year term. Mr. Brossard indicates he was  
never paid anything on this 2006 re-investment. In cross-examination, Mr.  
Brossard indicated that his statement indicates that he received $24,000 on  
December 6, 2007. (This investment precedes the indictment period and is part  
of the narrative only.)  
[492]  
It appears that the remaining $122,000 of Mr. Brossard’s inheritance  
was put into a GIF in November 2005, which was eventually transferred to Daniel  
as the financial advisor.  
FIRST INVESTMENT – EMERALD MET  
[493]  
In mid-January of 2007, Mr. Brossard got a call from Daniel. Daniel  
wanted him to cash in the GIF and get involved in a “great” real estate  
investment. Mr. Brossard asked if he had to sign anything. Daniel said no, that  
“we have our ways.” The rate of return was to be 12 percent and there was no  
talk of risk. It was pointed out in cross-examination that Mr. Brossard was already  
receiving a 12.3 percent return on his GIF investment. However, Mr. Brossard  
agreed to do as Daniel suggested.  
[
494] There was no discussion that the money was to be used to construct an  
office building for DPR Financial. Daniel simply stated that everything was  
turning into gold.”  
“
 
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[495]  
Exhibit 108 – 5B is withdrawal instructions, dated January 2, 2007. With  
respect to the signature of the policy holder, Mr. Brossard says it is a bad copy of  
his signature and that he did not sign it. Mr. Brossard indicated in cross-  
examination that he gave verbal instructions to redeem his GIF for use of the  
funds for the Emerald Met investment on Daniel’s advice. Further it was pointed  
out that Daniel did not lose his financial advisor licence until January 6, 2007,  
which was after the signing of this document.  
[496]  
One hundred thirty-seven thousand dollars (the original $122,000  
invested in 2005, plus the returns made until withdrawal of $15,000) was put into  
his bank account as a result of the redemption. On January 17, 2007, Mr.  
Brossard made out a bank draft in the amount of $120,000 payable to Emerald  
Met Inc. – see Exhibit 108 – 5A. Daniel had asked him to get a bank draft and  
Mr. Brossard attended at the bank to obtain it.  
[497]  
Exhibit 108 – 5D is a letter signed by “Cynthia Taylor, Finance” for  
Emerald Met. It indicates that Mr. Brossard has made a $120,000 loan to  
Emerald Met on January 8, 2007 with maturity at January 8, 2012. Interest is to  
be paid at 12 percent per annum. In cross-examination, it was pointed out that  
the document stipulates that the borrower – Emerald Met – had the option to get  
out at any time and the lender is locked in for five years unless certain conditions  
are met, e.g., bankruptcy, failure to make payments.  
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SECOND INVESTMENT – N.Y. PARK PLAZA  
[498]  
In 1997, Mr. Brossard sold his Shaw Street home in Toronto for  
approximately $1 million and, after expenses, netted $700,000. With this money  
he bought a home at 72 Mitchell Street for $550,000. Mr. Brossard put $80,000  
down on the Mitchell Street purchase on Daniel’s advice that he could arrange a  
mortgage at a low interest rate.  
[499]  
Daniel visited Mr. Brossard at his new address in July or August 2007.  
Daniel told Mr. Brossard that he had a great investment in real estate – the Park  
Plaza in New York. Daniel said he could pay 18 percent, and that 18 percent is  
nothing given that Daniel makes 25 percent. Notes of the discussion appear on a  
page with Plaza letterhead at Exhibit 108 – 5K. The notes indicate a $500,000  
investment at 15 percent.  
[500]  
Mr. Brossard was concerned regarding risk. Daniel said that there was  
zero risk. Daniel said that it was “Jewish money” and well managed. Daniel told  
Mr. Brossard that he was investing in the Plaza and Reeve Hotels and it was a  
private company. Daniel told Mr. Brossard that he would not believe how well  
things were going; Daniel’s accountant had told Daniel to get rid of his limo and  
get a helicopter.  
[501]  
In cross-examination, Mr. Brossard testified that he wanted to use  
$600,000 to pay for a retirement home he was building in Elora. It was his  
 
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understanding that Daniel was the sole owner of Reeve Hotels and Resorts.  
Given Daniel’s assurances that there was no risk, Mr. Brossard went ahead with  
the investment.  
[
502]  
400,000, $100,000 and $100,000 to Reeve Hotels and Resorts Inc. – see  
Exhibit 108 – 5E, 5K, and 5I.  
On August 20, 21 and 30 of 2007 Mr. Brossard made out cheques of  
$
[503]  
Three letters were prepared by Ms. Gingrich on behalf of Reeve Hotels  
and Resorts Inc. The letters indicate that the $400,000 investment was an open  
one-year investment at 18 percent to be paid annually – see Exhibit 108 – 5F.  
The two $100,000 investments were an open term and paid 1 percent per month  
–
see Exhibits 108 – 5H and 5J. The documents do not mention the New York  
Plaza – just Reeve Hotels and Resorts Inc. Mr. Brossard testified that the money  
was to be used for the Plaza and Reeve Hotels and Resorts. In cross-  
examination, Mr. Brossard testified that he thought he could redeem any time  
and got that understanding from the term “open.” Certainly, the $400,000 letter  
suggests otherwise and uses the same terminology as the previous Emerald Met  
letter.  
SUBSEQUENT EVENTS  
[504] Accordingly, in 2007, Mr. Brossard invested $120,000 in Emerald Met  
and $600,000 with Reeve Hotels and Resorts for a total of $720,000 with  
 
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Daniel’s companies. His understanding was that Daniel was the only owner of  
Reeve Hotels and Resorts Inc.  
[505]  
Regarding the Emerald Met investment, in 2008, he received a $14,000  
interest payment but never received any interest or principal thereafter. His loss  
is $120,000 plus unpaid accrued interest.  
[506]  
On the three Reeve Hotels and Resorts investments totalling $600,000,  
he got $170,000 back, which was a mixed return of principal and interest (see for  
example Exhibit 108 – 5N which was a payment of $10,000 on October 3, 2007  
regarding the August 21 $100,000 investment). He never got any other interest  
or principal amounts except perhaps a $20,000 payment in November of 2008  
which may or may not relate to these investments. Accordingly, his loss is  
$410,000 to $430,000 plus unpaid accrued interest.  
[507]  
Conservatively, therefore, Mr. Brossard’s loss on his 2007 investments  
with Daniel Reeve is $120,000, plus $410,000, for a total loss of $530,000 plus  
unpaid accrued interest.  
[508]  
In July of 2008, Daniel said that everything was fantastic. There was a  
delay in the money coming because of Ms. Gingrich not being able to open the  
safe. Daniel assured him that the money was coming. In September of 2008, the  
Elora building was 85 percent complete; the $600,000 was supposed to pay for it  
but Mr. Brossard was not getting his money from Daniel. In cross-examination,  
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Mr. Brossard testified that he was in desperate need of money in December of  
008 and early 2009 as he was building his retirement home in Elora and the  
payments he expected to receive from Daniel were not coming through.  
2
[509]  
Mr. Brossard got sued and had his wages garnisheed in around  
December of 2008. He met with Daniel and Daniel’s suggestion was to focus on  
mortgage brokers and get a mortgage to get out of it. In cross-examination, Mr.  
Brossard indicated that in April of 2009 a construction lien was registered against  
him and his wife and a judgment was obtained for $511,000 against him by his  
creditors. He had to get a mortgage to pay them out.  
[510]  
In cross-examination, Mr. Brossard indicated that he sued Daniel and  
got a judgment for $531,000 but got paid nothing. Prior to investing with Daniel  
Reeve, he had done a number of checks with police and the Internet and had  
uncovered no red flags.  
[511]  
In cross-examination a series of letters were filed outlining Mr.  
Brossard’s attempts to recover from Canada Life his $120,000 redeemed from  
his GIF with Canada Life. Mr. Brossard’s complaints were that Daniel lost his  
licence on January 6, 2007 and could not transfer funds on January 11, 2007.  
Further, Mr. Brossard maintains that his signature was forged on the withdrawal  
instructions. These letters were filed as Exhibits 110, 111, and 112. Ultimately,  
Mr. Brossard was unsuccessful in getting his GIF back despite his complaints  
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made from 2009 going into 2010.  
[512]  
It was suggested that Mr. Brossard did sign Exhibit 108 – 5B, which he  
firmly denied. Canada Life claimed that the signature matched others that they  
had on file. It was pointed out that Mr. Brossard decided in 2008 that he couldn’t  
get the $137,000 from Daniel and then focused in on the forged signature aspect.  
Mr. Brossard testified that, despite giving verbal instructions to Daniel (he thought  
that Daniel was working for Canada Life), to redeem the GIF, he focused on the  
signature aspect because he thought it was wrong.  
THIRD INVESTMENT – ISABELLA BROSSARD ESTATE  
[513]  
Exhibit 108 – 5L is a letter, dated October 3, 2007, on Jakobstettel Inn  
letterhead, from Cynthia Taylor, outlining investments made on behalf of the  
estate of Isabella Brossard, Mr. Brossard’s mother. A total investment of  
$756,000 was made with Celebrity Management ($500,000 of which was a joint  
investment with Helene and Isabella Brossard) and a $426,000 investment made  
in Emerald Met in May of 2007 payable at 14 percent (this was a rollover of a  
$400,000 investment made in Emerald Met in 2006).  
[514]  
The total of these investments is just shy of $1.2 million.  
[515]  
In 2007, approximately $400,000 was returned on these investments.  
On February 6, 2008 a schedule of payments regarding the outstanding amounts  
was drawn up – see Exhibit 108 – 5M. However, the schedule was not complied  
 
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with and the payments remained outstanding.  
[516]  
The loss to Mr. Brossard’s mother’s estate and his sister Helene  
Brossard’s investment totals approximately $800,000.  
SUBSEQUENT EVENTS  
[517]  
Mr. Brossard testified that the assets of Reeve Hotels and Resorts were  
never made clear. It was his impression they consisted of hotels and buildings  
and they were all part of a growing empire.  
[518]  
The losses for the Brossard family are $530,000 and accrued unpaid  
interest, plus $800,000 and accrued unpaid interest, for a total of $1,330,000 plus  
unpaid accrued interest.  
[519]  
I find Mr. Brossard to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
2
6. CRAIG MASON  
In 2007, Craig Mason was self-employed. He owned an engineering  
company, Prolann Project Planning Group Inc., and had six employees.  
[520]  
[521]  
Mr. Mason had limited investment experience and relied upon his  
 
 
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financial advisor. In 2007, Mr. Mason was dissatisfied with his financial advisor  
Todd Grondin (who was losing money bit by bit) and his friend Rob Agnew  
recommended DPR Financial.  
[522]  
In late 2007, Mr. Mason walked into the DPR office in Windsor and was  
impressed with the beautiful building. He returned in January 2008 and met with  
David and received a sales pitch. Mr. Mason had about $160,000 to $170,000 in  
RRSPs at the time.  
[
523] On March 11, 2008, Mr. Mason transferred his RRSPs to Canada Life  
with David and DPR Financial. The value of his RRSPs at that time was  
144,809.34 – see Exhibit 113 – 27B.  
$
[524]  
By May 22, 2008 the value of his RRSP had risen to $156,259.83 and it  
was reset at that amount – see Exhibit 113 – 27B. Resets were also done  
afterward – see for example, the reset done on June 24, 2008 at Exhibit 113 –  
27C. Mr. Mason was happy with the DPR service.  
[525] Mr. Mason also read three books authored by Daniel Reeve: Three  
Buckets, Mirrored Butterfly and Millionaire Mortgage.  
[526]  
On July 15, 2008, DPR Financial sent him correspondence that some of  
his funds had gone below the ten percent threshold due to global financial turmoil  
and they recommended a hold strategy – see Exhibit 113 – 27D. Mr. Mason was  
satisfied that DPR was looking after his money.  
-
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[527]  
On August 28, 2008, Mr. Mason met with Josh Lane and signed a  
number of waivers – see Exhibit 115 filed by the defence. David was in and out.  
Notes of the meeting were entered into evidence by the defence as Exhibit 116.  
[528]  
In and around this time, Daniel approached Mr. Mason about investing  
in the Jakobstettel Inn. Daniel told him it was bricks and mortar and a growing  
company. Mr. Mason thought it was a construction company. Daniel said that this  
investment was a way to grow his money faster. There was no disclosure as to  
who owned the Jakobstettel Inn. Both David and Daniel said that they had other  
investments. However, Mr. Mason did not know if David knew about the  
Jakobstettel. In cross-examination, Mr. Mason indicated he decided to follow the  
advice of his financial advisor and cashed in his RRSPs; however when he spoke  
to Daniel regarding Jakobstettel, David was not there.  
[529]  
Exhibit 118 filed by the defence is the Canada Life confirmation of  
withdrawal of RRSP funds of Mr. Mason of $143,378.58. After the deferred sales  
charge of $5800 and the withholding tax of approximately $41,000, Mr. Mason  
had $96,304.76 left to invest. Mr. Mason indicated in cross-examination that he  
knew about the withholding tax but not about the deferred sale charge.  
[530]  
Mr. Mason added a few thousand dollars to the RRSP withdrawal and  
on September 2, 2008, he phoned Daniel to obtain transit numbers and  
transferred $100,000 into Jakobstettel’s bank account – see Exhibit 113 – 27E.  
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Exhibit 113 – 27F is the T4RSP which confirms that Mr. Mason withdrew  
137,578.20 from his RRSP and paid withholding tax of $41,273.46.  
$
[531]  
Exhibit 113 – 27G  
is a corporate bond agreement between  
Jakobstettel Properties Inc. and Craig Mason in the amount of $143,378.58 (the  
full amount of the RRSP in Exhibit 118 before deductions for deferred sales  
charge and withholding tax) providing for the payment of 16 percent monthly on  
the anniversary date which is September 2. The maturity date is September 2,  
2013.  
[532]  
Daniel said he put in the $143,378.58 amount in the agreement for  
future tax reasons. Mr. Mason did not understand the explanation. In prior  
meetings, David and Daniel had discussed reducing taxes in general.  
[533]  
Daniel did not disclose that he owned the Jakobstettel and Daniel did  
not indicate what the money invested would be used for. Mr. Mason understood it  
was a bond given by the company and if the company failed to pay, he would get  
some ownership of the company.  
[534]  
The document was signed by Mr. Mason and, he thinks, Daniel Reeve a  
few days after the money had been transferred to the Jakobstettel account. In  
cross-examination, Mr. Mason stated that Daniel already had his money and  
Daniel was in a rush when the document was signed. Mr. Mason asked about the  
$3,600 he had used to top up the investment but received no answer. Daniel  
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asked Mr. Mason to initial each page of the document. Despite the document  
referring to the Jakobstettel Inn, Mr. Mason was not sure at the time of signing  
that the Jakobstettel was an inn. He knew the document was a corporate bond at  
the time of signing but not before. Basically, Mr. Mason followed Daniel’s  
suggestions because Daniel had done so well for him in the prior eight months.  
The document was signed in two minutes. Mr. Mason stated that he was used to  
winning and losing, in the context of investments, but not losing when someone  
steals from you.  
[535]  
Mr. Mason was supposed to receive interest payments starting in  
October of 2008 but did not get any interest for October, November or December  
of that year. On December 10, 2008 he got a letter from Lee-Anne Ruggle to get  
banking information in order to deposit interest payments – see Exhibit 113 –  
27H.  
[536]  
In early September or October of 2008 Daniel wanted Mr. Mason to re-  
mortgage his condo but Mr. Mason would not, due to his interest payments not  
being paid.  
[537]  
From September 2, 2008 to January 2009, Mr. Mason talked to Daniel  
and Daniel said everything was okay; the principal was okay, the interest was  
okay, and they were just setting everything up.  
[538]  
However, in January 2009 the DPR offices in Windsor closed. Then the  
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DPR office in Waterloo was locked. Mr. Mason had phone numbers but he just  
got voicemail. A couple in the Waterloo parking lot told him that Daniel owned the  
Jakobstettel Inn. If he had known that, he would have done more research before  
investing.  
[539]  
The final result is that Mr. Mason never received any interest payments  
and his principal was never returned. His loss is $100,000 plus unpaid accrued  
interest.  
[540]  
I find Mr. Mason to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
27. CARIN SMITH  
[541]  
Carin Smith in 2008 lived in Halton Hills and worked at Sobey’s. In 2008,  
she had a low level of investment knowledge. She had a financial advisor and a  
few thousand dollars in RRSPs and life insurance. She was married in 2008 but  
separated in 2009.  
[542]  
In 2008, Ms. Smith owned a home which had a value of $260,000 and a  
mortgage of $122,000. She met Daniel through her mortgage broker John  
Cavan. She wanted to get her mortgage paid off earlier.  
 
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Mr. Cavan suggested that she meet Daniel and discuss his Millionaire  
Mortgage concept.  
[543]  
[544]  
In September or October of 2008, a meeting was set up with Mr. Cavan  
and Daniel. Daniel explained the Millionaire Mortgage concept to her. Ms. Smith  
testified that her understanding was that Daniel told her to take out a mortgage  
for 80 percent of the value of her home. With the proceeds, she would pay off her  
old mortgage and get a line of credit. The line of credit proceeds would be given  
to Daniel for investing. The interest paid on the line of credit would be tax-  
deductible. The money from the line of credit would go into a workhorse account  
which would earn interest. Daniel said there would be no risk and she told him to  
go ahead. In cross-examination, she testified that Daniel showed her a slide  
show and lent them the Millionaire Mortgage book.  
[545]  
Exhibit 119 – 35A is the Millionaire Mortgage questionnaire and  
application that Ms. Smith and her husband filled out. Ms. Smith testified that her  
husband received a $100,000 leveraged loan from National Bank and invested it  
in segregated funds with Canada Life – see Exhibit – 35C. Her paperwork for a  
loan contained an error and did not work out. In cross-examination she indicated  
that her financial was Jasbir Sraon and he did the paperwork.  
[546] Pursuant to the mortgage loan application, the Smiths received a  
$205,000 mortgage. They paid off the old mortgage which had $122,000  
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outstanding. This left them with $83,000. Seventy thousand dollars was given to  
Daniel on November 14, 2008 – see Exhibit 119 – 35B which is a cheque  
payable to Millionaire Mortgage Inc.  
[547]  
The Smiths thought Daniel knew what he was doing and was a financial  
advisor. The plan was that the $415 cost for the monthly interest for the  
leveraged loan was to be deducted automatically from her account. The $70,000  
given to Millionaire Mortgage was to be placed in a workhorse account and the  
proceeds generated from investments made by the workhorse account were to  
be deposited monthly into her bank account so that the proceeds from the  
workhorse account would pay the $415 cost from the leveraged loan. In cross-  
examination, Ms. Smith indicated that they were paying only the interest on the  
line of credit loan.  
[548]  
In December of 2008, the deduction for the $415 interest payment on  
the leveraged loan went out of Ms. Smith’s account. However, no deposit was  
made into Ms. Smith’s account by the workhorse account. Ms. Ruggle from DPR  
was contacted and a meeting with Daniel was set up for February of 2009.  
[549]  
In February of 2009, a meeting took place in Starbucks and present  
were Ms. Smith, her husband, Mr. Sraon and Daniel. Daniel told them that the  
account had not been set up properly and he would fix it. The February deposit  
was not made and the bank wanted their money as the bank’s withdrawal on the  
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leveraged loan bounced again. Ms. Ruggle was contacted again and another  
meeting was set up for March 30, 2009.  
[550]  
On March 30, 2009, there was another meeting with Ms. Smith, her  
husband, Mr. Sraon, and Daniel. Mr. Smith brought with him a letter requesting  
their $70,000 back. Daniel said it would not be a problem to give their money  
back; it would take the accountant 30 days to get the money back. In cross-  
examination, Ms. Smith indicated that Daniel apologized for the problems and  
there would be no problem cancelling the program. He would also cancel the life  
insurance as it had not started yet. Daniel took full responsibility.  
[551]  
Daniel never discussed (1) that the $70,000 was to be paid to his  
companies; (2) that their money was to be used to pay other investors; or (3) any  
financial difficulties Daniel was having. Daniel only discussed that their money  
was to be used for the Millionaire Mortgage concept.  
[
552] Ms. Smith’s loss is $70,000 plus unpaid accrued interest payments. The  
100,000 leveraged loan was closed out in July 2009 as they could not afford the  
interest payments.  
$
[553]  
In cross-examination, Ms. Smith indicated that numerous emails were  
sent to Daniel’s staff – see Exhibit 119 – 35E. She had difficulty getting phone  
calls back.  
[554]  
In re-examination, Ms. Smith indicated that Daniel went to her work in  
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December of 2008 and got her and her husband to fill out forms for a $100,000  
line of credit for her husband and $50,000 for her. The forms had been mixed up  
previously and Daniel apologized for the mix-up in the office.  
[555]  
I find Ms. Smith to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
28. SHERRILL MARTIN (STEVENSON)  
[556]  
Sherrill (Martin) Stevenson is a foot specialist and has a university  
education. However, she has little experience in investing and relied on her  
financial advisor. She has been married to Bob Stevenson since November,  
2
006 and had a home with a mortgage and investments of approximate  
100,000 in 2008.  
$
[557]  
Ms. Stevenson met David in the fall of 2007. Her previous financial was  
Albert Brulet who was working for DPR Financial. She started with Mr. Brulet in  
the spring of 2007 and was turned over to David in the fall of 2007.  
[558] She had had a financial advisor previous to Mr. Brulet who “took off”  
with her money.  
[559]  
On April 30, 2008, she met with Daniel. Also present were Mr.  
 
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Stevenson and David. David discussed the Millionaire Mortgage concept. She at  
the time had a home worth $195,000 with a mortgage of $88,687. The details of  
the presentation given to her are outlined in Exhibit 120 – 37A.  
[560]  
She decided to do the Millionaire Mortgage because she felt no risk due  
to the fact that $67,313 (the difference between the new higher mortgage and her  
old mortgage which would be paid off) would be invested at 8 percent.  
Accordingly, she filled out the Millionaire Mortgage questionnaire on April 30,  
2008. The application appears at Exhibit 120 – 37B.  
[561] On May 14, 2008, Ms. Stevenson faxed in her outstanding mortgage  
figures. David said he would put her in contact with a mortgage broker.  
[562] In July 2008, David found Ms. Stevenson a broker and told her she now  
needed an appraisal and approval.  
[
563]  
564]  
In September 2008, her home was appraised at a value of $205,000.  
On October 21, 2008, the Stevensons met with David and went through  
[
the numbers. Ms. Stevenson’s house had been appraised at $210,000 and not  
195,000. She was eligible for $75,000 but she wanted to keep the lower amount  
$
of $67,000 in the workhorse account. David said the money would be paid to  
Investia (in trust) so that the financial advisor could not run off with the money.  
The notes of the meeting were signed by Mr. Stevenson, David, and Ms.  
Stevenson, and were introduced as Exhibit 121 by the defence in cross-  
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examination. The notes also refer to a wine and cheese party to be held in  
Windsor on November 20, 2008.  
[565]  
On October 30, Ms. Stevenson received an email from David that he  
was leaving DPR and would be in touch. The defence entered the email in cross-  
examination as Exhibit 122. Ms. Stevenson indicated in cross-examination she  
was surprised to receive the email and learned that David was setting up his own  
company, Davlyn Financial.  
[566]  
On November 3, 2008, Daniel phoned Ms. Stevenson and her husband.  
She returned Daniel’s call. Daniel said that the mortgage was closing this week  
and she had to get the money into the workhorse account. This was Ms.  
Stevenson’s first dealing with Daniel. She told Daniel that her lawyer had not  
called her and she had no cheque. Daniel said he would be in touch.  
[567]  
After a postponement of an earlier-scheduled meeting, Daniel came  
over for breakfast on November 8, 2008 at 9 a.m. Daniel indicated that David  
was leaving because David did not want to do administrative work. Daniel said  
that Daniel would look after the Millionaire Mortgage and David would look after  
their investments. Daniel said he needed a cheque for $75,000. Ms. Stevenson  
and her husband said no; they wanted to pay over $67,000 and keep the rest.  
Daniel replied no; Daniel had talked to David and David said $75,000. Daniel  
said he had talked to David and now had a 12 percent investment, not 8 percent.  
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Daniel said that he had trained David well as David normally makes notes and  
gives copies. Daniel said he needed a bank draft or certified cheque.  
[568]  
They drove to the Sarnia CIBC branch for the bank draft. Daniel said it  
had to be made out to the Wealth Institute but did not say why. There was no  
discussion of risk; they talked about 12 percent guaranteed versus 8 percent. Ms.  
Stevenson got the bank draft and said, “To Investia in trust?” Daniel said, “No,  
make it out to the Wealth Institute.”  
[569]  
Exhibit 120 – 37D is a bank draft dated November 10, 2008 in the  
amount of $75,000 payable to the Wealth Institute. She did not speak to David  
about this. She thought the money was going into a 12 percent guaranteed fund.  
There was no discussion about giving $75,000 to Daniel’s wife or the Wealth  
Institute.  
[
570] On November 20, 2008, the Stevensons attended the wine and cheese  
party with David. They told David that they saw his brother and gave him a  
75,000 cheque. In cross-examination, it was brought out that David was  
$
shocked and had no idea of Daniel’s visit and, further, that Daniel had no access  
to her file. David advised that Daniel had gone behind David’s back and had  
taken the Stevensons’ money.  
[571] David appeared “very pissed off.” David said he would call his brother  
and get their money back and get Daniel to say it was a mistake. David asked  
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them to prepare a summary of events and they did so and sent it to David  
amongst others. This summary was entered as Exhibit 123 by the defence.  
David told them that Daniel had lost his licence. Ms. Stevenson did not know that  
before; this was the first time she had heard it. David never suggested that the  
police be called. However Ms. Stevenson agreed with the defence suggestion  
that David was saying that Daniel stole from her. David also said that Daniel was  
being sued. Daniel was not present at this event. Exhibit 124, entered by the  
defence, is a series of emails between Ms. Stevenson and David where David is  
suggesting strategies regarding how to get their money back from Daniel.  
Exhibit 124 also contains comments by David that Daniel has no licence and  
lawsuits pending against him.  
[572]  
On December 1, 2008 Daniel phoned and said that he got a call from  
David that they were upset that they were getting 12 percent instead of 8  
percent. Ms. Stevenson told Daniel they wanted their money back but provided  
no details regarding their learning that Daniel had lost his licence, the lawsuits or  
that David had given her these details (as instructed by David in the Exhibit 124  
Nov. 30 email exchange). There was no documentation regarding the $75,000  
investment. Exhibit 125, entered by the defence, is emails sent to Daniel with a  
copy sent to David on December 3, 2008 wherein Ms. Stevenson confirms that  
Daniel has agreed to return her money. David responds by saying “awesome,”  
“
good luck,” and he liked the letter to Daniel.  
-
168 -  
573] In January 2009, Daniel said there would be a cheque on January 9,  
009. When Ms. Stevenson returned from her vacation of January 16 or 17 there  
[
2
was no money. When she phoned Daniel, he gave an excuse that there was a  
title on the investment and that it would therefore take longer. Daniel said that the  
money would be in her account February 6, 2008. There was no money  
deposited at that time either. When she phoned Daniel’s cell phone, it was  
disconnected. Per Exhibit 120 – 36C, Ms. Stevenson sent an email to Ms.  
Ruggle on February 6, 2009 asking her where her money was.  
[574]  
Exhibits 120 – 36E, 36F, and 36G are further emails sent among the  
parties from February and March 2009 regarding the return of the money. No  
money was ever returned to Ms. Stevenson or her husband as a result of these  
communications.  
[575] In the result, Ms. Stevenson received no interest or money back. Ms.  
Stevenson’s loss is $75,000.  
[576]  
In cross-examination, Ms. Stevenson indicated she wanted her money  
back because Daniel had put it where it was not supposed to go. She had not  
gone to the police as of March 2009 because she felt she could still get her  
money back. She eventually went to the Petrolia police in 2009 and was referred  
to Detective De Boer.  
[577]  
I find Ms. Stevenson to be a credible witness. Her evidence was  
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supported by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
29. BRAD ASHMAN  
[578]  
Brad Ashman is a self-employed businessman in the heating,  
ventilation, and plumbing business. He owned a couple of rental properties in  
Woodstock.  
[579]  
In April 2008, Mr. Ashman met David at the DPR building in London.  
Also present was Mr. Ashman’s wife. Mr. Ashman wanted to refinance his  
mortgage so that he could get leveraged loan investments and a workhorse  
account to pay the interest on the leveraged loan.  
[580]  
David provided Mr. Ashman with a pamphlet regarding Fidelity T-SWPs  
and told him that his mortgage funds would be used to purchase these products.  
The pamphlet was introduced as Exhibit 126 – 1B.  
[581]  
Mr. Ashman was led to believe that David was the president of DPR  
Financial. He had several meetings with David at the London DPR office and  
after the third meeting, he decided to proceed. In cross-examination, Mr. Ashman  
indicated that this meeting was on August 12, 2008.  
[582]  
Mr. Ashman contacted his mortgage broker, Dan Balch, to refinance his  
 
-
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house around October of 2008 and the approval came through around the end of  
October or early November of 2008.  
[583]  
In late October or early November, Mr. Ashman received a call from  
Daniel. This call was a total surprise as all his prior dealings were with David and  
Mr. Ashman did not know Daniel was involved.  
[584]  
Daniel told him, “Congratulations, your mortgage is approved.” Mr.  
Ashman was expecting to get a call from Mr. Balch but it was Daniel who was the  
first person to let him know about the approval.  
[585]  
Daniel told Mr. Ashman that he was now ready to proceed with the  
Millionaire Mortgage and Daniel wanted a time to pick up the cheque. In cross-  
examination, Mr. Ashman indicated that Daniel told him that the money was  
spoken for and there was a need to proceed with this. In re-examination. Mr.  
Ashman indicated that Daniel said that the funds had been allocated to go to the  
workhorse account.  
[586]  
A date was set for Daniel to pick up the cheque. Daniel attended at Mr.  
Ashman’s home in Burgessville in the evening to pick up the cheque. Daniel told  
him to make the cheque out to Millionaire Mortgage. Daniel told him that David  
had set this up. Exhibit 126 – 1A is a cheque for $150,000 made out to  
Millionaire Mortgage Inc., dated November 3, 2011. Mr. Ashman had received  
$152,000 through the refinancing.  
-
171 -  
[587]  
In cross-examination, Mr. Ashman indicated that this meeting with  
Daniel took about a half hour. Daniel asked if the arrangement had been  
explained and Mr. Ashman told him that David had explained it to them. David  
had given them the T-SWPs pamphlet and had discussed other investments but  
not in great detail. There was no specifics mentioned where the money was  
going to be invested. Daniel said that they would get documents later that week  
and his secretaries would set up an appointment. Mr. Ashman never received  
any documentation as promised.  
[588]  
There was no discussion regarding the money being invested in one of  
Daniel’s private companies. Mr. Ashman did not have any knowledge of Daniel’s  
private companies.  
[589]  
The next day, Mr. Ashman got a call from the mortgage company that  
the appraisal had come in for less than anticipated and they needed $20,000  
back. Mr. Ashman called Daniel in a panic and asked to get $20,000 back. Daniel  
told him that it was already invested. Later Daniel told him it was in the bond  
market. The $20,000 was eventually returned in January 2009.  
[590]  
In cross-examination, Mr. Ashman testified that he got a letter in the mail  
in November of 2009 that David was leaving DPR Financial and David would  
represent them in the future. Mr. Ashman had no prior notice that David was  
leaving. He had had no communication with David from August of 2008 until  
-
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November of 2008.  
[591]  
Since his last visit with David in August of 2008, Mr. Ashman had no  
contact with David until after Daniel had cashed in cheque in November of 2008.  
Mr. Ashman did contact David in November of 2008 and had a five-minute  
conversation. David said he had left DPR Financial but they could see him  
regarding their investments. Mr. Ashman asked David where his paperwork was  
and David indicated that he was no longer there and had no access to his file  
and didn’t know where his paperwork was. In cross-examination, Mr. Ashman  
indicated that David did not indicate what his actions were when he left DPR and  
there was no mention of any transfer of his file. Mr. Ashman had no information  
from DPR at all.  
[592]  
Thereafter, meetings with Daniel were scheduled but they were always  
cancelled. He received no payments regarding the $130,000 – no interest, no  
principal.  
[593] Eventually Mr. Ashman called the Waterloo police and was told to  
contact Detective De Boer in December of 2008.  
[
594]  
595]  
Mr. Ashman’s loss is $130,000 plus unpaid accrued interest.  
[
I find Mr. Ashman to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
-
173 -  
examination.  
30. EVA BERNACHI  
[596]  
Eva Bernachi lives in Amherstburg, twenty minutes outside of Windsor.  
She is married; her husband Jay Bernachi owns an auto repair business and she  
is a computer programmer at the University of Windsor.  
[597] Her only investing experience in 2008 was with RRSPs. She had  
$97,000 and her husband had $334,000. They owned a home with no mortgage.  
They had a financial advisor with whom they had been for 20 years, Al  
Broadbent.  
[598]  
On January 20, 2008, she had her first appointment with David. She had  
been referred to him by her massage therapist. The meeting took place in the  
DPR Financial building in Windsor, which she thought was quite impressive.  
[599]  
Present at this initial meeting were David, Joshua Lane, and the  
Bernachis. David outlined the DPR philosophy. David said he would be their  
quarterback on their team which included lawyers, accountants, insurance  
experts and others. DPR had a comprehensive, long-term approach involving  
investing in insurance and leveraged loans.  
[600]  
David advised them of the advantages of segregated funds and advised  
them to cash in their RRSPs and pay the tax and get it over with. In cross-  
 
-
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examination, Ms. Bernachi indicated that this conversation took place later in the  
summer. David said in the long run they would be better off cashing in their  
RRSPs. David said that segregated funds were protected from creditors, had  
resets, allowed switches from funds to funds, and other advantages. David spoke  
of paying the withholding taxes when cashing in RRSPs but Ms. Bernachi was  
blindsided later when she had to pay additional taxes above and beyond the  
withholding taxes.  
[601] The Bernachis had two or three visits with David and Mr. Lane and they  
set up insurance policies and three leveraged loans.  
FIRST INVESTMENT – JAKOBSTETTEL PROPERTIES  
INC.  
[602]  
In May or June of 2008, the Bernachis were in the waiting room at DPR  
Financial waiting for David. Instead, Daniel appeared and they were informed  
that David was not there that day. They assumed Daniel was a co-owner and  
financial advisor and part of their team. Daniel presented as very educated and  
smart. He gave them two of his books: Millionaire Mortgage and Three Buckets.  
Daniel said that Windsor was a blue-collar city and people there invest differently  
than in Toronto or London.  
[603]  
Daniel said that he owned the Jakobstettel Inn and was doing an  
expansion. Daniel said that the Inn lacked a restaurant, spa and corporate  
offices. Daniel said he had a lot of investors but had a couple of options left.  
 
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Daniel suggested purchasing a corporate bond for a three-year term paying 16  
percent. On the three-year anniversary, they would get paid the principal and the  
fees and withholding tax from cashing in their RRSPs. At that point their RRSPs  
had been invested into segregated funds. Daniel said there was no risk as DPR  
Financial had cash equivalents of any money they invested.  
[604]  
A week later, the Bernachis decided to do the investment and cashed in  
their RRSPs. David was not present when they met with Daniel to proceed with  
cashing in their RRSPs and investing in the Jakobstettel Inn. Between the two of  
them, they cashed in both their RRSPs totalling almost $475,000. After deferred  
sales charges and withholding taxes, Ms. Bernachi netted $68,463.90 – see  
Canada Life withdrawal instructions and T4RSP for Eva Bernachi at Exhibits  
127 – 2B and 2E respectively. Mr. Bernachi had $273,005.69 left over – see  
RRSP statement and T4RSP at Exhibits 127 – 2C and 2D respectively.  
[
605]  
Properties Inc. in the amounts of $68,463.96 and $237,005.69 (a total of  
305,469.65), which represented the exact net proceeds of cashing in their  
On July 18, 2008 Ms. Bernachi made out two cheques to Jakobstettel  
$
RRSPs. In cross-examination, Ms. Bernachi indicated that they never spoke to  
David about this and Daniel brought the papers at their second meeting and they  
were done.  
[606]  
Exhibit 127 – 2G is a corporate bond agreement between Jakobstettel  
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Properties Inc. and Eva Bernachi dated July 21, 2008 with a maturity date of July  
1, 2011 and paying 16 percent annually on the anniversary date. Paragraph 1 of  
2
the bond indicates that at the maturity date, the principal, along with accrued  
interest, penalties and prepaid taxes for the RRSP withdrawal, were to be paid.  
In cross-examination, she indicated that she thought the penalties referred to  
charges from DPR transferring money to Daniel and understood the prepaid  
taxes to consist of the withholding taxes (which would be about $130,000).  
Daniel and Ms. Bernachi signed the document.  
[607]  
Ms. Bernachi was not specifically told what the document meant. There  
was no discussion that the money was to be used to: (1) pay other investors, (2)  
to pay Daniel’s ex-wife, or (3) pay Pat Westerhout and Keith Austin (she did not  
know who they were).  
[608]  
In 2008, the Bernachis paid an additional $55,000 in income tax due to  
the cashing in of their RRSPs – see worksheets in Exhibit 127 – 2F comparing  
taxes with and without the RRSP withdrawals. They were blindsided by this  
development. David never told them about this. In cross-examination, Ms.  
Bernachi indicated that they were never aware that these RRSP withdrawals  
would put them into a higher tax bracket. They had never discussed cashing in  
RRSPs with their previous financial advisor Mr. Broadbent.  
[609]  
The Bernachis never received any interest payments and never  
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received any of their principal back. The loss on their investment is $305,469.65  
plus unpaid accrued interest.  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE INC.  
[610]  
Daniel spoke to the Bernachis about doing a Millionaire Mortgage. He  
explained that they could take out a mortgage on their house and invest the  
proceeds. Meanwhile the interest was tax-deductible and they could use the  
returns to pay the mortgage. Daniel gave them his Millionaire Mortgage book.  
[611]  
Afterward, they attended a wine and cheese party and saw Daniel’s  
presentation on the Millionaire Mortgage concept. Exhibit 127 – 2H is a  
Millionaire Mortgage pamphlet that was handed out in the seminar. In cross-  
examination, Ms. Bernachi indicated that the steps entailed: (1) reading the  
Millionaire Mortgage book, (2) seeing Daniel’s presentation, and (3) meeting with  
David for a more in-depth explanation.  
[612]  
David set up the mortgage of their home with Allison White. Ms. White  
mortgaged 80 percent of their house value or $454,000. Their house had been  
paid off for about eight years and was worth $600,000. The initial plan set up by  
David was to invest the $454,000 with Fidelity and that investment would cover  
the mortgage payments. Mr. Lane was present during these discussions and  
there was no discussion of risk.  
[613]  
Daniel spoke to them about investing the whole $454,000 with Fidelity  
 
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and expressed concerns regarding the lack of diversification. Daniel suggested  
investing $300,000 with Daniel and the other $150,000 with David. There was no  
discussion with Daniel about what Daniel would do with the $300,000. Daniel  
was very positive and there was no discussion about money going to his ex-wife  
or other investors. Ms. Bernachi would not have been okay with that.  
[614]  
In cross-examination, Ms. Bernachi indicated that the evolution of the  
investment occurred in three stages: (1) initially the whole $454,000 was to go to  
Fidelity; (2) then the investment was to be split up with Daniel getting $150,000  
and David investing $300,000; and (3) it was finally switched to Daniel getting  
$300,000 and David investing $150,000.  
[615] Exhibit 127 – 2J is a void cheque dated September 11, 2008 payable to  
Investia in trust for $454,000.  
[616]  
Exhibit 127 – 2I is a cheque dated September 12, 2008 for $300,000  
payable to Millionaire Mortgage Inc. This cheque was given to Daniel. Daniel had  
told them to make it out to Millionaire Mortgage. This transaction came about  
when Daniel phoned during David’s wedding and asked, “When are we going to  
get the money invested?” Daniel said that David knew all about it and that David  
had okayed all the investments. In cross-examination, Ms. Bernachi testified that  
they went to see Mr. Lane and that he had said that it was their choice but David  
would be disappointed.  
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[617]  
Exhibit 127 – 2K is an agreement between Millionaire Mortgage Inc.  
and Eva Bernachi. It provides for consideration of $300,000 and interest to be  
paid at 16 percent in monthly instalments commencing October 12, 2008 with the  
interest to be deposited directly into Ms. Bernachi’s account. The maturity date is  
September 12, 2013. In cross-examination. Ms. Bernachi indicated that the  
$4,000 monthly payment was to be used to pay the mortgage. The Fidelity  
investment would provide her with $1,200 per month on a $150,000 investment.  
Ms. Bernachi understood that Daniel owned Millionaire Mortgage and would  
come up with the money to pay her the monthly interest of $4,000. The document  
indicates at page 2 that if interest payments are not made within seven days, Ms.  
Bernachi would have the right to the return of her investment plus interest plus  
penalties and prepaid taxes.  
[618]  
Ms. Bernachi questioned the risk of her investment with Daniel and  
Daniel provided her with a guarantee agreement and letter from DPR Financial  
that appear as Exhibits 127 – 2L and 2M dated October 24, 2008. The Exhibit  
127 – 2L agreement is unsigned but Daniel signed the Exhibit 127 – 2M letter  
which she had requested. In cross-examination, Ms. Bernachi indicated that  
Daniel’s handwriting was put in Exhibit 127 – 2M at her request. It was done  
after she wanted her money back. This letter refers to Reeve Hotels and Resorts,  
of which she had never heard before.  
[619]  
Daniel told her that DPR Financial was backing her investments. There  
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was no disclosure of DPR Financial’s finances or Daniel’s finances.  
SUBSEQUENT EVENTS  
[620]  
On October 12, 2008, which was the due date of the first $4,000, the  
payment was not made. Eight business days later, about October 22, 2008, Ms.  
Bernachi asked for the return of her investment. She phoned DPR and was put  
on hold and was asked by an assistant how much was to be paid. The next day  
the $4,000 was paid. However, Ms. Bernachi arranged a meeting with Daniel  
because the Bernachis were going to enforce the default clause in Exhibit 127 –  
2K.  
[621]  
At the meeting on October 24, 2008, Daniel came down to meet them.  
Daniel wore sunglasses during the whole meeting. The Bernachis were telling  
him they were calling their money back. Daniel was very agreeable and gave no  
explanation as to why the money was late. They requested and got the Exhibit  
127 – 2M guarantee. In cross-examination, Ms. Bernachi agreed that Daniel  
indicated that they would get their money in three $100,000 instalments. Daniel  
said that it would take a little time to get the money back as it had to be rolled  
back from the bank.  
[622]  
Lee-Anne Ruggle sent them a repayment plan for the three installments  
of $100,000 each. The very first payment was missed. Ms. Bernachi called  
Daniel repeatedly. He never called back and never answered the phone. The  
 
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answering machine was always full. Every once in a while Daniel would answer  
and tell her that he was working on it and told her to call him when the money  
was in her account. Daniel would say the payment would be there by Friday but it  
would not be there.  
[623]  
On December 1, 2008, Ms. Bernachi was hysterical and yelling on the  
phone. Daniel told her he had never had a client act like this. She said that he  
had ruined her life and demanded to know where her money was. Exhibit 127 –  
2N is a series of emails outlining correspondence in November and December  
regarding the return of the money in installments. Finally, on December 8, 2008,  
Ms. Bernachi received a transfer of $100,000 into her account as return of  
principal on the $300,000 investment.  
[624] On or about January 23, 2009, Daniel gave the Bernachis a cheque for  
$100,000 and asked them not to cash it until he said so. In cross-examination,  
Ms. Bernachi indicated that she did not know if she agreed to Daniel’s request  
but was hoping that it would go through though she knew it was going to be  
returned NSF. Daniel had given her this cheque three months after it was due  
and had made numerous promises, but everything was a lie and Daniel had no  
credibility at that point. The cheque, as anticipated, was returned NSF when she  
cashed it – see Exhibit 127 – 2O.  
[625]  
On this investment her loss was $300,000 minus $100,000 returned for  
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a total loss of $200,000. She only received one $4,000 interest payment  
therefore her losses also include unpaid accrued interest.  
[626]  
Ms. Bernachi never received any explanation from Daniel where her  
total investment of $600,000 went or what happened to it. Daniel never disclosed  
any problems with his finances or his company’s finances.  
[627]  
In cross-examination, Ms. Bernachi indicated that she sued Daniel  
Reeve, Millionaire Mortgage and DPR Financial on September 2, 2010. The  
statement of claim was filed by the defence as Exhibit 131. Ms. Bernachi did so  
to keep the file open. There was no response and no default judgment. No funds  
were ever recovered.  
[628]  
Ms. Bernachi’s total loss is $305,469.65 on the Jakobstettel investment  
plus unpaid accrued interest, and $200,000 on the Millionaire Mortgage  
investment plus accrued interest, for a total loss of $505,469.65 plus accrued  
unpaid interest.  
[629]  
I find Ms. Bernachi to be a credible witness. Her evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
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3
1. JEANNETTE HARROP  
630] Jeannette Harrop is a widow whose husband died in 1996. In 2007 to  
008, she worked at payroll at the Waterloo Region and Pace Homecare.  
[
2
[631] She has a Grade 12 education with some college and university and has  
a little bit of investment experience with GICs and RRSPs.  
[632]  
Ms. Harrop met Daniel in 1997 or 1998 when he was a guest speaker at  
a funeral home. She was impressed with him and arranged a meeting. After the  
third meeting with him, she decided to go with Daniel. In cross-examination, she  
indicated that this meant that she kept her RRSP with the TD bank but there  
were a variety of documents in 1997 indicating a transfer of funds from other  
banks/trust companies.  
[633]  
She started to invest $150 to $250 per month in a financial plan with  
Daniel. It was to be low-risk RRSPs and segregated funds. In cross-examination,  
she indicated that she was happy with Daniel from 1997 to October of 2008 and  
met with Daniel once per year.  
[634]  
In 2007 or 2008, Daniel told her he was going to be out of the office a lot  
and David would take over. Daniel introduced Ms. Harrop to David. David never  
returned calls and she was unhappy with him. She called Daniel and wanted him  
back as her financial advisor.  
 
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[635]  
On October 22, 2008 Daniel attended her residence after phoning her.  
Daniel went over at 9:00 p.m. in the evening. Ms. Harrop indicated that did not  
want David’s services anymore. Daniel told her he was unhappy with Manulife.  
She told him that she did not want to withdraw her RRSPs and pay income tax.  
Daniel gave her a blank form. On October 30, 2008, Daniel met Ms. Harrop at a  
bank got cheques from her. Only when she was at the bank did she hear for the  
first time the name Jakobstettel Inn. This was when Daniel mentioned it with the  
bank teller.  
[636]  
Exhibit 137 – 18A is a bank draft made out to Jakobstettel Inn in the  
amount of $47,606.87 dated October 31, 2008. Exhibit 137 – 18B is a bank draft  
made out to Jakobstettel Inn in the amount of $15,107.37 dated November 4,  
2008. Daniel said that he could not get both out at the same time.  
[637]  
Ms. Harrop never received any documentation. She phoned repeatedly  
from November to January and her only visit was in February 2009 in order to get  
information regarding income tax.  
[638]  
Exhibit 137 – 18C is an agreement between Millionaire Mortgage Inc.  
and Jeanette Harrop dated October 31, 2008 for consideration of $62,714 for a  
five-year term paying 12 percent annually. Ms. Harrop’s signature appears on the  
last page and it is dated October 31, 2008 but she testified that it was back-  
dated.  
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[639]  
Exhibit 137 – 18D contains a series of directions to Manulife dated  
October 27, 2008 directing the cashing in of her RRSPs and nonregistered  
accounts. The three letters are signed by Jeanette L. Harrop but Ms. Harrop  
testified that she did not sign any of them.  
[640]  
Later Ms. Harrop got a letter from Social Security that her income was  
over $66,000 – see Exhibit 137 – 18E. She met them and explained the  
circumstances and her old age pension was re-instated.  
[641]  
In cross-examination, a variety of 1997, 1999, 2001, 2003 banking  
documents bearing her signature were shown to her and she admitted the  
signatures were hers. They were entered as Exhibits 138, 139, 140, 141, 142,  
150, 151, and 156. More recent documents bearing her signature in 2008 were  
also shown to her and she admitted the signatures were hers. They were entered  
as Exhibits 144, 145, 147, 148, and 157.  
[642]  
Ms. Harrop indicated that she does not use her middle initial L. when  
signing documents. However Exhibit 155, a Manulife document introduced by  
the defence, has her name printed as “Jeanette L. Harrop.”  
[643]  
Exhibit 158, introduced by the defence, is a letter of direction to  
Manulife signed by her dated July 24, 2007 closing out a leveraged loan against  
the advice of her financial advisor David Reeve. She does not recollect making  
this decision and does not recall this letter being amongst the letters she  
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provided to the police.  
[644]  
Exhibits 137 – 18D, 159 and 160, introduced by the defence, are  
Manulife documents dated from July 25, 2007 to December 31, 2008 showing  
that David was her financial advisor throughout that period. Ms. Harrop denied  
that, indicating that David was not her financial advisor for all of 2008. She was  
given a form asking if she wanted David to continue as her financial advisor and  
she sent it back indicating that she did not want David to continue as her financial  
advisor in 2008. She was unaware of David leaving in 2008 to form Davlyn  
Financial.  
[645]  
In cross-examination, Ms. Harrop confirmed that on October 22, 2008  
she told Daniel that she only wanted to transfer her Manulife investments to  
another company such as TD bank or Canada Life and did not want to incur the  
tax consequences of cashing in her RRSPs. She did not want to collapse her  
RRSPs. On October 22, 2008 Daniel told her that it was not the first time that  
David had not returned calls. Her trust with both of them was starting to unravel  
but she still trusted Daniel on October 22, 2008. She did not want to transfer to  
David and she denied the defence suggestion that Daniel told her she had to get  
another financial advisor as he was no longer doing that line of work.  
[646] Ms. Harrop denied that Daniel told her that her RRSPs were doing  
poorly. Daniel said that he did not like what Manulife was doing administratively  
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but did not discuss poor market returns. She denied that Daniel told her to cash  
in her RRSPs due to poor market performance. She never discussed with Daniel  
that, as of October of 2008, she had not reached her retirement goals.  
[647]  
Ms. Harrop, in cross-examination, denied that she was agreeable to  
cashing in her RRSPs and denied that she agreed to invest in real estate, Daniel  
Reeve’s companies, or corporate bonds. She says that she signed a blank form.  
[648]  
On October 30, 2008, she left work and met Daniel at the bank. She met  
Daniel and Janice Berkin at her bank and went in. Daniel showed her a bank  
draft and she saw the dollar amount and it was less than what she had. She  
asked Daniel if tax had been taken off and Daniel said that was the way it would  
have to be. She told him that she did not want it to be that way. She would have  
to pay income tax and get her Old Age Pension clawed back. She heard Daniel  
tell the bank teller to make it out to Jakobstettel – this was the first time she had  
heard that name. This was her third mistake that day. The amount was a lesser  
amount, taxes were being paid and it was going to the Jakobstettel. She did not  
realize that it could be stopped. She felt that she did not have the opportunity to  
reject what was being done.  
[649]  
She says that she never received the Manulife cheques that were made  
out to her. These cheques were dated October 30, 2008 and were entered by the  
defence as Exhibits 161 and 162. The two cheques are in her name and are in  
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188 -  
the amounts of $25,093.25 and $22,513. The cheques have a bank stamp of  
October 31, 2008 and one has her signature and the other one also has her  
signature although on the second one she is not 100 percent sure it is hers. The  
two cheques together total $47,606.87 which is the amount on the Exhibit 137 –  
18A bank draft dated October 31, 2008.  
[650]  
It was suggested that all this documentation, her signing the Manulife  
cheques, and her attendance at the bank confirm that she was fully aware of the  
Jakobstettel investment, but she denied this.  
[651]  
Ms. Harrop got a second call to go to the bank from Daniel. Daniel told  
her he could not get both out at the same time. Ms. Harrop said that this was all  
done without her consent and she was not aware that it could be stopped. The  
defence entered a third Manulife cheque dated October 31, 2008 in the amount  
of $15,107.37 as Exhibit 163. The cheque purportedly bears her signature but  
she denies that it is hers. She says she never received any money at her bank.  
However the amount of the cheque is the amount of the bank draft Exhibit 137 –  
18B dated November 4, 2008 made out to Jakobstettel that she provided to  
Daniel on his second visit to her bank.  
[
652]  
Exhibit 137 – 18C is the agreement that she signed and the amount of  
62,714.24 is the total amount of the two bank drafts entered as Exhibits 137 –  
8A and 18B. She agrees that she signed this document in February of 2009  
$
1
-
189 -  
and it was back dated to October 31, 2008. She was 99 to 100 percent sure that  
she did not sign any cheques at the bank but her previous testimony was that it  
was her signature on the Manulife cheques cashed at her bank.  
[653]  
In January of 2010 she gave a statement to the police after reading  
newspaper articles with instructions to do so. She admits that she never went to  
the police before January 2010 and never reported anything to Manulife other  
than to get copies of forms and letters.  
[654]  
In my opinion, Ms. Harrop is an elderly lady who was an honest person  
and did her best to reconstruct the events. She appeared a bit confused. Daniel  
would later testify that she was an elderly lady who was often confused.  
However, Ms. Harrop is an example of the importance of not deciding anyone’s  
credibility until one has an opportunity to put in place the person’s evidence in the  
context of all the other evidence. As will be discussed in the Analysis section of  
this judgment, once I combined the evidence of Andrea Morgan with that of Ms.  
Harrop and Mr. Thiessen, and the banking and DPR business records, it became  
crystal clear that Ms. Harrop was telling the truth and that she was a credible  
witness. Daniel took advantage of a vulnerable elderly lady who trusted him in  
order to refund Ms. Morgan her investment money and prevent Ms. Morgan from  
phoning the police. Ms. Harrop’s loss on her investment was $62,714.24, not  
including interest and the loss of her old age pension benefits.  
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3
2. KEVIN HILLMAN  
Kevin Hillman works at Chrysler and has a Grade 12 education and little  
investment experience.  
[655]  
[656]  
Mr. Hillman saw DPR Financial ads in Windsor Life and he got an  
appointment in the summer of 2007 to meet with David and Daniel. His first  
meeting was with David and Daniel and he noticed that their certificates were all  
over the walls. At the first meeting he spoke with both of them and no  
commitments were made. At that time he had approximately $80,000 in RRSPs  
and eventually transferred them to DPR Financial.  
[657]  
Mr. Hillman also took out two leveraged loans of $100,000 each with  
National Bank and Canada Life – see Exhibits 165 and 166 introduced by the  
defence. Mr. Hillman thought that Daniel was a financial advisor because of the  
diplomas all over the walls. In cross-examination, Mr. Hillman testified that David  
was in charge of his Canada Life investments and was his agent of record.  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE INC.  
[658]  
David and Daniel told Mr. Hillman to cash out his RRSPs and pay the  
withholding tax. David was Mr. Hillman’s agent of record and was in charge of his  
RRSPs. They promised him that they could make him a lot of money. There was  
no discussion of this money going toward Jakobstettel or DPR Financial’s  
expenses. In cross-examination, Mr. Hillman testified that they told him not to rely  
 
 
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too heavily on RRSPs due to the high taxes when he would withdraw them at the  
end of his life. Mr. Hillman discussed investing the monies into Millionaire  
Mortgage with David before discussing it with Daniel. Mr. Hillman understood that  
Daniel owned Millionaire Mortgage and that Daniel would be responsible to pay  
all the money back in three years, He assumed that DPR Financial and  
Millionaire Mortgage were the same company.  
[659] Mr. Hillman decided to follow their recommendations. Exhibits 164 –  
19B and 19C indicate that Mr. Hillman signed instructions to withdraw his  
RRSPs and pay the applicable deferred sales charge and withholding taxes –  
see also Sun Life confirmation dated July 4, 2008 introduced by the defence as  
Exhibit 170. The instructions are signed by Mr. Hillman and David. Exhibit 169,  
introduced by the defence, are notes signed by Mr. Hillman and David dated July  
18, 2008 indicating that Mr. Hillman was to withdraw $80,000 from his RRSP and  
give Daniel $41,000 and keep $10,000. In addition to the withholding taxes, Mr.  
Hillman eventually paid another $11,000 in taxes.  
[660]  
Exhibit 164 – 19A is a bank draft dated July 9, 2008 made out to  
Millionaire Mortgage by Kevin Hillman for $41,031.00. Exhibit 164 – 19D is an  
agreement between Millionaire Mortgage and Kevin Hillman for consideration of  
$51,031.78 dated July 7, 2008, and paying 16 percent annual interest. The  
agreement matures on July 11, 2011 and stipulates that on July 11, 2011 the  
original deposit is to be repaid in addition to penalties of $4,451.11 and withheld  
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tax of $21,870.77. David was there that day but the document was signed in a  
small office with Daniel when David was not there. Daniel called Joshua Lane in  
to witness the document.  
[661] Mr. Hillman never received any interest or principal on this investment.  
His loss would be $51,031.78  
SECOND INVESTMENT – JAKOBSTETTEL PROPERTIES  
INC.  
[662]  
Mr. Hillman had a house valued at $250,000 with a $60,000 mortgage.  
Daniel told him that he could borrow against the house and invest in stocks and  
pay off the mortgage quicker. Mr. Hillman assumed that the borrowed money  
was going into the stock market. Daniel explained that Mr. Hillman was going to  
be investing in the real estate sector of the market.  
[663]  
There was no discussion regarding investing in Daniel’s companies.  
There was no discussion that Mr. Hillman’s money would go to Cheryl Reeve. In  
cross-examination, Mr. Hillman confirmed that the purpose of his investments  
with Daniel was to make money in the real estate sector of the stock market and  
that his understanding was that his investment was in real estate stocks.  
[664]  
Mr. Hillman re-mortgaged his home – see July 23, 2008 mortgage  
commitment filed as Exhibit 171 by the defence. When he was at work he got a  
call from Allison that his mortgage company was transferring his funds to his  
 
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bank account and to call Daniel. He called Daniel and Daniel told him to make a  
bank draft of $144,000 to Jakobstettel Properties. In cross-examination, Mr.  
Hillman said that he thought Jakobstettel was a stock and just did as he was told  
by Daniel as he had no reason to doubt or distrust him.  
[665]  
TD Bank told Mr. Hillman that his deposit had to sit for a couple of days  
and when Daniel was informed of this, Daniel became very angry as Daniel said  
that the money had to be deposited that day and Daniel spoke to the TD bank  
manager by phone and after, Mr. Hillman got his bank draft.  
[666]  
There was no discussion of Jakobstettel before that day. In cross-  
examination, Mr. Hillman indicated that he had no idea of what Jakobstettel  
Properties was or that he was part owner. Had he known, Mr. Hillman would not  
have invested in a bed and breakfast. David told Mr. Hillman after the Windsor  
office closed about Jakobstettel Properties and that Daniel owned it and that it  
was a bed and breakfast.  
[667]  
Exhibits 164 – 19E and 19F are bank documents that confirm Mr.  
Hillman provided $144,360.44 to Jakobstettel Properties Inc. on August 8, 2008.  
Mr. Hillman received no documents for his Jakobstettel investment despite  
asking for them on numerous occasions. When he wanted his file later on, he got  
different excuses from Daniel and his staff.  
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SUBSEQUENT EVENTS  
[668]  
In the fall of 2008, a friend of Mr. Hillman, a Mr. Quigley, called him out  
of the blue and told him that DPR Windsor was closing and he was ripping out  
the furniture. Mr. Hillman called Daniel who told him that the closing rumour was  
crazy – they were just winterizing! In cross-examination, Mr. Hillman indicated  
that he asked for his documents when DPR was closing down in Windsor but did  
not receive anything. The Windsor office did close and Mr. Hillman started calling  
the Kitchener office. In cross-examination, Mr. Hillman indicated he never  
received any documentation, information or paperwork regarding his real estate  
investments.  
[669]  
In the latter part of 2008, Mr. Hillman met David and Allison Briand at a  
coffee shop. In cross-examination, Mr. Hillman stated that David told him that he  
had broken away from DPR Financial and that he had formed Davlyn Financial  
and wanted Mr. Hillman to continue on with David. David advised him to pull his  
money away from Daniel, i.e., the $144,000 loan. David told him that he did not  
agree with what Daniel was doing with the clients’ money. David had been  
involved with Mr. Hillman’s Millionaire Mortgage dealings and David was aware  
of the contents of Mr. Hillman’s portfolio. Mr. Hillman did not trust David because  
he was clearly trying to distance himself from his Millionaire Mortgage  
involvement. David told him to contact a lawyer. Mr. Hillman did but did not  
initiate a civil suit. Instead, Mr. Hillman eventually contacted the police on advice  
 
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of counsel.  
[670]  
On December 8, 2008 Mr. Hillman took his father and met Daniel in a  
coffee shop in Windsor. Mr. Hillman told Daniel that he wanted his money back  
immediately. Daniel wrote out a letter that appears as Exhibit 164 – 19G in  
which Daniel writes that he is notifying “said companies of Mr. Hillman’s request  
to withdraw his investments. [He] will report this week on the progress of said  
request.”  
[671]  
Mr. Hillman never received any principal or interest on the Jakobstettel  
Properties investment and his loss on that investment is $144,360.44 plus unpaid  
accrued interest.  
[
672]  
Mr. Hillman’s loss on the Millionaire Mortgage investment was  
51,031.78, and his loss on the Jakobstettel Properties investment was  
144,360.44, for a total loss of $195,392.22 plus unpaid accrued interest.  
$
$
[673]  
Later Mr. Hillman got a new financial advisor, Theresa King. He cashed  
in his leveraged loans. One broke even and the other had a small loss. There  
was never any discussion with the Reeve brothers regarding private equity – he  
would not have been interested due to the risk. Daniel and David just talked  
about the stock market and they had better stocks to invest in with less risk. They  
would monitor his stock portfolio and did on occasion call to transfer his stocks.  
In cross-examination, Mr. Hillman indicated that they both said they could do  
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better than Trimark. They never warned him about any bad things that could  
happen (i.e., the 2008 stock market losses); they just talked about the good  
things.  
[674] Mr. Hillman sold his other home and now has a mortgage on his current  
home of $200,000.  
[675]  
I find Mr. Hillman to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
33. GARY RAYCROFT  
[
676]  
677]  
Gary Raycroft was married for 25 years but separated in 2014.  
[
Mr. Raycroft has a Bachelor of Arts in economics from the University of  
Guelph but no training in investing. He met Daniel through Steve Haney who was  
a financial advisor with DPR Financial.  
[678]  
Mr. Raycroft read articles on DPR and Daniel that were very impressive.  
Exhibit 174 is a copy of Exchange Magazine which contains articles which he  
read regarding Daniel and DPR. His impression was that Daniel was a  
successful owner of a successful investment firm.  
[679]  
In November of 2007, Mr. Raycroft and his wife met with Mr. Haney. The  
 
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Raycrofts owned a $370,000 home with no mortgage and had $100,000 in  
RRSPs and also RESPs. They discussed with Mr. Haney different types of  
investments in a meet-and-greet session.  
[680]  
Mr. Raycroft did a variety of checks and read articles and got references  
that were favorable toward DPR Financial and Daniel – see Exhibits 176 – 32A  
and 32B.  
[681]  
In February or March of 2008, Mr. Haney told Mr. Raycroft that if he  
wanted to do anything outside his RRSPs, he should speak to Daniel. It was  
around this time that Mr. Raycroft was introduced to Daniel by Mr. Haney. In  
cross-examination, Mr. Raycroft indicated that Mr. Haney arranged for two  
$100,000 leveraged loans to him and his wife and they purchased segregated  
funds and paid interest monthly on these leveraged loans with the National Bank.  
[682]  
In March or April of 2008, Mr. Raycroft and his wife had meetings with  
Daniel at the Jakobstettel Inn. Mr. Raycroft believed that Daniel was the owner of  
DPR Financial and a financial advisor because Daniel owned a financial  
company involved in segregated fund investments.  
FIRST INVESTMENT – CELEBRITY MANAGEMENT  
INTERNATIONAL INC.  
[683]  
In April of 2008, Daniel was aware that the Raycrofts had $100,000 in a  
bank account for investments. Daniel told them about investments in real estate  
 
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in increments of $100,000, $200,000 and $300,000. Daniel talked about a  
corporate bond involving the Jakobstettel. Daniel said it was a safe, high-end and  
low-risk commercial real estate investment. It was “bricks and mortar.” Mr.  
Raycroft was shown the Jakobstettel as the meetings were there. Daniel said  
that he was making a further 1 to 2 percent beyond the 20 percent he was  
paying. Daniel told Mr. Raycroft that his money was going into first and second  
mortgages in low risk, high end commercial real estate. In cross-examination, Mr.  
Raycroft denied the suggestion that his money was to be invested in the  
Jakobstettel. He was not told that his money was going to the Jakobstettel or any  
particular building.  
[684]  
There was no discussion that Mr. Raycroft’s money was to be used to  
pay DPR Financial’s expenses or that it was going to other investors. In cross-  
examination, Mr. Raycroft indicated that he had established a trust relationship  
with Daniel due to the homework that he had done, the references he had  
checked into, and the personal meetings with Daniel. Everything was done based  
on trust and his comfort with Daniel.  
[
685]  
2C is a bank draft dated April 26, 2008 made out to Celebrity Management  
International Inc. (Daniel told him to make it out to this company) in the amount of  
100,000. A couple of days later, Mr. Raycroft received Exhibit 176 – 32D which  
is a corporate bond between Celebrity Management International Inc. c.o.b. as  
Mr. Raycroft decided to invest in this high-end real estate. Exhibit 176 –  
3
$
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Jakobstettel Inn and Gary and Deborah Raycroft for consideration of $100,000  
paying annual interest of 20 percent for a five-year term with interest payments to  
be made annually. The document was signed by the parties; Mr. Raycroft  
believes Daniel signed in front of him on April 28, 2008. The document was  
witnessed by Annie Smith and it was brought out in cross-examination that Ms.  
Smith was the author of one of the articles in Exchange Magazine.  
SECOND INVESTMENT – JAKOBSTETTEL PROPERTIES  
INC.  
[686] In July or August, Mr. Haney left DPR Financial and advised the  
Raycrofts that they could stay or leave DPR Financial.  
[687]  
Through May to August of 2008, Mr. Raycroft had several meetings with  
Daniel. Daniel knew about Mr. Raycroft’s financial portfolio and the value of his  
RRSPs and RESPs. When Mr. Haney was not present, Daniel suggested  
cashing out his RRSPs all at once. Daniel said he had another high-end, low-risk  
commercial real estate investment.  
[688]  
Daniel suggested that Mr. Raycroft invest $100,000 in Jakobstettel  
properties at 16 percent. Mr. Raycroft asked Daniel where the money was going.  
Daniel told him that it was going into a low-risk, high-end commercial investment  
and that Daniel would never risk Mr. Raycroft’s money. There was no discussion  
regarding his money going to pay DPR Financial’s general expenses.  
 
-
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[689]  
Tax consequences were discussed. Daniel explained that if Mr. Raycroft  
cashed out his RRSPs there would be deferred sales charges and withholding  
taxes which Daniel would repay in full in five years. Mr. Raycroft told Daniel that  
he would not make this investment without being reimbursed for these charges  
and taxes. Regarding risk, Daniel again said that the investment was low-risk,  
high-end real estate, investments in first and second mortgages, “bricks and  
mortar.” Daniel confirmed that he would not risk Mr. Raycroft’s money. Daniel  
never disclosed that Daniel and his companies were having financial problems.  
[690]  
Mr. Raycroft and his wife agreed to withdraw their RRSPs. Exhibits 176  
–
32F and 32G are the withdrawal instructions signed by Deborah Raycroft, and  
confirmation of withdrawal by Canada Life dated August 13, 2008. The agent of  
record is Mr. Haney and he purports to witness the withdrawal instructions. In  
cross-examination, Mr. Raycroft indicated that Mr. Haney was not there and  
Daniel filled out the withdrawal instructions. Exhibit 176 – 32G is the  
confirmation provided by Canada life of Gary Raycroft’s withdrawal of his RRSPs  
on August 13, 2008. The agent of record is Mr. Haney. Exhibit 178 introduced by  
the defence are the withdrawal instructions of Mr. Raycroft. In cross-examination,  
Mr. Raycroft testified that this document was completed by Daniel and Mr.  
Raycroft doesn’t know if Mr. Haney signed it.  
[691]  
Exhibit 176 – 32H is the T4RSP of Deborah and Gary Raycroft  
indicating total withdrawals of approximately $130,000 with withholding taxes  
-
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paid of about $39,000. After deductions for deferred sales charges, the amount  
left was approximately $87,000. Mr. Raycroft added $13,000 to that total to make  
the investment for $100,000 into Jakobstettel Properties – see Exhibit 176 – 32E  
bank draft of $100,000 payable to Jakobstettel Properties Inc., dated August 16,  
2008. Later, Mr. Raycroft had to pay an additional $20,000 in income taxes. Mr.  
Raycroft cannot recall if Daniel advised him about that.  
[692]  
Exhibit 176 – 32J is an agreement dated August 18, 2008 between  
Jakobstettel Properties Inc. and Deborah and Gary Raycroft. It stipulates  
consideration of $100,000 with interest of 16 percent to be paid annually with a  
maturity date of August 18, 2013. Paragraph 1 of the agreement indicates that  
upon maturity, the following amounts would be paid: deposit of $100,000,  
accrued interest, $5,477.76 in deferred sales charges and $39,059 in prepaid  
taxes. The signature page indicated the parties signed the document on August  
28, 2008.  
[693]  
Mr. Raycroft indicated in cross-examination that he was never told the  
money was going to the Jakobstettel Inn. His understanding was that the money  
was to be invested in low-risk, high-end commercial real estate. It was pointed  
out that paragraphs 2 and 3 of the agreement refer specifically to occupancy  
rights and operating costs of the Jakobstettel Inn.  
[694]  
Sometime in July or August 2008, Mr. Haney left the firm. Mr. Raycroft  
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contacted Daniel that he was not getting his statements and Daniel said he would  
look after his investments and his segregated funds. Mr. Raycroft and his wife  
each had $100,000 in segregated funds.  
THIRD INVESTMENT – MILLIONAIRE MORTGAGE INC.  
[695]  
Mr. Raycroft had a number of meetings with Daniel in the fall of 2008  
regarding Daniel’s Millionaire Mortgage concept. Daniel advised him to create a  
workhorse account. Daniel said that Mr. Raycroft could set up a line of credit on  
his home and then take the money and invest it plus the interest; the line of credit  
would be paid by interest from the investment, and the interest paid could be  
deducted from his income tax. Mr. Raycroft took out a $250,000 line of credit in  
the fall of 2008. Daniel was aware of this as Daniel had told Mr. Raycroft to take  
out the line of credit for potential investments.  
[
696] On December 30 or 31, 2008, Daniel called Mr. Raycroft at home.  
Daniel told Mr. Raycroft that he had an investment vehicle for his (Mr. Raycroft’s)  
250,000 but needed the money by December 31, 2008. Daniel offered the  
$
following terms: the money was going to go to secure, low-risk, high-end  
commercial investments and he would receive interest monthly by direct deposit  
and this money would be used to make Mr. Raycroft’s line of credit payments.  
Daniel said that he would never jeopardize the equity in Mr. Raycroft’s home.  
There was no discussion regarding financial problems that Daniel or his  
companies were having. There was no discussion that his money was to be used  
 
-
203 -  
to pay other investors or was to go to Daniel’s ex-wife.  
[697]  
Exhibit 136 – 32K is a bank draft in the amount of $250,000 dated  
December 31, 2008 payable to Millionaire Mortgage Inc. Daniel told Mr. Raycroft  
to make it out to Millionaire Mortgage Inc. Mr. Raycroft gave the draft to Daniel at  
the parking lot at the Jakobstettel Inn.  
[698]  
By this time, Mr. Raycroft had invested a total of $450,000 with Daniel.  
Mr. Raycroft did this because he really trusted Daniel. In cross-examination, Mr.  
Raycroft indicated that in February or March 2008, he had done a number of  
reference checks on Daniel and DPR and he had telephone discussions with  
National Bank, Canada Life and other institutions that did business with DPR  
Financial. From this investigation, he learned that Daniel was very successful.  
Daniel owned the Jakobstettel Inn. Accordingly, Mr. Raycroft had a lot of trust in  
Daniel when he was told that his investments were going into low-risk and high-  
end investments.  
[699]  
After giving Daniel the $250,000, Daniel was very evasive in getting  
documents signed and Mr. Raycroft phoned every day for ten days to get a  
document signed. Exhibit 136 – 32L is an agreement, dated January 10, 2009,  
between Millionaire Mortgage Inc. and Gary and Deborah Raycroft for  
consideration of $250,000 with interest payable at 15 percent annually over five  
years, with monthly payments to made in the amount of $3,125 commencing  
-
204 -  
February 10, 2009. A void cheque was provided. There was a default clause that  
the Raycrofts could get their money back if interest payments were seven days  
late. The document was signed at the Wealth Institute Building on King Street in  
Cambridge.  
[700]  
In cross-examination, it was suggested that the $250,000 was invested  
in a business. Mr. Raycroft denied this suggestion; he was investing in low-risk,  
high-end commercial real estate. He was told these were secure investments but  
not the specifics. Daniel said he was making 1 to 2 percent above what he was  
paying. Daniel never said his money was going into Daniel’s businesses. What  
Daniel had said was that the money was being directed to high-end, brick-and-  
mortar real estate and that Daniel would never risk Mr. Raycroft’s money and/or  
home. Daniel said that Mr. Raycroft could trust Daniel.  
[701]  
On February 10, 2009, no payment was received. Mr. Raycroft was on  
the phone four or five times a day and finally got a payment in late February or  
early March for $2,500. The February and March payments, of a total $6,250,  
were fully paid on March 10 and 13, 2009. Over time, Mr. Raycroft got four  
payments in total.  
[702]  
On March 17, 2009, there was a meeting between Daniel and the  
Raycrofts with Mike Floyd and Jeff May also in attendance. Mr. Floyd went over  
Mr. Raycroft’s financial plan which included the three investments with Daniel  
-
205 -  
and concluded that Mr. Raycroft had a favourable outlook on retirement. Mr.  
Floyd then left. Daniel went through the payments regarding the $250,000  
investment and promised that $3,125 deposits would be made every month and  
it would be corrected in April with the next payment date being April 10.  
Regarding the $20,000 that was due on the first investment of $100,000 in April  
of 2009, Daniel said that a direct deposit would be made in April and that the  
interest deposit of $16,000 regarding the second investment would be made in  
August. Daniel did not disclose any financial problems that he was having.  
Exhibit 136 – 32M is an email dated March 19, 2009 sent to Daniel, Mr. May and  
Mr. Floyd outlining these promises made to Mr. Raycroft at this meeting.  
[703]  
The April 10, 2009 interest payment did not come. On April 13, 2009,  
Mr. Raycroft met with Daniel at the St. Louis Bar and Grill. Mr. Raycroft informed  
Daniel was that the April interest payment of $3,125 had not come and that he  
had heard rumours that DPR Financial was experiencing financial difficulties and  
that newspapers were stating that people were not getting paid on their  
investments. Daniel responded by telling Mr. Raycroft to not worry about his  
investments and that they were secure. Daniel indicated, “I would never risk your  
money or your home. I treat your money like it’s mine.” Mr. Raycroft told Daniel  
that if the monthly interest payments or the $20,000 interest payment due in April  
were not going to be paid, they wanted their money back. Daniel never disclosed  
any financial problems. Daniel indicated that they were doing very well. The  
-
206 -  
meeting is summarized in an email sent to Daniel dated April 14, 2009  
[704]  
Interest payments were not made in April. On May 11 through 15, 2009,  
Mr. Raycroft sent Daniel three separate letters demanding the return of all his  
investment monies in his three investments totalling $450,000 plus unpaid  
accrued interest. Mr. Raycroft retained a lawyer in April or May 2009 and sued  
Daniel.  
[705]  
Regarding the first two $100,000 investments, no interest or principal  
was ever paid. Regarding the $250,000 Millionaire Mortgage investment, only  
four monthly interest payments were ever paid and the principal was never paid  
back. The Raycrofts’ loss is $450,000 plus unpaid accrued interest.  
[706]  
I find Mr. Raycroft to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
3
4. WAYNE SCHROEDER  
Wayne Schroeder in 2008 was a retired teacher. He has a university  
degree but little investment training.  
[707]  
[708] David had been Mr. Schroeder’s financial advisor since 2000. Mr.  
Schroeder had known David and Daniel for years and thought they were financial  
 
-
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advisors.  
[709]  
In 2008, Mr. Schroeder had RRSPs. In the past they had always gone  
up in value. In 2008, they dropped from $95,000 to $85,000. He was concerned  
and was looking for a safer alternative.  
[710]  
Daniel called Mr. Schroeder in August of 2008. Daniel met Mr.  
Schroeder and his wife at the Jakobstettel Inn. Daniel talked about Mr. Schroeder  
taking all of his funds out of his RRSPs. David had told Mr. Schroeder to leave  
them in as long as possible, but Mr. Schroeder was concerned about the funds  
dropping and would no longer need to be concerned about taxes after they were  
cashed in. Daniel told him that there would be less risk in his proposed  
alternative, and that Mr. Schroeder would be better protected by where the  
money would reinvested. There was no discussion of a loan to Daniel or his  
companies. Mr. Schroeder thinks he signed some documents but is not sure. In  
cross-examination, Mr. Schroeder indicated he does not recollect whether there  
were any discussions regarding private investments or corporate bonds or  
investments in the Jakobstettel. Mr. Schroeder could not recall the specifics of  
what his investment was going into.  
[711]  
Mr. Schroeder and his wife decided to take their money out of their  
RRSPs. Exhibit 179 – 34D is the RRSP withdrawal instructions that he signed  
on August 18, 2008. It purports to be signed by David, but David was not there  
-
208 -  
for the meeting or when this document was signed. While Mr. Schroeder  
expected David at the meeting, David was not there. He does not recall talking to  
David about withdrawing the RRSPs. In cross-examination, Mr. Schroeder  
indicated that he made no attempt to contact David about the withdrawal. He  
looked at David and Daniel as both part of the same company.  
[712]  
In cross-examination, Mr. Schroeder was referred to a letter of direction  
dated August 18, 2008 which he signed. The letter indicates that he was  
withdrawing his RRSPs against the advice of his financial advisor for personal  
reasons. Mr. Schroeder does not remember this letter, and it goes against what  
his understanding was. He recalls signing some documents but cannot  
remember which ones. Mr. Schroeder does not know who composed this  
document. His recollection is that Daniel said this document was necessary for  
the bank to release funds to him.  
[713]  
Exhibit 179 – 34A is a bank draft in the name of Jakobstettel Properties  
in the amount of $59,524.74 dated August 22, 2008, which is the net amount of  
Mr. Schroeder’s RRSP withdrawal. Mr. Schroeder was told to bring the bank draft  
to the Millionaire Building in Waterloo. He cannot remember who told him that.  
David was not involved. The doors were closed when he got there and he gave  
the bank draft to a man that walked out of the building who told him that he would  
see that Daniel got it. Mr. Schroeder knew nothing about Jakobstettel Properties  
other than it was David and Daniel’s company.  
-
209 -  
[714]  
Mr. Schroeder was expecting documents or a report within three months  
but got nothing. It was difficult to get hold of anyone and the building was closed.  
Shortly after August of 2008, Mr. Schroeder met with Daniel regarding a course  
but decided not to enroll. By Christmas of 2008, he had still received nothing.  
After Christmas, he could not get a hold of Daniel. In February of 2009, Mr.  
Schroeder located David at his new office at Davlyn but David could not make  
the February 2009 meeting they scheduled. In the summer of 2009, Mr.  
Schroeder finally met with David at Davlyn; David had no knowledge of what  
happened. In cross-examination, Mr. Schroeder indicated that at this summer  
meeting, David told Mr. Schroeder that his money was gone and advised him to  
phone the police which he did.  
[715]  
Exhibits 179 – 34E and 34F are Mr. Schroeder’s T4RSP and 2008  
income tax summary respectively. They indicated that Mr. Schroeder, in addition  
to paying the withholding tax of approximately $25,000, also paid another $7,814.  
Mr. Schroeder was surprised to learn of this latter additional figure.  
[716] Mr. Schroeder never received any money or documentation regarding  
his investment. The investment totally disappeared. His loss is $59,524.74.  
[717]  
I find Mr. Schroeder to be a credible witness. His evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
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examination.  
3
5. ANDREW EPLEN  
In 2008, Andrew Eplen was a plumber and training co-ordinator and  
lived in Kitchener. He had limited investment knowledge.  
[718]  
[719]  
Mr. Eplen met Daniel in approximately 1988 and Daniel became his  
financial advisor. Daniel eventually formed Reeve and Associates which evolved  
into DPR Financial.  
[720]  
Mr. Eplen’s investments were in RRSPs which were invested in  
segregated funds through Manulife and Fidelity. He also had GIFs and mutual  
funds.  
[721]  
In 2005, Daniel introduced Mr. Eplen to David who took over as his  
agent of record as Daniel was doing other things. In cross-examination, Mr.  
Eplen indicated that Daniel was opening offices in Windsor and was expanding  
as the owner of DPR and the Jakobstettel Inn.  
[722]  
In August of 2008, Mr. Eplen got a phone call from Lee-Anne Ruggle,  
Daniel’s assistant, that Daniel wanted to schedule a meeting as Daniel had a  
good opportunity for investments to present.  
[723] On August 27, 2008, Mr. Eplen met with Daniel at Daniel’s Waterloo  
office. Daniel told him to cash in his Manulife GIFs in his RRSPs and invest in a  
 
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high-end tourist resort in Costa Rica. Daniel told him that Daniel had property in  
Costa Rica. The money was to be used in the growth, construction and  
management of the resort. Mr. Eplen asked if he should contact David but Daniel  
stated that he was the president of DPR and could do all the transactions. In  
cross-examination, Mr. Eplen indicated that there was no discussion of the name  
of the resort or any details. The deal was based on trust and a 20-year working  
relationship with Daniel.  
[724]  
There was no disclosure that Daniel no longer had a licence to deal with  
insurance products. Regarding risk, Mr. Eplen said that he could not afford to  
take a hit. Daniel replied, “No one can.” Mr. Eplen decided to cash out his GIFs  
and gave a cheque to Daniel.  
[725]  
Exhibit 180 – 15B contains the withdrawal instructions and confirmation  
of withdrawal of RRSPs in the amount of $111,978.01. David is the agent of  
record. The withdrawal instructions have Mr. Eplen’s and David’s signatures on  
them. David was not involved. Mr. Eplen indicates that the 7 in the date of  
“
27/8/08” is not his writing but the signature beside it is. Mr. Eplen indicated that  
the withdrawal instructions were signed the day of his meeting with Daniel on  
August 27, 2008 and completed after. In cross-examination, it was pointed out  
that Exhibit 180 – 15B also contains a letter of direction signed by Mr. Eplen on  
August 17, 2008. The letter indicates that the withdrawal is against the advice of  
his financial advisor. Mr. Eplen indicated that this document was never  
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discussed.  
[726]  
Exhibit 180 – 15A is a bank draft made out to Jakobstettel Properties,  
dated August 29, 2008 in the amount of $78,400. This was the amount left over  
from Mr. Eplen’s withdrawal after a deduction for $33,000 in withholding taxes.  
The term “withholding taxes” was never discussed. Daniel told Mr. Eplen to make  
the cheque out to Jakobstettel but never explained why. Mr. Eplen assumed that  
Jakobstettel was the holding company for Costa Rica. Mr. Eplen was told nothing  
about Jakobstettel or Millionaire Mortgage.  
[
727] Exhibit 180 – 15E is an agreement between Millionaire Mortgage Inc.  
and Margaret and Andrew Eplen for consideration of $111,978.01 with interest of  
6 percent to be paid in annual instalments commencing August 27, 2009 and  
1
maturing in August 27, 2013. The amount of $111,978.01 listed on the document  
was the amount of Mr. Eplen’s deposit plus his withholding taxes. The document  
has a default clause that if no payment of interest is paid within seven days, the  
original deposit and deferred sales charges and prepaid taxes are to be repaid.  
Upon maturity, $111,978.01 was to be paid. In cross-examination, it was pointed  
out this is the exact amount on the T4RSP in Exhibit 180 – 15C. The Exhibit  
180 – 15E agreement was signed at the Jakobstettel Inn in mid-September but  
backdated to August 27, 2008.  
[728]  
In cross-examination, Mr. Eplen agreed that the agreement makes no  
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reference to Costa Rica or DPR Financial despite Mr. Eplen holding Daniel  
Reeve and DPR Financial responsible.  
[729]  
Mr. Eplen knew that Daniel owned the Millionaire Mortgage Company.  
The first time it was mentioned was when he saw it in the agreement. He  
assumed it was a holding company for the funds in Costa Rica.  
[
730] Exhibit 180 – 15D indicates that Mr. Eplen had to pay an additional  
16,000 in taxes due to the RRSP withdrawal. There was no discussion of tax  
consequences or of the original withholding tax. The only value mentioned was  
111,978.01.  
$
$
[731]  
After he signed the agreement in September at the Jakobstettel, Mr.  
Eplen bumped into David by happenstance. He asked David if he had made a  
good investment but David had no comment. In cross-examination, Mr. Eplen  
indicated that he did not tell David about Costa Rica or discuss cashing in his  
RRSPs. David was asked, “Did I make a good deal?” to which David said  
nothing. Mr. Eplen did not know what David’s silence meant but he did not  
pursue it as he had a 20-year relationship with Daniel and trusted him.  
[732]  
In early 2009, Mr. Eplen tried to get a hold of Daniel as he had not  
received any information about Costa Rica and had no other meetings with  
Daniel. Accordingly, Mr. Eplen got a meeting with David at Davlyn Financial in  
April 2009. He had received a letter dated April 2, 2009 from David indicating that  
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there were allegations of wrongdoing by Daniel and David did not encourage  
investments with Daniel or his companies – see Exhibit 181, introduced by the  
defence. In the meeting, David told Mr. Eplen that Daniel had been a bad boy  
and Daniel had not been making investments for his clients. He asked David for  
advice and wondered if he should get a lawyer or go to the police or write Daniel.  
Articles appeared in the newspapers and Mr. Eplen went to the police.  
[733]  
Mr. Eplen never got any money in either interest or principal; his total  
investment is gone. His loss is $78,400, which is the total given to Daniel after  
paying for prepaid taxes.  
[734]  
I find Mr. Eplen to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
36A. LYNETTE CARNEGIE (CAIGER)  
[735]  
Lynette Carnegie was married to Robert Caiger in 2008. She was  
employed at Sterling Truck Manufacturing and was a group leader of 18 people.  
She had been working there for 17 years.  
[736] In 2008, she had limited investing experience and had RRSPs to which  
she had contributed for 17 years. She had a new home with a $350,000  
 
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mortgage.  
[737]  
In 2008, Dan Balch, who was a mortgage broker and family friend,  
described an investment opportunity that would pay dividends being offered by  
Daniel.  
[738]  
In May of 2008, Ms. Carnegie and her then-husband met Daniel at  
Daniel’s office in London. Exhibit 182 – 7A, a “Know Your Client” form, was filled  
out by Ms. Carnegie and Mr. Caiger and sent back to DPR Financial on May 19,  
2008.  
[739]  
Daniel presented a slide show regarding his Millionaire Mortgage  
programme – see Exhibit 182 – 7B. Daniel said the programme could pay off  
her mortgage in seven years. Her understanding was that a minimum of  
$100,000 would be borrowed and used as leverage and the money was to be  
invested into insurance companies. In cross-examination, she indicated that Mr.  
Balch helped her to get the re-financing on her home. As well, David assisted  
with the process to get a line of credit from the TD Bank  
[740]  
Prior to May 28, 2008, there was a meeting among Ms. Carnegie, Mr.  
Caiger, Mr. Balch and Daniel. Daniel told them he operated Reeve Hotels and  
Resorts out of St. Jacobs. Ms. Carnegie provided a $100,000 cheque payable to  
Reeve Hotels and Resorts so that he could invest in insurance companies (Sun  
Life was mentioned). In cross-examination, she indicated there was no  
-
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discussion about using the workhorse account as a real estate investment.  
There was no discussion of any money going to Daniel’s ex-wife. Exhibit 182 –  
7C is an email from Linzie Brown, Daniel’s assistant, instructing Ms. Carnegie to  
bring $100,000 payable to Reeve Hotels and Resorts to the anticipated May 28  
appointment with David and Daniel.  
[741]  
The $100,000 came from a TD bank line of credit that Ms. Carnegie had  
opened. She wrote the cheque on the spot and handed it to Daniel at his office –  
see bank receipt at Exhibit 182 – 7D. She asked Daniel if she could get her  
money back if she lost her job. Daniel told her, in David’s presence, that she  
could get her money back without penalty. She got no documents at that time;  
she just had her bank receipt. All she received were insurance books.  
[
742] Exhibit 182 – 7E is an agreement dated June 1, 2008 between  
Millionaire Mortgage and Lynette Caiger (Ms. Carnegie) for consideration of  
100,000 at interest of 16 percent with a maturity date of June 1, 2013. Interest  
$
was to be paid in monthly instalments of $1,333.39, starting January 1, 2009.  
Daniel’s handwriting is on the document where changes to the typewritten portion  
were indicated. The beneficiaries are listed as Barry Carnegie (Ms. Carnegie’s  
brother) and Carol Carnegie (Ms. Carnegie’s sister). Ms. Carnegie testified that  
she got the document on June 1, 2008. She could not say why there was a  
seven-month delay in getting any interest payments. In cross-examination, she  
indicated that both Daniel and David told her that Millionaire Mortgage was  
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owned by Daniel. In re-examination, Ms. Carnegie indicated that her investment  
was to be split four ways with each quarter being put into four different insurance  
companies.  
[
743]  
in November of 2008 when Daniel came to her house but backdated to June 1,  
008, the date of the money transfer to Daniel. She indicated that she did in fact  
In cross-examination, she agreed that his document was in fact signed  
2
get a document signed in June 1, 2008 as she got two sets of papers. The  
defence submitted Exhibit 186 which are David’s notes of May 28, 2008, which  
refer to the beneficiaries as “Bob Caiger and Cassandra.” In contrast, the  
agreement refers to Ms. Carnegie’s brother and sister, Barry and Carol, as  
beneficiaries. Cassandra was living there in May and June of 2008 but moved  
out in the fall of 2008. In October of 2008, Lynette was in the midst of losing her  
job and she had concerns about her husband using her bank account. She  
wanted Mr. Caiger removed as primary beneficiary and replaced with her brother  
Barry Carnegie – see notes of David, dated October 21, 2008, filed by the  
defence as Exhibit 188.  
[744]  
When, in October 2008, Ms. Carnegie was notified that the plant  
employing her was going to close and her job was in jeopardy, she panicked;  
four months had gone by and she had not received anything on her investment.  
She tried to get ahold of Daniel but he had disappeared. She sent an email to  
David and Daniel indicating she wanted the investment cancelled and her money  
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218 -  
back as agreed to by Daniel in their previous meeting in September. David  
returned the correspondence indicating he would forward her request to Daniel  
and that David was now at Davlyn Financial – see Exhibits 182 – 7F and 7G.  
[745]  
In November of 2008, Ms. Carnegie met with Daniel and her husband at  
her house. She told Daniel she wanted her money back. Daniel told her he could  
not give the money back but that it could be re-invested in a different way. She  
recalled that her investment was invested in four insurance companies. Daniel  
said that it would be re-invested in Reeve Resorts and Hotels and Daniel  
guaranteed her a monthly income. She thought that it seemed like a good idea  
and agreed to do it that way. She then signed and received Exhibit 182 – 7E  
which has been previously referred to. The document indicates that interest  
payments were to commence January 1, 2009.  
[
746]  
are a series of emails to Daniel and David from January 15, 2009 to March 3,  
009 wherein Ms. Carnegie outlined the stress she was under as she was about  
However, the payments did not come. Exhibits 182 – 7H through 7L  
2
to lose her job and would no longer be able to pay the line of credit without the  
interest payments Daniel had promised. David responded by indicating that he  
was no longer at DPR and had severed ties to that company. Lee-Anne Ruggle  
on March 2, 2019 advised Ms. Carnegie that she was trying to arrange an  
appointment for the signing of documents to refund the monies.  
-
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[747]  
In cross-examination, Ms. Carnegie indicated that she talked to David in  
this period but that David did not recommend phoning the police. She did call the  
London fraud office on February 20, 2009.  
[748]  
She was never advised that her money was going to pay Daniel’s ex-  
wife or that Daniel had financial difficulties (he had a beautiful London office).  
There was no discussion regarding her money going to pay the expenses of DPR  
Financial.  
[749]  
Ms. Carnegie had two investments: the June 1, 2008 $100,000  
investment, which was re-invested in November 2008. She received no interest  
and no return of principal on either.  
[750]  
Ms. Carnegie’s loss is $100,000 plus unpaid accrued interest payments.  
36B. ROBERT CAIGER  
[751]  
In 2008, Robert Caiger was married to Lynette Caiger (Ms. Carnegie)  
but in 2010 they were divorced.  
[752]  
Their finances were separate and they had an agreement as to how the  
bills were going to be paid. Mr. Caiger had been in the home renovating business  
for 25 years and had limited investment knowledge. He worked with Dan Balch to  
flip commercial properties.  
[753]  
Mr. Balch was looking for new products and DPR Financial had a  
 
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Millionaire Mortgage product. Mr. Balch introduced the Caigers to David. The  
meeting took place in the DPR Financial building which was a high-end building  
with waterfalls, which appeared very expensive and impressive. In March of  
2008, Mr. Caiger learned about leveraging per the Millionaire Mortgage  
programme.  
[754]  
The Caigers were in their 50s looking to retire. They owned their dream  
home, which Mr. Caiger had built. David represented Daniel as a successful  
business person coming out of a limo.  
[755]  
Daniel and David explained that the Millionaire Mortgage program relied  
on a 40-year amortization: A person takes an 80 percent loan on equity and  
extracts an extra $100,000 and pays $300 less. The person then obtains loans  
and invests in insurance segregated funds. Daniel told Mr. Caiger that  
segregated funds were more protected with better returns and that segregated  
funds cater to people with money. He got $89,000 from the bank and Ms.  
Carnegie topped it off with $100,000. In cross-examination, Mr. Caiger indicated  
that the house was in his wife’s name.  
[756]  
At the end of March 2008, Daniel indicated the Carnegies needed to get  
approval from insurance companies to raise $100,000 from four companies each,  
plus a $100,000 line of credit, for a total of $500,000. The $100,000 from the line  
of credit was to go into Reeve Hotels and Resorts until the approvals were  
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obtained. Interest would be paid on the $100,000 and that would pay for the line  
of credit payments owing on the $100,000. Ms. Carnegie asked Daniel if they  
could get their money out and Daniel said that they could get a 100 percent  
refund at any time. The $100,000 would be held by the insurance companies.  
[757]  
There was no disclosure by Daniel of problems of financing. Daniel said  
he was big in real estate and was in the financial advisor business to help other  
people make money.  
[758]  
The $100,000 as indicated in the Exhibit 182 – 7D receipt was given  
over on June 1, 2008. Mr. Caiger signed a number of forms but they were all  
given to Daniel. He never saw Daniel between June and November as Daniel  
was difficult to get ahold of and would cancel appointments. His signature  
appears as a witness on the Exhibit 182 – 7E agreement between Millionaire  
Mortgage and Ms. Carnegie. Mr. Caiger stated he signed the agreement on June  
1, 2008 which is the date on the agreement. The Crown made an application  
under s. 9(2) of the Canada Evidence Act and confronted him with his testimony  
from the preliminary hearing where he testified that Exhibit 182 – 7E was not  
signed in June but in November. “Sixteen percent interest” (see the following  
paragraph) did not come up until November and Daniel backdated the document.  
Mr. Caiger indicated that he was truthful at the preliminary hearing and that his  
memory was better then.  
-
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[759]  
On November 14, 2008, Daniel showed up. The Caigers were uptight as  
they had not seen a penny on their investments. Daniel said everything should  
be fine and he did not understand why they had not been paid – maybe a toggle  
switch had not been turned on. They told Daniel they wanted their money back.  
Daniel said he had another plan. He would pay 16 percent interest. A new  
document was brought up and it incorporated the 16 percent interest payment.  
According to Mr. Caiger, there was no way that the June agreement had 16  
percent written into the terms. Mr. Caiger remembers Daniel backdated the  
November agreement to June 1, 2008 and scribbled something onto the  
document. (Exhibit 182 – 7E has Daniel’s writing on it as per Ms. Carnegie’s  
testimony.) Daniel indicated on November 14 that payments in the new program  
were to start on January 1, 2009 (as indicated in Exhibit 182 – 7E) but that he  
still owed interest from June to December which would be paid in December.  
[
760]  
the defence as Exhibit 186, Robert’s testimony, and the contents of Exhibit 182  
7E, the only reasonable conclusion I can draw is that Exhibit 182 – 7E was  
Combining Ms. Carnegie’s testimony with David’s notes introduced by  
–
signed on November 14, 2008 and backdated to June 1, 2008. The deal was  
drawn up in November to reflect the “new deal” proposed by Daniel on November  
14, 2008 and agreed to by the Caigers.  
-
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36C. DAN BALCH  
[761]  
In 2008, Dan Balch was a mortgage broker with 13 years’ experience  
with the brokerage firm Mortgage Architects. He arranges mortgages and is  
regulated by the Financial Services Commission of Ontario (FISCO).  
[762]  
Another mortgage broker, Joe Sammut, informed Mr. Balch what DPR  
Financial was doing. He did internet research on Daniel and DPR in April, 2008  
and nothing negative turned up. He decided he wanted to meet Daniel.  
[763]  
On April 8, 2008, Mr. Balch first met Daniel and his secretary. Daniel  
showed him around the London office. The offices were very elaborate and  
impressive. Daniel explained how the Millionaire Mortgage programme worked  
and Daniel gave him his book and a magazine with Daniel’s picture on it.  
[764]  
Daniel told him the programme works this way: Mr. Balch would procure  
mortgages for people with equity in their homes and do a 40-year amortization.  
The clients’ payments would not change but they could pull out money and put it  
into a workhorse account. They then could get 3 or 4 times their money in loans  
and put it into segregated funds growing at a generous interest rate. Clients  
would need $50,000 to $150,000 in equity in their homes. The workhorse  
account contained the money that would be leveraged to get a larger sum of  
money.  
[765]  
Daniel wanted Mr. Balch to service Daniel’s clients and bring in Mr.  
 
-
224 -  
Balch’s clients. Mr. Balch had six potential clients for Daniel but only two couples  
ultimately partook: the Caigers and the Ashmans.  
[766] Regarding the Caigers, on April 16, 2008, David did a presentation with  
Mr. Balch and the Caigers present.  
[
767]  
it over to Daniel. The Caigers were to get a new mortgage of $360,000 of which  
125,000 was to be put into a workhorse account. The workhorse account would  
be leveraged to obtain a total new line of credit of $500,000 – see Exhibit 189 –  
B action sheet dated April 4, 2008.  
The Caigers decided to go ahead. They obtained $100,000 and handed  
$
5
[768]  
Daniel provided Mr. Balch with the parameters of what they were looking  
for in the programme. In cross-examination, Mr. Balch indicated that David did  
the presentation and arranged the segregated funds because Daniel was not  
licenced. Daniel set up the lines of credit and financing. The workhorse account  
was to be used for paying the monthly interest payments and the payments were  
to be tax-deductible. The workhorse account was not to be used for investment.  
[769]  
In August or September, the Caigers were concerned as they had been  
provided no paperwork. Mr. Balch contacted Daniel and asked about the  
paperwork and Daniel said he was having problems getting the leverage done.  
The $100,000 was supposed to turn into $400,000. Daniel was not returning calls  
and Mr. Balch was trying to keep his clients happy.  
-
225 -  
[770]  
In cross-examination, Mr. Balch indicated he received a letter from  
David on October 20, 2008 that David was no longer at DPR Financial. In  
November, 2008 Mr. Balch had a face-to-face meeting with Daniel and part of the  
discussion was why David left. Daniel advised that he was continuing the  
Millionaire Mortgage programme. Mr. Balch does not remember whether Daniel  
advised that he was shutting down the Windsor and London offices.  
[771]  
Exhibit 189 – 5D is an email dated February 11, 2009 sent to Lee-Anne  
Ruggle. Mr. Balch indicated that he could not get a hold of Daniel and had two  
distraught clients, the Ashmans and the Caigers, who were not getting any  
money, the offices had closed and Daniel’s cell phone was out of service.  
[772] Daniel told Mr. Balch he had resorts, limos and the Wealth Institute.  
Daniel did not mention his private equity investments.  
[773]  
Regarding the Ashmans, they met with David who presented the  
Millionaire Mortgage PowerPoint on TV. The Ashmans entered the programme  
and gave Daniel $150,000. They refinanced their home for a new mortgage of  
$480,000 and raised $155,000 to be put into their workhorse account – see  
Exhibit 189 – 50A action sheet, dated April 4, 2008. The mortgage company  
said that they had given the Ashmans too much money and wanted $20,000  
back. After months and months, the Ashmans asked Mr. Balch to get hold of  
Daniel. On November 20, 2008 Mr. Balch sent an email to Janice Berkin  
-
226 -  
indicating that the Ashmans needed $20,000 returned ASAP or they would pay a  
15,000 penalty. Ms. Berkin responded by saying that Daniel would call Mr.  
Ashman.  
$
[774]  
I find Ms. Carnegie (Caiger) and Mr. Carnegie to be credible witnesses.  
Their evidence was supported by documentation in the form of exhibits and there  
were no significant inconsistencies in their evidence in either examination-in-chief  
or cross-examination.  
3
7A. PILITA GALANO  
Pilita Galano is a lab technician with a university degree in medical  
technology. She came to Canada in 1997 and was married in 2007.  
[775]  
[776]  
In June of 2008, Steve Haney from DPR Financial did a presentation to  
Ms. Galano and her co-workers regarding the Millionaire Mortgage programme.  
Ms. Galano remembers it as a programme whereby you could pay off your  
mortgage faster by taking equity out of it, setting up a workhorse account to pay  
for the interest on the loan, and deducting the interest for income tax purposes.  
She was given a hard copy of the presentation – see Exhibit 191 – 16A. The  
example in it is close to her situation.  
[777] She decided to go ahead with the programme. In cross-examination,  
she indicated that she attended upon John Cavan to set up a new mortgage. It  
 
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227 -  
was still a 25-year amortization period. Her mortgage payments went up but she  
did not mind as long as the workhorse account paid off the $100,000 leveraged  
investment loan.  
[778]  
She got a $100,000 leveraged loan from the National Bank. It was  
deposited with Canada Life on August 7, 2008. Steve Haney was the agent of  
record. Mr. Haney left DPR Financial in August of 2008. By December 31, 2008,  
the $100,000 was down to $68,754 – see Exhibit 191 – 16D. In cross-  
examination, Ms. Galano indicated that Mr. Haney had told her that DPR  
Financial would do daily monitoring of her account and put in a 10 percent stop-  
loss policy. They were not doing their job.  
[779]  
She gave Mr. Haney a $74,000 cheque payable to Canada Life for the  
workhorse account on August 19, 2008 – see Exhibit 191 – 16C. In cross-  
examination, she indicated that, after Mr. Haney left, she phoned to see who was  
replacing Mr. Haney. The workhorse account had not been set up yet.  
[780]  
On September 6, 2008 Daniel brought the cheque back. He asked her  
to change it to Millionaire Mortgage. Daniel said he would pay her an 8 percent  
fixed rate of return. She was paying 6 percent on her leveraged loan. There was  
no discussion as to how long her $74,000 was to be invested for. Daniel told her  
he had seven companies and was a successful businessman. In cross-  
examination, she indicated that Daniel told her it would be better for her cheque  
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to go to Millionaire Mortgage (DPR). Daniel did not say that Mr. Haney was  
responsible for setting up the workhorse account but it was not done.  
[781]  
She gave Daniel a cheque in the amount of $74,000 payable to  
Millionaire Mortgage, dated September 6, 2008 – see Exhibit 191 – 16B. Daniel  
said nothing regarding risk. He told her he would process the cheque and send  
the documents to her. She believed that the money would be invested the same  
way as what Mr. Haney had said – in segregated funds. Daniel said nothing other  
than he would invest the cheque in Millionaire Mortgage to get a specific rate of  
return.  
[782] There was no agreement that her $74,000 was to be used to pay for (1)  
DPR expenses, (2) divorce settlement to Daniel’s wife, or (3) any other investors.  
[783] On October 31, 2008, she filled out a form, sent to her by DPR, making  
Jeff May her agent of record – see Exhibit 191 – 16F.  
[784]  
Regarding her $74,000, Ms. Galano never received any interest  
payments, neither were any interest payments made on her $100,000 line of  
credit loan. She made the interest payments herself. In cross-examination, she  
indicated that Mr. Haney told her that the workhorse account would pay the  
interest on the $100,000 loan and it would be tax-deductible.  
[785] She met Daniel in February 2009 and told him she wanted her money  
back. Jeff May was there. She was told she could get free instruction from the  
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Wealth Institute. Daniel made no disclosure of the financial problems he was  
having and never told her where her $74,000 went.  
[786]  
In cross-examination, Ms. Galano indicated that her $100,000  
investment just kept dropping despite DPR promising in the fall of 2008 that they  
would monitor her account and implement stop-losses. Finally on March 5, 2009,  
she switched three funds that had dropped from $75,000 to $40,000. She did this  
by phoning and instructing Canada Life to make the switch that appears in the  
confirmation in Exhibit 192 introduced by the defence.  
[
787] In late March of 2009, she got an email from Mr. May that he was no  
longer affiliated with Daniel or his companies as of April 2, 2009 – see Exhibit  
91 – 16E.  
1
[788]  
Ms. Galano’s loss is $74,000, in addition to her increased mortgage  
payments.  
3
7B. JOHN CAVAN  
John Cavan is a licensed mortgage agent regulated by FISCO and  
works with Mortgage Architects.  
[789]  
[790]  
In February or March of 2008, he attended a meeting that was set up by  
his company in conjunction with Millionaire Mortgage at the Mississauga Public  
Library.  
 
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[791]  
Daniel Reeve was there with Steve Haney and Lee-Anne Ruggle. Ten to  
twelve agents from Mortgage Architects were there. Daniel was looking for a  
high-profile mortgage company to engage in a two-way street of referrals. The  
Millionaire Mortgage concept was explained by Daniel and then Mr. Haney gave  
more intricate details.  
[792]  
Daniel and Mr. Haney indicated they were looking for a firm that would  
arrange mortgage financing to get equity out for investing in segregated funds.  
Later there was a discussion regarding leveraged loans. It was a time-sensitive  
offer. Daniel had selected Mortgage Architects as they were a high-profile firm.  
[793]  
Exhibit 190 – 52 is an ad placed around August 2008 in the Milton  
Champion providing details of the Millionaire Mortgage concept in association  
with Mr. Cavan. In cross-examination, Mr. Cavan indicated that he was  
approached by Millionaire Mortgage and Daniel to place the article in the paper.  
The article was written by Daniel and provided to Mr. Cavan by Millionaire  
Mortgage. Daniel had told Mr. Cavan that he liked the way he did business and  
wanted to do something that would advance both their businesses.  
[794]  
Mr. Cavan’s understanding was that the money raised was to go to  
segregated funds. There was no discussion that the money secured by the  
Millionaire Mortgage programme was to go to Daniel’s corporations.  
[795]  
He referred ten or eleven of his clients to Millionaire Mortgage. Four  
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participated including Pilita Galano and Carin and Dan Smith.  
[796]  
Regarding the Smiths, they got into matrimonial issues and were  
separating. Ms. Smith had problems with Millionaire Mortgage. Mr. Cavan got  
involved to try to get a hold of Daniel in the late summer and fall of 2008 to the  
point that he became a pest.  
[797]  
After weeks of calls, Mr. Cavan finally got a hold of Daniel and asked  
him why he was not returning calls. Daniel told Mr. Cavan that he always returns  
calls and voicemails are recorded. Mr. Cavan asked Daniel why he did not return  
emails. Daniel blamed Ms. Ruggle and promised he would get ahold of Ms.  
Smith right away. Meetings were arranged and were cancelled. Mr. Cavan  
offered the use of his office.  
[798] Mr. Cavan did not participate in the Millionaire Mortgage programme  
due to suspicions raised in late 2008 and 2009.  
[799]  
Daniel told Mr. Cavan that the workhorse account was to receive the  
mortgage funds and the workhorse account would in turn invest in three or four  
segregated funds accounts. This concept is also addressed by the book, The  
Millionaire Mortgage. In cross-examination, Mr. Cavan indicated that he never  
read the whole book—just a couple of chapters—but he did give it to clients.  
[800] The Millionaire Mortgage book was entered as Exhibit 7. At page 110,  
the procedure is outlined as follows:  
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Step 3 – Create WHA [workhorse account] – for example $60,000  
Step 6 – Use WHA to make interest payments on LOC [line of credit] of  
$307,174  
Step 9 – Invest $307,174 in GIF [guaranteed investment fund]. A GIF is  
an advanced form of SFs [segregated funds] and has a 75% maturity  
guarantee  
[801]  
I find Ms. Galano to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
38. LINDA CHAFFE  
[802]  
Linda Chaffe has been an X-ray technologist for 25 years and has a  
college degree but has no training in investing. In 2009, she had a low level of  
investing experience.  
[803]  
In 2009, she had a house worth $300,000 with a $140,000 mortgage  
and $160,000 in equity. She was recently separated with three children and  
needed to remortgage her home. She had a mortgage broker, Penny Chmilar  
from Mortgage Architects, and met Daniel through Ms. Chmilar.  
[804]  
In mid-January 2009 she attended a Millionaire Mortgage presentation  
at Ms. Chmilar’s home. Daniel was there. Daniel described the programme – it  
involved workhorse accounts, mutual funds, and segregated funds. Daniel said a  
 
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ten-year mortgage would be paid off with money left over to send the kids to  
college.  
[805]  
Daniel’s idea was that instead of a $140,000 renewal, she would re-  
mortgage for $240,000. Of the $100,000 difference, $30,000 would be used to  
pay off debts and $5,000 would be used for a Disney World trip and the  
remaining $65,000 would be invested in a Millionaire Mortgage plan to be  
invested in insurance companies. She did not really understand the concept.  
Exhibit 195 is the Millionaire Mortgage presentation given to her with the  
numbers tailored to her situation. In cross-examination, Ms. Chaffe indicated that  
she thought the money was going to insurance company investments and that  
years later, the mortgage would end up paid off. She knew nothing about private  
companies. She was referred to her preliminary hearing evidence where she  
testified that she was shown a graph by Daniel that had three lines indicating  
worst-case scenario, best-case scenario, and something in between. Daniel said  
they were going to go “right up the middle” and implied “no risk at all.”  
[806]  
There was a second meeting in January or February of 2009. It was the  
same presentation. There was no discussion of any money going into Daniel’s  
companies. She never agreed to that. In cross-examination, she indicated she  
asked questions but made no commitments at this time.  
[807]  
A third meeting took place on February 6, 2009 at Tim Hortons. Ms.  
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Chaffe received the Exhibit 194 booklets regarding Canada Life. She believed,  
in light of representations made by Daniel, that her money was going to  
insurance companies and that ten years later her mortgage would be paid off.  
There was no discussion of investing in Daniel’s companies or being involved in  
his companies’ finances. In cross-examination, Ms. Chaffe indicated that Ms.  
Chmilar was there and had arranged for the new $240,000 mortgage. Toward the  
end of the meeting, Ms. Chaffe attended the bank and got a bank draft.  
[808]  
Exhibits 197 – 8A and 8B are copies of the bank draft and receipt she  
received from the TD Bank. She gave the bank draft to Daniel at the meeting on  
February 6, 2009. It is dated February 6, 2009 and is in the amount of  
$64,996.70 payable to Millionaire Mortgage Inc. Daniel told her in two weeks’  
time she would receive a lovely leather binder and the documents. In cross-  
examination, she indicated that this was the only cheque she turned over to  
Daniel and thought it was going into the workhorse account for re-investment. In  
re-examination, she indicated that the money was not going to Millionaire  
Mortgage but was going to insurance companies for mutual funds and  
segregated funds.  
[809]  
At the Tim Hortons meeting, Jeff May was there and Ms. Chaffe filled  
out the forms with him. The forms included forms asking health questions. She  
signed consents for physical examinations due to insurance being involved.  
Daniel said a nurse would phone but that never happened. Exhibit 196 is a form  
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that was signed by a registered nurse on February 12, 2009. In cross-  
examination, Ms. Chaffe denied ever seeing a nurse.  
[810]  
Ms. Chaffe never received any documents at all. She never got any  
mutual funds or segregated funds. She never got any interest payments and she  
never got her $65,000 back. His current mortgage is $200,000 left from the  
$240,000. Her mortgage in 2008 was $144,000.  
[811]  
Ms. Chaffe’s loss is $65,000 plus unpaid accrued interest payments.  
[812]  
I find Ms. Chaffe to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
3
9. PAUL MELEG  
Paul Meleg, in 2007, had worked for Chrysler Canada for 37 years. He  
had RRSPs with the Royal Bank and had limited investment knowledge.  
[813]  
[814]  
In the latter part of 2007, his sister-in-law, a client of DPR Financial,  
invited him to a DPR seminar. He attended the seminar. It was opened by David  
and Daniel took over and discussed Millionaire Mortgage and Three Buckets,  
which were books he had written. In cross-examination, he indicated that Daniel  
was the owner of DPR and he thought it was a partnership between the two  
 
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brothers.  
[815]  
Mr. Meleg met with David afterward. David told him he could do better  
than he was doing. At the time, Mr. Meleg’s net worth was $350,000. In January  
of 2008, he transferred his RRSP from the Royal Bank to David. David explained  
re-sets to him and told him he could not lose as the bottom keeps coming up.  
[816]  
David told Mr. Meleg he could get a line of credit up to $600,000 and  
then leverage that into segregated funds. Mr. Meleg got four $100,000 leveraged  
loans: three in his name and one in his wife’s name. He got a $500,000 life  
insurance policy. The premiums were $20,000 per year to be paid by profits from  
the leveraged loan investments.  
[817]  
In April of 2008, after the insurance policy was set up, Daniel did a  
presentation on Millionaire Mortgage and said it was the non-risky thing to do.  
Mr. Meleg could not remember the details.  
[818]  
In April or May of 2008, Mr. Meleg went to a mortgage broker to re-  
mortgage his home. It was mortgage-free before. He received $276,000 from the  
mortgage on May 23, 2008 – see Exhibit 198 – 30D.  
[819]  
In cross-examination, Mr. Meleg indicated that he and his wife and son  
met with David and Daniel regarding how to split this money up. This meeting  
took place on May 22, 2008. Mr. Meleg learned that Daniel was in the hotel  
business and David had brought Daniel in to provide more details. After this date,  
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Mr. Meleg only dealt with Daniel.  
FIRST INVESTMENT – REEVE HOTELS AND RESORTS  
INC. C.O.B. AS BREADALBANE PROPERTIES INC.  
[820]  
Daniel suggested that Mr. Meleg should put $200,000 of his mortgage  
proceeds into a corporate bond. Daniel said it would be invested in Celebrity  
Management Inc. Daniel said it would be invested in resorts and timeshares but  
Daniel could not advise specifically where Celebrity Management would put the  
money due to confidentiality reasons. On that May 22, 2008 meeting, both David  
and Daniel were there during the discussion as to how to apply Mr. Meleg’s  
mortgage proceeds – see Daniel’s notes regarding the May 22, 2008 meeting  
entered as Exhibit 199 by the defence. The notes indicate that the workhorse  
account was to be divided, with $200,000 to be put into a corporate bond and the  
remaining $76,000 into a conservative segregated fund.  
[821]  
The Melegs decided to put $200,000 into Celebrity Management.  
Exhibit 198 – 30C is a bank draft dated May 23, 2008 made out to Celebrity  
Management International Inc. in the amount of $200,000. Exhibit 198 – 30C is  
an agreement between Reeve Hotels and Resorts Inc. c.o.b. as Breadalbane  
Properties Inc. and Paul and Elizabeth Meleg dated May 23, 2008 for  
consideration of $200,000, paying 16 percent annual interest on the anniversary  
date and maturing on May 23, 2011. Daniel said that it was 16 percent for two  
years but the document outlined 16 percent for three years but Mr. Meleg had no  
 
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problem with it. Sixteen percent interest seemed reasonable, considering the  
offices were lush and the place smelled of money. He was not told anything  
about Breadalbane Properties Inc.  
[822]  
In cross-examination, Mr. Meleg indicated that Daniel was responsible  
for the payment. He knew that Daniel was in the hotel business but did not know  
if David and Daniel together owned Reeve Hotels or if just one of them did. In re-  
examination, Mr. Meleg indicated that he believed that Celebrity Management  
International Inc. was a subsidiary of Reeve Hotels.  
[823]  
The remaining $76,000 went into the workhorse account and was to be  
used to pay the life insurance of $20,000 per year. Daniel was not involved in this  
portion of the investment.  
[824] There was no mention of his money going to other investors or to  
Daniel’s wife.  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE INC.  
On June 2, 2008, the Melegs met with Daniel. Daniel suggested that Ms.  
[825]  
Meleg should collapse her RRSP. Daniel would pay her 16 percent, plus in three  
years she would get back her invested amount plus the deferred sales charges  
and withholding taxes. Daniel said that if they wanted to get their money back  
that could be done in 30 days.  
 
-
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[826]  
Exhibits 198 – 30G and 30H contain the withdrawal instructions and  
confirmation of withdrawal by Canada Life respectively. The withdrawal  
instructions dated June 26, 2008 include the boilerplate letter that the transaction  
was being done against the advice of their financial advisor. The withdrawal  
instructions are signed by Ms. Meleg and is witnessed by a scrawl; in cross-  
examination, Mr. Meleg indicated that he could not say whose signature it was.  
The agent of record was David, but it was Daniel who was responsible for the  
second corporate bond. The amount of the withdrawal was $102,279.17 and  
after deferred sales charges ($4,169.97) and withholding tax ($29,423.76), the  
net withdrawal was $68,676.44.  
[827]  
Exhibit 198 – 30J is an agreement between Millionaire Mortgage Inc.  
dated July 7, 2008 for consideration of $68,676 with annual interest of 16 percent  
and maturity date of July 11, 2011. On the maturity date, the document indicates  
that the penalties of $4,169.97 and tax withheld of $29,432.76 will be refunded.  
Joshua Lane, another financial advisor at DPR, witnessed the document. Ms.  
Meleg and Daniel signed the bond agreement.  
SUBSEQUENT EVENTS  
[828] Ms. Meleg had to pay another $4,357.36 in taxes instead of getting a  
refund – see Exhibit 198 – 30I.  
[829]  
In cross-examination, it was brought out that the Melegs met Mr. Lane in  
 
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October of 2008 as the markets were bad but no changes had been made. David  
popped in but there was no indication that David was leaving until they got his  
letter saying so. In the fall of 2008, the DPR Windsor offices were closed.  
[830]  
In November of 2008, Mr. Meleg called Daniel and asked him about  
DPR’s problems. Daniel said there was no need to worry – there was a  
reorganization going on.  
[831]  
In the summer of 2008, Mr. Meleg paid $4,190 for a correspondence  
course with the Wealth Institute. Daniel said that if he did not like it, Daniel would  
refund his money but no one had ever asked for a refund. In November, Mr.  
Meleg stopped doing the course and asked for his money back but did not get it.  
[832]  
In February of 2009, Mr. Meleg transferred his assets from DPR to  
Davlyn.  
[833]  
In cross-examination, on or about April 6, 2009, Mr. Meleg indicated he  
received David’s letter where David distanced himself from Daniel’s private  
investments. This was the last straw for Mr. Meleg as David had been present  
and involved with his private corporate bond investments with Daniel. The  
Exhibit 200 letter filed by the defence contradicted Mr. Meleg’s own experience  
with David, Daniel and DPR. In April of 2009, Mr. Meleg transferred his assets  
from Davlyn to another firm.  
[834]  
The Melegs were paid nothing on the $200,000 Reeve Hotels and  
-
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Resorts investment and were paid nothing on the Millionaire Mortgage Inc.  
investment of $68,676.  
[
835]  
836]  
The Melegs’ loss is $268,676 plus unpaid accrued interest.  
[
I find Mr. Meleg to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
40A. LISA SCHNARR  
[837]  
In 2008, Lisa Schnarr worked with Sun Life as an underwriter. She had  
limited investment knowledge and background. She had a small amount in RESP  
and other investments. Her husband handled all the finances.  
[838]  
In late November of 2008, Ms. Schnarr and her husband met with Daniel  
and Jeff May at her home. The concept of Millionaire Mortgage was discussed  
and Daniel talked about refinancing her home. Mr. May was a 25-year friend and  
had been her financial advisor for ten years.  
[839]  
She decided to participate in the Millionaire Mortgage programme and to  
spend $5,000 for the Wealth Institute. She had to attend to her son and daughter  
who were under the age of ten, so she missed parts of the meeting. She cannot  
recall signing any documents. In cross-examination, she indicated that in early  
 
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December her mortgage broker, Rocco, looked after the re-financing of her home  
and it was done in early December.  
[840]  
Exhibit 201 – 33A is a certified cheque in the amount of $75,000  
payable to Millionaire Mortgage Inc. In cross-examination, she understood that  
her money was going to be put into trust to be put in segregated funds in an  
outside company. That understanding came from the meeting and her husband’s  
explanations. There was no discussion of the $75,000 being invested in a  
corporate bond or fixed rate investment.  
[
841]  
between Millionaire Mortgage Inc. and Ms. Schnarr in the amount of $75,000 with  
2 percent interest payable monthly commencing January 31, 2009 and maturing  
Exhibit 201 – 33B is an agreement, dated December 31, 2008,  
1
December 31, 2013. In cross-examination, she indicated that the document was  
signed at the DPR office but she did not read it. Ms. Schnarr and Daniel signed  
the document and Mr. May witnessed it.  
[842]  
The $75,000 was given to Daniel on the basis that it would be invested  
in segregated funds for a monthly return. There was no discussion of any other  
investments, no mention of Annie Smith, and no mention of monies to be paid to  
other investors. She paid the $5,000 to the Wealth Institute. Within a month, on  
January 22, 2009, she separated from her husband but kept the matrimonial  
home and assumed the mortgage.  
-
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[843]  
Ms. Schnarr never received any interest payments and never received  
her principal back. She had no further communication with Daniel. She was in a  
bad place emotionally, in light of her January 2009 separation from her husband  
and resulting turmoil. Sometime in 2009, Mr. Schnarr contacted Ms. Schnarr and  
told that “the thing regarding Millionaire Mortgage has gone bad.” She made no  
effort to contact Daniel or recoup her loss.  
[844]  
Ms. Schnarr’s loss is $75,000 plus unpaid accrued interest.  
40B. PAUL SCHNARR  
[845]  
Paul Schnarr was living in Waterloo with his wife Lisa Schnarr in 2008,  
and had medium investment knowledge. He did mutual fund investments. He  
was employed as a garbage man by the city of Waterloo.  
[846]  
In November of 2008, Jeff May wanted to get into financial instruments.  
Mr. May was a licensed financial advisor and had switched from Trimerica to  
working with Daniel. Mr. May told Mr. Schnarr that Daniel could help him pay off  
his mortgage quicker by investing in segregated funds, and asked if Mr. Schnarr  
wanted to meet him.  
[847]  
In late November 2008, Daniel and Mr. May attended the Schnarr home.  
Daniel brought a laptop and showed Mr. Schnarr how to pay off the mortgage by  
investing in segregated funds. There was no discussion about investing in  
 
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Daniel’s companies or difficulties with them, and Mr. Schnarr has no recall of  
Annie Smith. There was no discussion about the money being paid to other  
investors. The discussion was purely about investing the $75,000 in large outside  
companies with mutual funds and segregated funds. In cross-examination, Mr.  
Schnarr denied that the money was to go into a corporate bond and not  
segregated funds. Segregated funds were more secure and the money was to be  
paid monthly into his account. Daniel said that the money was going to be held in  
trust until the segregated funds were invested in. Mr. Schnarr agreed that the  
Exhibit 201 – 33A cheque did not say “in trust.”  
[848]  
After the meeting, Mr. Schnarr spoke to his wife and they decided to get  
a second mortgage. The Exhibit 201 – 33A cheque is the one he wrote to  
Daniel. He believes he gave it to Mr. May to give to Daniel during the second  
meeting at their home when the Exhibit 201 – 33B agreement was signed. It  
was only signed by his wife but he doesn’t know why. Daniel also mentioned  
something about classes and how it would all work. In cross-examination, he  
indicated the $5,000 would pay for this. The Exhibit 201 – 33B agreement also  
refers to penalties and prepaid taxes in the default clause; in cross-examination,  
it was pointed out that those provisions were irrelevant in this case.  
[849]  
There was no contact with Daniel after the cheque was handed over. No  
attempts at contact were made. There was no payment ever made on the  
investment – no interest or principal were ever paid.  
-
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[850]  
I find Lisa and Paul Schnarr to be credible witnesses. Their evidence  
was supported by documentation in the form of exhibits and there were no  
significant inconsistencies in their evidence in either examination-in-chief or  
cross-examination.  
41. CHERRIN MELEG  
[851]  
Cherrin Meleg in 2008 had little investment experience. She worked as  
a legal assistant with a family law lawyer and had RRSPs with a Mr. Thiessen  
from Manulife.  
[852]  
In May of 2007, her brother-in-law Robert Pigeon advised her to attend  
a seminar at Windsor DPR Financial. Mr. Pigeon had worked several years at  
DPR and was happy with his investment there. Ms. Meleg attended the seminar.  
David was there and he spoke about financial theory. She remembers the Three  
Buckets and she read the books. In cross-examination, she indicated that David  
spoke about segregated funds, leveraged loans and alternatives to RRSPs; DPR  
did not believe in heavy reliance on RRSPs.  
[853]  
After the seminar, she signed paperwork to transfer her RRSPs from Mr.  
Thiessen to DPR and she also signed paperwork for leveraged loans. She had  
no personal contact with Daniel until late May of 2008.  
[854]  
In late May 2008, Allison Briand, Daniel’s assistant, phoned and said  
 
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that Daniel wanted to meet with people with over $60,000 in RRSPs. Daniel had  
a better investment to propose. Up to that point, all her meetings had been with  
David.  
[855]  
The Melegs met with Daniel. Daniel told them to withdraw her RRSPs.  
He would pay 18 percent, the penalties and the withholding tax. David was not  
present. The money was to be used to invest in seven local inns in the area  
through Millionaire Mortgage. Daniel asked if they had heard of Jakobstettel and  
when they said yes, Daniel said, “There are seven in the area. That’s where [the  
money] will be invested.”  
[856]  
She decided to cash in her RRSPs and the money went into her  
account. In cross-examination she indicated that she decided to cash in her  
RRSPs because Daniel’s investment offered a higher interest rate and not  
because she wanted to reduce reliance on RRSPs.  
[857]  
She brought a cheque to Daniel at DPR Windsor and gave Daniel the  
cheque directly. The RRSPs had been in her name only. Exhibit 202 – 29A is a  
bank draft dated June 26, 2008 in the amount of $43,337.03 payable to  
Millionaire Mortgage Inc. She returned the following week to sign documents. In  
cross-examination, she indicated that she knew that Daniel owned Millionaire  
Mortgage and she understood that he was one of the principals of the seven  
inns; Daniel could be the owner or a major investor.  
-
247 -  
[858]  
Exhibit 202 – 29B is an agreement between Millionaire Mortgage Inc.  
and Cherrin Meleg, dated July 7, 2008 with terms of 18 percent annual interest (it  
had been 16 percent but it was changed to 18 percent with Daniel and her  
initialling the changes). The maturity date was July 11, 2100 and on that date, the  
original deposit and interest and penalties of $2,619.68 and tax withheld of  
$18,573.02 were to be returned. She does not remember if she paid any income  
tax later. In cross-examination, Ms. Meleg indicated that Daniel spoke to her  
about the tax consequences of withdrawing the RRSP when her husband was  
present. The document was witnessed by Joshua Lane, a junior partner who was  
assisting David. She and Daniel signed the document on July 11, 2008. Further,  
when Ms. Meleg signed the agreement, she believed that Daniel was responsible  
because he owned Millionaire Mortgage Inc. and the agreement was with  
Millionaire Mortgage Inc.  
[859] In cross-examination, Ms. Meleg indicated that she did not talk to David  
about the investment. She and her husband never signed any mortgage papers.  
[860]  
In late 2008 or early 2009, Ms. Meleg read in the Windsor papers that  
the Windsor office had closed and there were problems. She did a title search on  
the Jakobstettel and there was no mortgage there in late 2008 or early 2009.  
[861] She was not aware that her monies were going personally to Daniel and  
his wife. She received nothing on her investment: no interest, no principal,  
-
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nothing.  
[
862]  
863]  
Ms. Meleg’s loss is $43,337.03 plus unpaid accrued interest.  
[
I find Ms. Meleg to be a credible witness. Her evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in her evidence in either examination-in-chief or cross-  
examination.  
4
2. STEVE MANUEL  
Steve Manuel has a high school education and little investment  
knowledge.  
[864]  
[865]  
Jeff May is now his son-in-law but in 2008 Mr. May was dating Mr.  
Manuel’s daughter. Mr. May worked with Daniel but was not Mr. Manuel’s  
financial advisor. Mr. May asked Mr. Manuel to listen to Daniel’s plan.  
[866]  
In October or November 2008, Mr. Manuel met Daniel at the  
Jakobstettel Inn. The meeting was also attended by Mr. May, and Mr. Manuel’s  
daughter. Daniel discussed his Millionaire Mortgage programme and it seemed  
feasible and a good thing to do. Daniel said that he could guarantee 12 percent  
on a segregated fund which would cover the interest payments on a line of credit.  
There was no discussion of risk.  
[867]  
Mr. Manuel met with Rocco, a mortgage broker, and a new mortgage  
 
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was finalized on January 13 or 14, 2009. He received $54,900. He held a couple  
thousand back and obtained a $50,000 bank draft.  
[868]  
Exhibit 203 – 26A is a bank draft in the amount of $50,000 payable to  
Millionaire Mortgage Inc., dated January 19, 2009. The $50,000 was to be  
invested in a workhorse account to be invested in segregated funds. Mr. Manuel  
did not agree with the cross-examination suggestion that the workhorse account  
funds were to be in an investment outside of segregated funds.  
[869]  
Daniel said that the money would be invested in a segregated fund,  
guaranteeing a 12 percent return. Mr. Manuel contacted Daniel and Daniel came  
to his house to get the bank draft. Mr. Manuel also signed the Millionaire  
Mortgage document the day he gave Daniel the draft.  
[870]  
Exhibit 203 – 26B is an agreement between Millionaire Mortgage Inc.  
and Mr. Manuel for consideration of $50,000 providing for 12 percent interest  
with payment to be made monthly commencing February 19, 2009 and maturing  
January 19, 2014. The document is dated January 19, 2008 but that is a typo  
and the document was signed by Mr. Manuel and (it must have been) Daniel  
Reeve on January 19, 2009. The document was pre-witnessed as only Daniel  
and Mr. Samuel were there. Daniel said that Mr. Manuel would get material in the  
mail but he never got anything.  
[871]  
The $50,000 was to be leveraged into a $100,000 line of credit, but no  
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segregated fund was ever set up. It was to be done by either Mr. May or Daniel.  
In cross-examination, Mr. Manuel stated Daniel took his $50,000 cheque and  
ran.  
[872]  
No interest was ever paid and the principal was never returned. Mr.  
Manuel looked for Daniel but he could not find him. The doors to the office were  
locked. He got a hold of the lady who was the witness on the document and she  
said that Daniel would get back to him.  
[873]  
Daniel never told Mr. Manuel that his $50,000 was to be used for  
Daniel’s personal use or company expenses, and there was no disclosure of any  
financial difficulties that Daniel was having. He was told his $50,000 was going to  
segregated funds. In cross-examination, Mr. Manuel was referred to his January  
23, 2013 statement where he stated that $50,000 would be invested at a  
guaranteed rate of return to pay interest in the line of credit, and it was pointed  
out that in that portion of the statement that there is no reference to segregated  
funds.  
[
874]  
875]  
Mr. Manuel’s loss is $50,000 plus unpaid accrued interest.  
[
I find Mr. Manuel to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
-
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4
3. ISAAC THIESSEN  
Isaac Thiessen was born and raised in Mexico, His education is less  
than high school. He has no specialized training in investing.  
[876]  
[
877]  
English but could not understand higher-level words. His income in 2008 was  
38,000.  
Mr. Thiessen arrived in Canada in 2001 and in 2008 he could read  
$
[878]  
In cross-examination, Mr. Thiessen indicated that in 2003 Daniel Reeve  
came to his workplace and gave a presentation. He did not understand half the  
words in the presentation. Daniel said that if you withdraw RRSPs early, you  
have to pay taxes and it is not the best idea.  
[879] Mr. Thiessen started to contribute $30 a month to RRSPs and his  
company matched his contribution. Mr, Thiessen was making $12.00 per hour.  
[880] In 2005 in his first meeting with Daniel Reeve, Mr. Thiessen had  
$50,000 saved up. He invested it with Daniel because he wanted to find people  
who had money to learn about money. The money was put into mutual funds and  
segregated funds with a 75 percent guarantee.  
[881]  
After 2005, Mr. Thiessen set up leveraged loans which he still has.  
Exhibit 204 includes a number of published articles that Daniel gave him  
complimentarily. From 2005 to 2007, Daniel was his financial advisor and his  
 
-
252 -  
investments went up. In 2007, his financial advisor was changed to Steve Haney  
–
see Exhibit 208 filed by the defence.  
[882]  
In 2007, Mr. Thiessen’s investments started to go down. He thought that  
Mr. Haney was not looking after his investments, As long as Daniel was his  
financial advisor, his investments went up.  
[883]  
In October of 2008, Mr. Thiessen got a call from to Daniel to come to the  
Jakobstettel. Daniel told him that his investments were going down and that was  
now going to stop. At that time, Mr. Haney was Mr. Thiessen’s financial advisor  
of record, but Daniel said that Mr. Haney was not at the company anymore.  
[884]  
Daniel said that he was taking over. In cross-examination, Mr. Thiessen  
indicated that Daniel said that he knew where to put the money where it would  
not go down; he would put it into a different account. Daniel told him it was  
guaranteed not to go down.  
[885]  
Mr. Thiessen trusted Daniel and thought that Daniel was acting in his  
best interests. Daniel got him to sign two void cheques but void was not written  
on them.  
[886]  
Exhibit 205 – 41A is a certified cheque payable to Jakobstettel Inn in  
the amount of $40,890.24, dated October 31, 2008. Mr. Thiessen had signed this  
cheque in blank a few days earlier on or about October 27 or 28. In cross-  
examination, Mr. Thiessen said that he signed it in front of Daniel and it was  
-
253 -  
supposed to be a void cheque.  
[887]  
Exhibit 205 – 41B is a letter of direction to withdraw his GIF dated  
October 27, 2008. Mr. Thiessen signed this letter on that date during his meeting  
with Daniel at the Jakobstettel Inn. He didn’t read it; he just signed it – his English  
was okay but he needed time to read it. Daniel said the money would go to a  
different account where it would go up. The instructions confirm that the cheque  
was to be picked up by a representative of DPR Financial. In cross-examination,  
Mr. Thiessen indicated that Daniel did not explain that there would be penalties  
involved and denies reading that letter. He signed it and went back to work. He  
later got a letter confirming the withdrawal and was waiting for a letter to tell him  
where the money went. Exhibit 209 is a cheque from Manulife dated October 30,  
2008. Janice Berkin deposited the cheque and withdrew it the same day. Mr.  
Thiessen did not know about the cheque until February of 2009 and does not  
know Ms. Berkin.  
[888]  
Daniel did not say that the money was going out of Manulife or that the  
money was going into Daniel’s companies or that Daniel’s companies had  
financial problems. He did not agree to invest in Daniel’s companies. In cross-  
examination, Mr. Thiessen testified that he did not know you could invest in the  
Jakobstettel but believed that Daniel owned the Jakobstettel.  
[889]  
In 2009, Mr. Thiessen received the Exhibit 205 – 41C report on his  
-
254 -  
segregated funds from Manulife for the period July 1 to December 31, 2008. The  
statement showed that after market losses of over $11,000, $41,669.93 had  
been withdrawn, withdrawal penalties deducted from that amount were a further  
$779.69, and the account balance was now zero. This surprised him. After  
receiving this statement, he called Daniel three days in a row to get an  
appointment. In cross-examination, Mr. Thiessen said that Daniel said never “sell  
when it’s low,” but “sell when it’s high.” Mr. Thiessen did not want to leave  
Manulife. Daniel did not say that his money was going into a corporate bond.  
[890]  
At the appointment, Daniel said that he had put the money into a  
different account with Millionaire Mortgage. Mr. Thiessen said that he wanted the  
money back with Manulife. Daniel told him he would get a statement from  
Millionaire Mortgage and he would add $10,000 to it.  
[891]  
Exhibit 205 – 41D is an agreement between Millionaire Mortgage Inc.  
and Isaac Thiessen for consideration of $50,000 with interest at 12 percent with a  
maturity date of October 31, 2011. The maturity date had been 2013 but it was  
changed to 2011 and initialled by Daniel and Mr. Thiessen. The document was  
signed in February of 2009 but backdated to October 31, 2008.  
[892]  
In cross-examination, Mr. Thiessen indicated that he didn’t know that  
Daniel owned Millionaire Mortgage Inc. He had never heard of Millionaire  
Mortgage before. Mr. Thiessen wanted the money back with Manulife. Daniel  
-
255 -  
said he had made a mistake. Daniel told him the money went into Millionaire  
Mortgage but the cheque was made out to Jakobstettel. He did not agree to  
transfer his funds there until late February 2009. He signed the document  
because his money was there anyway and did not know where his money was  
and Daniel offered him another $10,000 to make it $50,000.  
[893]  
There was no disclosure about any of Daniel’s financial problems or how  
Millionaire Mortgage was doing. Daniel told Mr. Thiessen there was no risk and  
his money would not go down.  
[894]  
In February of 2009, the office called him and they wanted to switch his  
remaining investments to Jeff May and he said no. He did not trust Daniel Reeve  
anymore.  
[895]  
In late February or March of 2009, Mr. Thiessen drove his friend Anzie  
Martin to meet Daniel at a Stoney Creek restaurant. Mr. Thiessen told Mr. Martin  
that Daniel had put his money into a place without his knowledge or permission  
and that he did not trust Daniel anymore. Daniel came out of the restaurant and  
asked if Mr. Thiessen had made a statement that he did not trust Daniel  
anymore. Mr. Thiessen said yes and asked about his money. Daniel said that Mr.  
Thiessen was trying to destroy his business and told Mr. Thiessen he would get  
his money in 30 days.  
[896]  
In cross-examination, Mr. Thiessen testified that after speaking to Mr.  
-
256 -  
Haney in February or March of 2009, Mr. Thiessen was very upset and contacted  
Manulife and told them that he had never authorized his investment going out of  
Manulife. On March 13, 2009, Manulife sent him a letter outlining their  
investigation results. Manulife told him that the money went into his bank account  
and there was nothing further they could do about it. Mr. Haney had told Mr.  
Thiessen in February or March of 2009 that Daniel did not have a licence which  
Mr. Thiessen had not known. In re-examination, Mr. Thiessen indicated that  
Daniel never told him that he did not have a licence.  
[897] Mr. Thiessen, in fact, got no money at all on this Millionaire Mortgage  
investment: no interest and no return of principal.  
[
898]  
899]  
Mr. Thiessen’s loss is $40,890.24 plus unpaid accrued interest.  
[
I find Mr. Thiessen to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
44. JAMES REINHARDT  
[
900]  
901]  
James Reinhardt in 2008 was a retired mason contractor.  
[
He has three daughters including 47-year-old Bridgette who became  
severely disabled in 1975 when she was 17. Bridgette lives with her immediate  
 
-
257 -  
family in Waterloo.  
[902] He was referred to the Reeve brothers as good investors by his  
bookkeeper Barbara Hutchinson.  
[903] He thought that the Reeves were reputable and they discussed different  
funds and many months later they discussed real estate.  
[904]  
Bridgette had $2 million from a settlement from a medical malpractice  
suit stemming from an automobile accident. The Reeves knew where the $2  
million came from. Mr. Reinhardt was always with Bridgette for all meetings with  
David and Daniel.  
[905] The Breadalbane was suggested as an investment, but it never  
materialized.  
[906]  
The Reinhardts invested in the property next to the Jakobstettel at 2  
Isabella Street. A building was to be torn down and a spa was to be put up. The  
investment was for $500,000 but $350,000 was loaned as a start as the lawyer  
suggested holding $150,000 back.  
[
907]  
big mortgage on it of $642,600. The lawyer estimated the value of the property at  
1.2 million and accordingly a second mortgage of $500,000 was put on Daniel’s  
Swan Lake farm residence on October 9, 2008 just in case the investment went  
The lawyer suggested a lien on Daniel’s Swan Lake property but it had a  
$
-
258 -  
bad – see registry records at Exhibit Stick File 600, E.  
[
908] Mr. Reinhardt advanced the $350,000 but never advanced the other  
150,000. He paid $6,000 in penalties to a variety of mutual fund companies.  
Daniel said he would pay him back but he never did. He was expecting to get a  
2 percent return.  
$
1
[909]  
However, Mr. Reinhardt did not get paid and had to pursue the second  
mortgage on the residence. He received $130,000 and got stuck with the Isabella  
property. It fell into his hands unwillingly after a two-and-a-half-year legal battle.  
[
910]  
He and his crew gutted the Isabella property and fixed it. It cost him  
30,000 for the crew and the material cost was limited. He was able to sell it for  
260,000 with a $60,000 vendor take back mortgage – see registry records at  
$
$
Exhibit Stick File 600, H and J.  
[
911] Regarding the failed negotiations with respect to the Breadalbane,  
Daniel suggested at the meeting with the daughter that she should invest the  
500,000 in the Breadalbane. Daniel said it was a good investment with a good  
return.  
$
[912]  
The Breadalbane was going to be a high-end resort. Daniel said that the  
investment was to be $500,000. He said that as much as 11 other investors  
would each contribute $500,000. Daniel needed the money to make it a high-end  
resort.  
-
259 -  
[913]  
Exhibit 222 is pictures he received of the inside of the Breadalbane Inn.  
He went to Fergus to look at the property but did not go inside. The total building  
at 12 x $500,000 did not make sense. Daniel said that the $500,000 was to be  
used for the purchase of the real estate.  
[914]  
Exhibit 223 is a proposed agreement between Reeve Hotels and  
Bridgette Reinhardt dated June 2, 2008 with consideration of $500,000 with a  
corporate bond of 15 percent. Mr. Reinhardt thinks he got this document from the  
Reeve office and he later gave it to the police. There were no discussions  
regarding whether the Breadalbane was purchased. He assumed it was  
purchased. Daniel said he owned it. In cross-examination, it was pointed out that  
paragraph 1 of the document indicates that the Breadalbane Inn was to close on  
August 1, 2008.  
[915]  
In cross-examination, Mr. Reinhardt indicated that Daniel brought up an  
investment in Panama property but he was not interested. Daniel also brought up  
Las Vegas real estate but he was not interested.  
[
916]  
The initial investment was $350,000 with fees of $6,000 and another  
30,000 spent on the Isabella property for total investment expenditures of  
386,000. Mr. Reinhardt, through dedicated and tenacious efforts to assist his  
$
$
disabled daughter, was able to recover $130,000 from his second mortgage and  
260,000 from the sale of the Isabella property for a total recovery of $390,000  
$
-
260 -  
minus lawyer’s fees.  
[
917]  
918]  
Accordingly, the dollar loss here is approximately zero.  
[
I find Mr. Reinhardt to be a credible witness. His evidence was  
supported by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
4
5. KEITH AUSTIN  
In 2004, Keith Austin met Daniel. He thought that Daniel was a financial  
wizard. Mr. Austin does farming and long-distance trucking.  
[919]  
[920] From 2004 to 2008, he invested $100,000 with Daniel to see if Daniel  
was capable. The $100,000 doubled to $200,000 by 2008.  
[921]  
In 2008, he decided to do two investments with Daniel Reeve.  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE  
[922]  
The Millionaire Mortgage investment was done through Steve Haney.  
Mr. Haney did a presentation at the Jakobstettel and Daniel came in and spoke  
about the Millionaire Mortgage investment and that there was no risk and the  
principal was guaranteed.  
[923]  
Three hundred twenty-four thousand dollars was transferred from  
 
 
-
261 -  
Manulife and into Millionaire Mortgage at 20 percent – see Exhibit 225 cheque to  
Millionaire Mortgage Inc. dated January 22, 2008 in the amount of $324,000.  
Exhibit 226 is an agreement between Millionaire Mortgage Inc. and Keith Austin  
Holdings, dated January 15, 2008 for consideration of $324,000 and 20 percent  
special interest. The maturity date was September 1, 2008 at which time the  
original deposit and interest was to be paid.  
SECOND INVESTMENT – BREADALBANE INN  
[924] In the spring of 2008, his friend told him about a great opportunity. Mr.  
Austin spoke to Mr. Haney about it and he told Mr. Haney he wanted in on it.  
[925]  
Mr. Austin spoke to Daniel about it. Daniel told him it was going to be a  
tax haven, there was no guarantee on interest and “it’s top secret.” Daniel was  
acquiring the Breadalbane Inn and possibly a franchise restaurant. There were  
only going to be ten to 12 investors.  
[
926] Mr. Austin asked Daniel, “What are we putting on the cheque?” and  
Daniel said, “We’ll get the name.” Mr. Austin later brought in a cheque for  
200,000 and put Reeve Hotels on it. Daniel looked out the window and Daniel’s  
$
body language troubled Mr. Austin. Exhibit 224 is a cheque dated April 28, 2008  
for $200,000 payable to Reeve Hotels and Resorts.  
 
-
262 -  
SUBSEQUENT EVENTS  
[927]  
Within two weeks of writing the cheque (mid-May), Mr. Austin spoke to a  
lawyer regarding the sale of the Breadalbane. He was told the Breadalbane was  
not for sale. His accountant is Collins Barrow which is the same accountant that  
Daniel uses. The accounting firm had no history of Reeve Hotels and Resorts.  
[928]  
Sometime shortly thereafter, Mr. Austin asked Daniel for his money  
back. Daniel told him that the money was locked up and it would be used to  
purchase the Breadalbane Inn. There was a July 1 purchase date. Daniel told  
him that the fact that Mr. Austin had changed his mind was his fault and that it  
was difficult to get money back. Mr. Austin told Daniel that it was his money and  
he wanted it back.  
[929] A cheque for $202,000 was given by Daniel to Mr. Austin’s wife but it  
was never deposited since Daniel told her to rip it up.  
[
930]  
received $270,000 back from Daniel. TD bank documents at Exhibit Stick File  
03 at page 3059 indicated that $75,000 was paid back on July 21, 2008. TD  
The total of Mr. Austin’s two investments was $524,000. Mr. Austin  
1
bank documents at Exhibit Stick File 128 at pages 312 and 812 show bank  
drafts of $80,000 on September 12, 2008 and $10,000 on November 17, 2008,  
respectively were deposited into Mr. Austin’s account.  
[931]  
Mr. Austin’s total loss on the two investments is $254,000.  
 
-
263 -  
[932]  
I find Mr. Austin to be a credible witness. His evidence was supported by  
documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
46. LLOYD HOFFMAN  
[933]  
Lloyd Hoffman is 78 years old and married to Ruth Hoffman. He used to  
own a sand and gravel business but sold it in 2003. Mr. Hoffman met Daniel  
through his brother who thought that Daniel was a great guy.  
[
934]  
935]  
Mr. Hoffman retained Daniel as a financial advisor in the late 1990s.  
In 2003, he bought a room at the Jakobstettel Inn for $100,000 with 13  
[
percent interest. Possibly two years later, he bought another room for another  
100,000. He had no problems with repayment of the $200,000 or the 13 percent  
interest.  
$
[936]  
TD bank records at Exhibit Stick File 101 at page 1374 show that on  
August 22, 2007, Celebrity Management paid $200,000 to Ruth or Lloyd  
Hoffman. In cross-examination, Mr. Hoffman indicated that getting the money  
back was a real confidence builder.  
[937]  
Daniel told Mr. Hoffman that his brother David was going to take over  
the companies (DPR) as Daniel was going to do something else such as the  
 
-
264 -  
Jakobstettel Inn and Millionaire Mortgage. Daniel continued to come over for  
short visits to his home. In cross-examination, Mr. Hoffman indicated that Daniel  
told him he was giving up his licence and that David had his name on his  
investments. David took over in 2007.  
FIRST INVESTMENT – MILLIONAIRE MORTGAGE  
[938]  
In 2008, Daniel warned that the market was going down. Daniel said  
that Mr. Hoffman’s investment was safer with the 16 percent that Daniel was  
offering. Daniel was asked how he could offer 10 percent more than what the  
banks were offering. Daniel told him it was all in real estate. Daniel asked for  
$260,000 and told him to take out the money from Manulife registered funds.  
When he did that, Mr. Hoffman paid almost $110,000 in penalties and  
withholding taxes.  
[939]  
Daniel did not talk about taxes and penalties but when it came up,  
Daniel said he would help him out. In cross-examination, Mr. Hoffman indicated  
that in helping him out, Daniel said the interest rate would take care of it. The  
defence entered Exhibit 232A which is a letter of direction to Manulife which Mr.  
Hoffman signed and advises that he is doing the withdrawal against the advice of  
his financial advisor. David was his financial advisor and never advised him of  
anything. He did not think he needed to contact David or Linzie Brown as they  
were all in the same building. Exhibit 232B is a similar boilerplate direction  
signed by his wife. Their daughter got the documents and they signed them and  
 
-
265 -  
it was faxed back. They signed a lot of documents and barely glanced at them as  
they trusted Daniel. Daniel brought out the Manulife withdrawal instructions and  
they signed them at the dining table in order to get the money out.  
[940]  
Exhibit 222 is a cheque dated September 5, 2008 payable to  
Jakobstettel Inn in the amount of $260,000 signed by Ms. Hoffman. The money  
was going to be invested in the Jakobstettel Inn but Daniel told his wife to make it  
out to the Jakobstettel Inn. His wife gave Daniel the cheque in the parking lot of  
the TD Bank. He had to ask for documentation and it was close to two weeks  
before he got it. In cross-examination, Mr. Hoffman indicated that Millionaire  
Mortgage was another business that Daniel was starting but he did not know the  
location.  
[941]  
Exhibit 228 is an agreement between Millionaire Mortgage and Lloyd  
and Ruth Hoffman, dated September 15, 2008, for consideration of $260,000  
with annual interest of 16 percent with annual instalments to be paid starting  
October 16, 2009 and a maturity date of September 12, 2013. There is a  
provision that if the agreement goes into default, the Hoffmans would get their  
deposit plus interest and prepaid taxes returned. In cross-examination, Mr.  
Hoffman indicated that it was an opportunity to invest in Daniel’s business. He  
questioned the interest rate but trusted that Daniel could pay.  
-
266 -  
SECOND INVESTMENT – MILLIONAIRE MORTGAGE  
[942]  
Daniel suggested another investment after receiving the first cheque but  
before the first agreement was signed. The next investment was $248,000 and it  
came from the same pile of registered money. Daniel said the money was to be  
used for real estate and mortgages.  
[943]  
Mr. Hoffman asked Daniel where he was investing it to get this type of  
return. Daniel told him that clients needed money in the short-term and were  
willing to pay a high interest rate to get it. Daniel never said that the money was  
going to Daniel’s companies.  
[944]  
Exhibit 229 is an agreement between Millionaire Mortgage and Lloyd  
and Ruth Hoffman, dated October 7, 2008, for consideration of $256,000 with  
annual interest of 16 percent with annual instalments to be paid starting October  
7, 2009, and a maturity date of October 7, 2013. There is a provision that if the  
agreement goes into default, the Hoffmans would get their deposit plus interest  
and prepaid taxes returned.  
[
945]  
Hoffman to the TD account of Millionaire Mortgage of $142,000 on October 3,  
008 and $106,000 on October 7, 2008 for a total of $248,000. Daniel insisted  
Exhibit 230 indicates that there were two bank transfers by Lloyd  
2
that it be sent to the TD bank. Daniel was at the bank both times and told him  
that he could transfer from his account to Daniel’s account.  
 
-
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[946]  
The October 7, 2008 agreement indicated consideration of $256,000 but  
Mr. Hoffman only gave Daniel $248,000. Daniel told him he would send him  
another agreement but he never did. Mr. Hoffman denied the defence suggestion  
that the $8,000 was to compensate Mr. Hoffman for the deferred sales charges.  
Mr. Hoffman indicated that was never explained to him and $8,000 was not  
enough to compensate for the deferred sales charges in any event.  
[947] Exhibits 231A and 231B outline that the withholding taxes on five  
withdrawals on registered accounts were in excess of $80,000.  
[948]  
Daniel never said he was experiencing financial troubles personally or  
that his companies were experiencing financial trouble.  
SUBSEQUENT EVENTS  
[949]  
In January of 2009, Daniel met with Mr. Hoffman and his accountant and  
promised to pay the money back. They wanted their money back after thinking  
about it in September and October of 2008. Daniel assured them it would be paid  
on Friday and that he would have to move stuff. Nothing was ever paid and Mr.  
Hoffman never saw Daniel after that.  
[950] Mr. Hoffman never received any interest or principal back. His loss is  
$508,000.  
[951]  
In cross-examination, Mr. Hoffman indicated that he sued Daniel for a  
 
-
268 -  
year and then sued David. David’s insurance gave Mr. Hoffman $220,000. His  
lawyer cost him $70,000. Daniel never denied that he owed the money.  
[952] In re-examination, Mr. Hoffman indicated that his first cheque of  
$260,000 was to be in real estate and mortgages according to Daniel and the  
second $256,000 cheque was to be in different investments but Daniel did not  
specify where it was going.  
[953]  
I find Mr. Hoffman to be a credible witness. His evidence was supported  
by documentation in the form of exhibits and there were no significant  
inconsistencies in his evidence in either examination-in-chief or cross-  
examination.  
B. THE PROPOSED REAL ESTATE VENDORS  
1. BREADALBANE INN  
PETER EGGER  
[954] Peter Egger owns the Breadalbane Inn. It was purchased in April 1996  
and has been family-owned continuously since that time.  
[955]  
In cross-examination, Mr. Egger indicated that he was the primary  
operator while his mother was the accountant/bookkeeper and his father did the  
repairs until he died in the fall of 2009. Mr. Egger’s wife and son also help out.  
 
 
 
-
269 -  
The shares of Breadalbane Inn Ltd. are owned by himself and his mother who  
acquired them after his father’s death in 2009.  
[956]  
The Breadalbane Inn is located in Fergus and in 2007 had 14 rooms  
including nine suites. The average room charge in 2007 was $185 to $295 per  
night. The Inn has two restaurants and in 2008 there were no problems with the  
liquor licence.  
[957]  
In 2007, the Inn had no mortgages but had an operating line of credit, on  
which $80,000 was borrowed; the maximum credit limit was $148,000. There  
were no corporate bonds outstanding.  
[958]  
Mr. Egger met Daniel in 2004 at a function put on by Ontario’s Finest  
Inns Association. Mr. Egger knew that Daniel owned the Jakobstettel and that  
Daniel was a customer at the Breadalbane. Their children went to school  
together.  
[959] Daniel and Mr. Egger discussed selling the Breadalbane in November of  
2007. Mr. Egger initiated the discussions and Daniel was quite interested. Daniel  
prepared a letter of intent. Mr. Egger gave Daniel a selling price of $2.3 million  
and Daniel agreed to it in February or March of 2008.  
[960]  
Later in the negotiations, there was talk about $500,000 down and the  
balance was to be a vendor take-back mortgage of $1.8 million. It was Daniel’s  
idea to arrange the vendor take-back mortgage. Daniel offered 16 percent on the  
-
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mortgage. Mr. Egger thought that 16 percent was quite high and lucrative as a 10  
to 15 percent net return is the highest he had previously achieved. Mr. Egger was  
concerned whether 16 percent was even viable. For the fiscal year ending  
October 31, 2007 their revenues were $2 million and after expenses, their profit  
and taxable income was $200,000.  
[961]  
Exhibit 55 – 200 at pages 39 to 42 is an unsigned letter of intent  
provided to Peter and Melinda Egger by Daniel in April or May of 2008. The letter  
of intent proposed a closing date of July 2, 2008 for the purchase of the Inn.  
Peter gave it to his lawyer to work on.  
[962]  
Exhibit 55 – 200 at pages 1-38 is a share and purchase agreement  
between Experience Restaurants and Peter Egger and his father Joseph Egger.  
The document is dated June 19, 2008. Mr. Egger got the document from Daniel.  
The signature page is unsigned and was never signed by anyone with a  
controlling interest in the Breadalbane.  
[963]  
There never was any signed agreement to sell the Breadalbane. There  
was never any oral agreement to sell the Breadalbane. They were interested and  
there were negotiations.  
[964]  
In October of 2008, the Eggers felt that it was not in their interest to sell  
the Breadalbane so Mr. Egger phoned Daniel to let him know that they were no  
longer interested in selling the Breadalbane. Daniel was disappointed. After this  
-
271 -  
phone call and a meeting at the Eggers’ home, there were no further discussions  
to sell the Breadalbane.  
[965]  
David was not involved in any way. Mr. Egger never received any  
money or deposit or escrow funds or lawyer’s trust fund monies from Daniel for  
the purchase of the Breadalbane.  
[966]  
In cross-examination, Mr. Egger indicated he met with Daniel at the  
Jakobstettel Inn and a restaurant in Kitchener over the summer in an attempt to  
work out the details. There were a number of draft documents and emails that  
were entered into evidence by the defence – see Exhibits 56, 57, 58, 59, and  
62. The closing date contemplated by these documents was July 2, 2008.  
Exhibits 60 and 61, tendered by the defence, are a series of emails  
contemplating a closing date of June 1, 2008. Exhibits 63, 64, 65, 66 and 67 are  
a series of emails outlining negotiations in April through May of 2008. Exhibit 68  
is a series of emails dated July 2, 2008 suggesting a possible closing date of  
November 1, 2008 after Mr. Egger’s year-end in October 31, 2008.  
[967]  
In cross-examination, Mr. Egger indicated that selling the Breadalbane  
was his and his wife’s idea. The sale was not advertised; they wanted to keep it  
confidential per the letters of intent. It was nobody’s fault that the deal did not go  
through. The family got cold feet and they were not comfortable with the vendor  
take-back mortgage and had an emotional attachment to the Inn. There was an  
-
272 -  
unregistered loan of $300,000 from a family friend and the deposit of $500,000  
would be used to pay off this loan. After, Daniel tried to increase the deposit to  
continue the deal in Christmas of 2008 at Mr. Egger’s house. In re-examination,  
Mr. Egger said that it could be an extra $300,000 but he doesn’t remember it.  
[968]  
In cross-examination, Mr. Egger revealed that he got a call from police  
in December of 2008 that Daniel was under investigation for fraud. Daniel  
confirmed that he was under investigation for fraud.  
2. N.Y. PARK PLAZA HOTEL  
ALICIA GANZ  
[969]  
Alicia Ganz is a lawyer in New York and is the associate general  
counsel for the El Ad Group (also known as Elad or ElAd), an Israeli-based  
American real estate development company. CPS 1 Realty LP, an El Ad affiliate,  
bought the Park Plaza Hotel, and was converting a portion of it into condominium  
th  
units. The Park Plaza is a hotel at the corner of 58 Street and Central Park  
South in Manhattan and consists of a hotel, and condo units, and restaurants.  
[970]  
CPS 1 Realty jointly owned the Plaza with other entities. Its portion of  
the Plaza consisted of the hotel and hotel condos. The hotel condo program  
allowed people to purchase a hotel room and rent it out. Hotel condo owners  
were not permitted to do any renovations or change the furnishings. The hotel  
 
 
-
273 -  
condos were supposed to look identical to the other hotel rooms.  
[
971]  
US$365,555,000. The initial public offering was in June of 2006 – see Exhibit  
32 – 300A.  
The total initial purchase price of the 152 condo hotel units was  
1
[972] Exhibit 132 – 300B is the amendments that reflect changes to the initial  
offering; there were ten amendments altogether.  
[973]  
Exhibit 132 – 300C is a brochure that outlines the variety of suites that  
were being offered. There was no Wellington Suite, and purchasers cannot  
rename suites.  
[974]  
Ms. Ganz communicated with Daniel’s attorney regarding entering into a  
contract of sale for a hotel condo. They entered into a contract of sale. Meryl  
Goldberg, a paralegal for Kramer Levin LLP, communicated with potential  
purchasers. Exhibit 132 – 300D is an agreement between Daniel Reeve as  
purchaser and CPS 1 Realty, dated August 22, 2007, for condo unit #1130 which  
was the Edwardian Suite. The purchase price was US$2.635 million. There was  
no agreement with Reeve Hotels and Resorts, Jakobstettel Properties Inc.,  
Celebrity Management or DPR Financial.  
[975]  
There was an initial deposit required of US$263,500. There was a  
second deposit required of US$263,500 due by December 22, 2007, subject to  
certain adjustments, and a final payment of US$2.108 million was required on  
-
274 -  
closing.  
[976] Exhibit 132 – 300E is a deposit cheque of US$263,500, dated August  
19, 2007, provided by Daniel. It was returned NSF.  
[977] Exhibit 132 – 300F is a bank draft, dated January 16, 2008, payable to  
Kramer Levin in escrow for US$263,500.  
[978]  
CPS 1 Realty did not receive the second deposit required. Daniel  
indicated that he needed more time and the deal never closed. Daniel never  
purchased any condo unit at the Plaza. The company was permitted to retain the  
initial deposit of US$263,500 after a petition adjudication by the Attorney  
General. Daniel did not respond to the adjudication and the company never again  
dealt with him.  
[
979]  
980]  
Ms. Ganz left her post in July 2010.  
[
In cross-examination, Ms. Ganz indicated that the bank draft of January  
16, 2008 of US$263,500 was the initial deposit, and it kept Daniel in the running  
to get the deal closed. Ms. Ganz only dealt with Daniel’s lawyer. No more  
deposits were received. Daniel’s lawyer asked for more time. CPS 1 Realty  
prepared a closing boilerplate letter, dated February 29, 2008, indicating that the  
closing date on unit #1130 was April 8, 2008 at 2 p.m. – see Exhibit 133 filed by  
the defence.  
-
275 -  
[981]  
The deal did not close on April 8, 2008. A further letter was sent to  
Daniel’s lawyer indicating that the default had to be cured by May 19, 2008. The  
deal was still active until May 19, 2008 – see Exhibit 134 filed by the defence.  
The letter advised that if the deal did not close by May 19, 2008 the purchase  
agreement was terminated and the deposit was forfeited.  
[982] On May 23, 2008, Daniel’s lawyer received a further letter dated May  
23, 2008 indicating that the May 19 deadline had passed without closing and the  
agreement was terminated and the deposit would be retained – see Exhibit 135  
filed by the defence. There was further correspondence through Meryl Goldberg  
to revive the agreement and discussions to return the initial deposit. There was  
one attempt to get the deposit back but the company said no. The purchaser  
must initiate the adjudication process to retain the deposit, something that is  
commonly done.  
MERYL GOLDBERG  
[983] Meryl Goldberg, a paralegal, was involved in the closing of Plaza  
condos on behalf of Kramer Levin.  
[
984]  
terminated, Daniel requested the return of two-thirds of his deposit on June 10,  
008. The email indicated that Daniel could not come up with the monies to close  
the deal due to severe financial and personal hardships.  
Exhibit 136 is a series of emails indicating that after the agreement was  
2
 
-
276 -  
[985]  
In cross-examination, Ms. Goldberg testified that the failure to meet the  
obligations in the purchase agreement resulted in the forfeiture of the single  
deposit they received after the original deposit cheque did not clear.  
3. BAYFIELD PROPERTY  
HENRY ISRAEL  
[986]  
In 2008, Mr. Israel owned two properties: the Red Bump Inn (regarding  
which there were no negotiations) and the Bayfield property. The Bayfield  
property was a house on a lake.  
[
987]  
property between Annie Smith and Daniel Reeve and Henry Israel, dated June  
0, 2008, with a purchase price of $1 million. In cross-examination, Mr. Israel  
Exhibit 220 is an agreement of purchase and sale for the Bayfield  
3
indicated that Ms. Smith was the girlfriend of Daniel and that Daniel and Annie  
signed the agreement on June 30, 2008.  
[988] The agreement was conditional on financing to be arranged. There was  
also a $10,000 deposit.  
[989]  
The closing date was December 1, 2008. The lawyer called to say that  
the deal had not gone through. The $10,000 was put into Mr. Israel’s bank  
account.  
[990]  
Mr. Israel never received any money to be invested and there were no  
 
 
-
277 -  
negotiations regarding selling the Red Bump Inn.  
C. DPR FINANCIAL – THE INSIDERS  
1
. JEFFREY MAY  
Jeffrey May is a financial advisor who met Daniel Reeve in September  
008 after responding to an ad. He worked with Daniel from December of 2008  
to March of 2009.  
[991]  
2
[992]  
The advantage of segregated funds versus mutual funds are as follows:  
1
2
3
. Segregated funds are creditor-proof unless money is put there for  
the purpose of avoiding creditors;  
. Segregated funds bypass probate when passing to beneficiaries;  
and  
. Segregated funds have insurance guarantees that ensure 75 to 100  
percent of the investment with a death benefit.  
[993]  
Mr. May met Daniel at the King Street West office in Waterloo which had  
a “futuristic” reception area. There he viewed Exhibit 20 – 55A, the Millionaire  
Mortgage presentation. The concept basically involved a remortgage and using  
the equity to invest in segregated funds to buy two to three times more  
segregated funds. It has mechanisms to minimize losses: resets and stop-losses.  
 
 
-
278 -  
[994]  
Mr. May involved three couples in the Millionaire Mortgage concept: (1)  
Ingrid Wessel and Jeff Miller, (2) Paul and Lisa Schnarr, and (3) Steven Manuel  
and Amanda May.  
[995] The Schnarrs dropped out due to their divorce. Daniel picked up the  
cheques for the other two couples.  
[996]  
Mr. May spoke to Daniel in December 2008 to January 2009 and  
indicated to Daniel that no money had ever been paid to his clients. Daniel said  
their money had been invested in commercial mortgages.  
[997]  
In January of 2009, Mr. May asked if Daniel was licenced. Daniel said  
that he had given up his licence and David had taken over. In re-examination, Mr.  
May indicated that Daniel told him that he was not licenced after Mr. May’s  
clients had completed their investments with DPR Financial. Mr. May split his  
commissions with DPR 50/50. In February of 2009, the bailiff came to the door.  
[998]  
Exhibit 21 – 55B is the Wealth Institute presentation. It has 12 modules  
to educate clients. Clients pay costs tuition of $4,995 per year plus GST. Mike  
Floyd was in charge of the school.  
[999]  
Mr. May resigned from DPR by email in March 2009 as there was no  
one in the office. When he left, the only ones there were Daniel, Janice Berkin  
and Lee-Anne Ruggle. There were no financial advisors left once he resigned.  
-
279 -  
[1000]  
In cross-examination, Mr. May indicated that in March of 2009, he  
became aware of the criminal investigation into the firm. It was pointed out that,  
at the last page in the Millionaire Mortgage presentation at Exhibit 20 – 55A and  
at page 183-184 of the Millionaire Mortgage book in Exhibit 7, respectively, there  
was a note that the presenter and the author were not licenced. Mr. May saw  
Daniel give five presentations to clients and Daniel never indicated he was not  
licenced; the disclaimer would have been in the presentation material that Daniel  
referred to.  
2. KAREN GINGRICH  
[1001]  
Karen Gingrich met Daniel Reeve 18 years ago. Wilma Jordan is her  
mother. Ms. Gingrich and Daniel started out as friends. Later, Daniel would  
become her financial advisor and employer. In cross-examination, she indicated  
she was friends with the family of Cheryl Reeve and worked for Daniel after he  
offered her more money ($55,000 annually) than she had been presently making  
and gave her a full-time job.  
[1002]  
Ms. Gingrich has 30 years’ experience as a bookkeeper. She started  
working for DPR in July 1, 2006. She was surprised at the large amounts of  
Accounts Payable that were owing. She spoke to Cynthia Taylor about it, not  
Daniel. In cross-examination, Ms. Gingrich indicated that Ms. Taylor worked for  
an agency and part-time at DPR. Ms. Taylor was responsible for Celebrity  
 
-
280 -  
Management, Jakobstettel Inn and DPR before Ms. Gingrich took over. Ms.  
Gingrich shared Reeve Hotels and took over responsibility for DPR. Ms. Gingrich  
was the first full-time in-house bookkeeper.  
[1003]  
In the fall of 2006, Ms. Gingrich got signing authority for Jakobstettel  
Inn and Daniel P. Reeve Associates which became DPR Financial. Her duties  
were to pay employees and do the banking. Daniel would say he needed  
something paid; she would prepare a bank draft and pay the people who needed  
to be paid. Bank drafts were preferred as they would clear as opposed to  
cheques which were bouncing. In the fall of 2006, cheques were bouncing at  
least one time per month. Often more than one cheque would bounce.  
[1004]  
Ms. Gingrich borrowed from her account to cover cheques that would  
otherwise bounce as she wanted the employees to be paid. In 2007, Daniel said  
that big things were coming in 2008.  
[1005]  
David was the president of DPR Financial. He was a financial advisor  
but did nothing regarding the company’s finances and did not give instructions as  
to whom to pay. David wanted to see the financial statements in March or April of  
2008 but Daniel instructed Ms. Gingrich not to provide the financial statements to  
David.  
[1006] In August or September of 2008, Daniel asked Ms. Gingrich to become  
head of finance so that David would not have access. Daniel phoned six clients  
-
281 -  
and told them that Ms. Gingrich would look after them in her new role. The next  
day a lady with $700,000 invested in the Bayfield property phoned. Ms. Gingrich  
did not know anything about Bayfield and the lady was upset that Ms. Gingrich  
could not provide information. Ms. Gingrich told Daniel that Anne Colquhoun had  
called her and she told her that she did not know about the Bayfield property.  
Daniel was upset and told her, “Don’t ever tell a client you don’t know.” In cross-  
examination, Ms. Gingrich indicated that Ms. Colquhoun said that Daniel was  
aware of the investment and said, “I can’t even buy a loaf of bread anymore.” A  
number of upset clients were phoning but Daniel specifically told her to deal with  
six clients.  
[
1007] Ms. Gingrich got a call from Pat Westerhout on September 18 or 19,  
008. Ms. Westerhout had invested $800,000 in the new office in Waterloo in  
December 2007 and wanted her money back. Ms. Gingrich was aware that  
500,000 of that money had gone to Cheryl Reeve. In cross-examination, Ms.  
Gingrich indicated that the other $300,000 went to the Jakobstettel Inn  
$200,000) and DPR ($100,000) for general expenses. With that information, Ms.  
Gingrich quit as head of finance after just one week.  
2
$
(
[1008]  
The TD bank records at Exhibit Stick File 103 at page 2005 indicate  
that deposits of $700,000 and $100,000 was made on December 4, 2007 and  
then there was a credit transfer to Cheryl Reeve of $500,000 signed by Daniel. In  
cross-examination, Ms. Gingrich says she did not make the deposit; she was on  
-
282 -  
holidays in Costa Rica at the time. Ms. Taylor may have but Ms. Gingrich does  
not know. Ms. Reeve, at that time, had no employment duties.  
[1009]  
From January 2007 to September 2008, Daniel was not in the office  
much. However, when David was president, the directions for finances came  
from Daniel. Daniel Reeve and Associates evolved into Jakobstettel Inn and DPR  
Financial. Daniel also owned a limousine service which was called Select  
Executive Services and then Millionaire Executive Services.  
[1010]  
Reeve Hotels and Resorts had no bank account until 2007. The  
company did not do anything. As soon as a Daniel knew that a cheque was  
coming, she was told how to disperse it. Cheques were large sums and were  
deposited into the Reeve Hotels and Resorts bank account and pretty well right  
away the funds would be transferred to DPR Financial. For example, $200,000  
would come in and she would tell Daniel for what they needed money – e.g., a  
hydro bill, employee salaries, etc.  
[1011]  
There was not a lot of revenue coming in. The company lost $2 million  
per year. Daniel said that big things were coming in 2008 and things would work  
out.  
[1012]  
Daniel brought personal invoices in for his expenses for his farm and  
Ms. Reeve’s house. Ms. Gingrich paid these invoices per Daniel’s instructions  
and she put them in the books as shareholder loans. She stopped giving Daniel a  
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paycheque and used it to decrease his loan in mid-2007. In cross-examination,  
Ms. Gingrich indicated that all of Daniel’s personal expenses were put in the  
books. Intercompany loans were all between Daniel’s companies, except  
possibly DPR Windsor. It was not improper to make intercompany loans between  
companies owned by a single owner. Tax issues were dealt with by Collins  
Barrow.  
[1013]  
Reeve Hotels and Resorts provided $6 million to DPR Financial. It was  
set up as a loan to DPR Financial and not as a personal loan to Daniel. There  
was no revenue for Reeve Hotels and Resorts. She did not process any  
expenses for Reeve Hotels and Resorts except for bank charges and interest.  
She was not sure of what was happening with the company; she assumed it was  
for the buying of hotels.  
[1014]  
Daniel said that he was going to start a new company, Millionaire  
Mortgage in late 2007 or early 2008. The setting up of the bank account and  
details was done by Ms. Taylor.  
[1015]  
The TD bank records at Exhibit Stick File 101 at page 3376 indicate  
on July 19, 2008 there was a deposit of $68,463.96 for Jakobstettel. There was  
an immediate credit transfer that day from that account to Ms. Reeve in the  
amount of $50,000. Page 3377 of the same document shows that the deposit  
was from a cheque of $68,463.96 made out by Jay and Eva Bernachi. In cross-  
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examination, Ms. Gingrich could not remember this transaction.  
[
1016] The TD bank records at Exhibit Stick File 128 at page 305 indicate a  
receipt on September 12, 2008 in which Millionaire Mortgage transferred  
100,000 to Ms. Reeve; the receipt is singed by Ms. Gingrich. Daniel instructed  
$
her to do it and when she asked why Ms. Reeve was getting money from  
transactions like this, every time Daniel would say that it was due to a court  
order.  
[1017]  
All of the companies were not making money except for Millionaire  
Travel which was making $20,000 per year. Daniel said that things were going to  
get better.  
[1018]  
On August 22, 2007, the TD bank records, at Exhibit Stick File 123 at  
pages 219-220, evidence a receipt signed by Ms. Gingrich for a deposit to DPR  
for $400,000 and a transfer to Emerald Met for a draft for Information Design  
Canada for $300,000. The money came from a client and could have been done  
to pay off a loan. In cross-examination, Ms. Gingrich indicated she could not  
recall the specifics and is not sure of where else the monies could have come  
from.  
[1019]  
The TD bank records at Exhibit Stick File 101 at page 2498 show a  
cheque, dated March 6, 2008 to Celebrity Management signed by Brian Crozier  
in the amount of $159,601.95. At page 2497 of the same Exhibit Stick File is a  
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TD bank receipt dated March 7, 2008 signed by Ms. Gingrich indicating a  
depositing of that cheque. Then $100,000 was sent to Sutherland Mark, which  
was the law firm representing DPR. Ms. Gingrich testified that she deposited Mr.  
Crozier’s cheque and then made out a $100,000 cheque to pay off the mortgage  
for the DPR offices at 46 Cambridge Street in Cambridge (Ms. Reeve was getting  
that in the divorce). There was no money in the DPR account before the deposit  
of Mr. Crozier’s cheque.  
[1020]  
The TD bank records at Exhibit Stick File 103 at page 2464 indicate a  
receipt dated March 10, 2008 signed by Ms. Gingrich and Daniel wherein a  
deposit is made to Reeve Hotels in the amount of $106,000 and then a bank  
draft is made out to Sutherland Mark for $100,000. Again this money was used to  
pay off the mortgage on 46 Cambridge Street. The only deposits made to Reeve  
Hotels were client money. Ms. Gingrich was not aware of any other deposits.  
[
1021] The TD bank records at Exhibit Stick File 105 at page 441 show a  
receipt signed by Ms. Gingrich on April 28, 2008. The receipt shows a deposit of  
200,000 for Reeve Hotels (from Keith Austin Holdings – see page 442 of the  
$
same Exhibit Stick File) and then a payment of $100,000 to Starbuck  
Transportation (which was a client of DPR or Reeve Hotels, Ms. Gingrich is not  
sure) and a further $100,000 transfer to Ms. Reeve.  
[1022]  
Ms. Gingrich was paying various bills under $5,000 on her own.  
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Anything over $5,000 for the six months prior to her leaving on September 19,  
008 required Daniel’s instruction. From January 2007 to September 19, 2008,  
2
any payments greater than $25,000 to $50,000 required Daniel’s instruction.  
Daniel had control over where the money was going.  
[1023] DPR was operating at a $2 million per year loss. The client money was  
set up as loans.  
[1024]  
On September 15, 2008, Daniel told her to deposit a $35,000 interest  
payment to Josephine DeSalvo. She walked in at the end of the meeting and  
signed on as a witness to Exhibit Stick File 13, E. This document is an  
agreement between Jakobstettel Inn and Ms. DeSalvo, dated June 18, 2008 but  
Ms. Gingrich signed it in September 2008 at the Jakobstettel Inn. She first met  
Ms. DeSalvo on September 15, 2008 when Ms. Gingrich witnessed the  
document and believes the agreement was signed on September 15, 2008.  
[1025] There was a total of $1.8 million disbursed from corporate accounts to  
Ms. Reeve.  
[1026]  
Ms. Gingrich is not aware of any discussions regarding the Park Plaza  
Hotel. She was not given any directions regarding purchasing a suite or  
payments for renovations with respect to the Park Plaza.  
[1027] One of the six clients she was to look after was Keith Austin who told  
her, in her last week at DPR, that he invested money in the Breadalbane. She  
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had never heard of the Breadalbane and had never been directed to make  
payments regarding the purchase of the Breadalbane.  
[1028]  
Ms. Gingrich heard, on her last day, from Ms. Colquhoun regarding  
Bayfield. Ms. Gingrich was not aware of any purchase or deposits on a Bayfield  
property.  
[1029] Ms. Gingrich believed that Daniel was a financial advisor but found out  
in January 2007 that Daniel was not licenced. Janice Berkin told her this.  
[1030]  
In 2004, Ms. Gingrich provided Daniel with a $100,000 loan to help out  
a chicken farmer. She got the documents in January or March of 2008 from Ms.  
Taylor and it was signed by “Cynthia Taylor.” However Ms. Taylor was not  
married in 2004 and “Cynthia Taylor” is her married name. The document was  
entered as Exhibit 211A and is dated May 10, 2004 with a maturity date of May  
10, 2009 providing for a $100,000 loan with 10 percent interest. Exhibit 211B is  
a similar document indicating a loan made on May 10, 2004 for $100,000 but  
provides for 15 percent interest and is signed by Daniel. In cross-examination,  
Ms. Gingrich indicated that she got this document from Daniel in March of 2008.  
She did not get quarterly reports regarding this loan.  
[1031] On this loan, Ms. Gingrich received a return of $20,000 in principal and  
some interest.  
[1032]  
On December of 2007, Ms. Gingrich made a second loan of $100,000  
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to Daniel. Daniel needed the loan to get DPR Waterloo running. She was paid  
back this money in March of 2008.  
[1033]  
In cross-examination, regarding these two loans by the Gingriches to  
Daniel, the defence tendered a spreadsheet which was entered as Exhibit 213.  
The spreadsheet shows two columns referring to interest payments on the two  
loans. Regarding the first loan, it shows a total of $146,150.63 owing in 2008 and  
$36,643.30 owing on the second loan in September of 2008. The second loan  
was negotiated in December of 2007 for 25 percent interest for three months. In  
the first week of September, two weeks before she left, she received from  
Celebrity Management c.o.b. as Jakobstettel and DPR a total of close to $80,000  
to $90,000. She received $46,150.63 on the first loan in interest and $36,643.38  
for the second loan of $100,000. She guesses there was $50,000 in the bank in  
DPR at the time of these payments. She got $20,000 after she left DPR. She did  
not do the books for Jakobstettel Inn.  
[1034]  
In re-examination, Ms. Gingrich was referred to the TD bank records at  
Exhibit Stick File 101 at page 3802. There is a receipt dated September 6, 2008  
signed by Ms. Gingrich which shows Jakobstettel paying Broadleaf Farms (a  
company of the Gingriches) $46,150.63, which was interest on the first loan and  
DPR paying $44,908.96, which was interest on the second loan, and a  
repayment of $16,000 from the Wealth Institute. At page 870 of the same Exhibit  
Stick File there is a bank draft payment to Broadleaf Farms of $25,000 on June  
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2, 2007 which was a partial interest payment of the first $100,000 loan.  
[1035]  
In 2007 to 2008, there were expansions by DPR in Windsor, London,  
Waterloo and satellite offices in Peterborough and Aurora. Ms. Gingrich agreed  
in cross-examination that growth involves debt.  
[1036]  
In cross-examination, Ms. Gingrich indicated that Emerald Met is the  
holding company for Millionaire in You, a store in Guelph. Alex Realty was the  
holding company for the offices of Daniel Reeve and Associates and DPR at 46  
Cambridge Street and was owned by Ms. Reeve. DPR paid the mortgage  
payments for Alex Realty. No lease payments were made to Alex Realty.  
[1037]  
In cross-examination, Ms. Gingrich indicated she did the payroll for the  
companies she looked after. Daniel was the shareholder of all the companies  
except Alex Realty and DPR Windsor. DPR Windsor was jointly owned by Daniel  
and Rob Pigeon. Ms. Gingrich denied that Ms. Reeve received a salary. If  
anything was done on 46 Cambridge Street, DPR paid for it. In 2006, 61  
Cambridge Street, across the street from 46 Cambridge Street, was bought to  
house administrative support staff and segregated funds’ monitors. Ms. Gingrich  
started there.  
[1038]  
Only Ms. Taylor, Ms. Gingrich and Daniel had access to the bank  
accounts. Ms. Gingrich had signing authority. David did not have signing  
authority. Later in 2008, Linzie Brown had access to a new account for payroll  
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purposes.  
[1039]  
Millionaire Travel had a trust account for travellers but there were no  
other trust accounts for any of the companies. Each company had one bank  
account.  
[1040]  
At the time of the divorce, Ms. Reeve owned Alex Realty which in turn  
owned 46 Cambridge Street, which was the main office of DPR Financial. Ms.  
Gingrich was not privy to any court orders. She took directions from Daniel. All of  
Ms. Reeve’s divorce payments were put in the books.  
[1041]  
All the transactions were recorded on the books including Daniel’s  
personal expenses. Daniel never told Ms. Gingrich not to put transactions in the  
books.  
[1042]  
Ms. Gingrich did not meet with Daniel regarding the books but did  
discuss difficulties in meeting the payroll and bill payments and discussed  
payment priority lists with Daniel.  
[1043]  
Daniel told Ms. Gingrich not to show David the financial statements  
when David was president of DPR. David put money into the company a few  
times so that the payroll could be covered.  
[1044]  
Ms. Gingrich’s understanding was that Daniel lost his licence due to a  
client suing him. It was suggested to her in cross-examination that Daniel gave  
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up his licence because he could not get insurance. When Daniel had his licence,  
Canada Life paid the advisors and they split half-and-half with Daniel. After he  
lost his licence, all the commission went to the advisor.  
[1045]  
In 2008, Daniel said big things were coming. He was referring to  
Millionaire Mortgage and the utilization of mortgage brokers. The book and the  
Millionaire Mortgage presentation program disclosed that Daniel did not have a  
licence. It was not a secret that Daniel had no licence.  
[1046] Ms. Gingrich was not involved in client portfolios and investments. She  
just dealt with the finances.  
[1047]  
When Ms. Gingrich left, she handed the keys to Janice Berkin. Her  
DPR computer had broken so she had been using her own personal computer  
for the preceding six months. Her personal computer therefore contained  
company information. She copied the information on her computer to a USB stick  
and handed it to Daniel. He was always losing things, and Sarah Snow would  
later call looking for it. She emailed the company information and believed she  
deleted everything.  
[1048]  
When Business Fax did Emerald Met’s books, she picked them up and  
put them in her garage. She was with DPR at the time and did that because DPR  
was in the process of moving. She did not come into possession of the records  
after she left and did not look at them. She received a letter from Daniel  
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regarding this information and she took everything and gave it to her lawyer Bob  
Waters including the information in her deleted box and all the boxes of  
documents. She met with her lawyer and the police in about January of 2009.  
[1049]  
On her last day, Ms. Gingrich gave Ms. Taylor all the books. She had  
no authority to take DPR Financial and related companies’ information. She was  
upset; Daniel had hurt all six other clients. On September 19, she walked out with  
all the financial information and took it home. On September 29, she gave a USB  
stick to Daniel. Payroll was due on September 30, 2008.  
[1050]  
Exhibit 214 is a letter dated January 27, 2009 from Daniel’s lawyers  
suggesting Ms. Gingrich was contacting clients. The letter advises her she had  
no right to possess confidential information and to return it within seven days.  
Ms. Gingrich indicated she turned over the material shortly after she left. She met  
Detective De Boer in June 2009; the police never asked for any information on  
her computer and did nothing to professionally examine it. In October 2009, she  
went to the police to help them with QuickBooks and it was not audiotaped.  
3. CYNTHIA TAYLOR  
[1051]  
Cynthia Taylor was employed with Business Fax Bookkeeping and did  
bookkeeping for Daniel. In 2006, she started her own bookkeeping company and  
kept Daniel on as a client.  
 
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[1052]  
She did the books for Daniel Reeve and Associates, Jakobstettel Inn in  
St. Jacobs and Emerald Met (which operated a store in Guelph: Millionaire in  
You).  
[1053] In or about 2004 to 2005, she had signing authority for Daniel Reeve  
(
DPR Financial), Emerald Met and Celebrity Management.  
[1054]  
The cashflow at DPR consisted of receiving commissions from Daniel  
as a financial advisor. That source started to decrease and she noticed that  
larger amounts were being deposited; they were loans and investments from  
company accounts from individuals. Sometimes she got documents for the loans  
but other times she got no documents.  
[1055] In 2007, the loans and investments were in the millions. In 2008, the  
estimated outstanding loans stood at about $30 million.  
[1056]  
Daniel was no longer a financial advisor but other financial advisors  
were receiving commissions and splitting it with DPR. Daniel said he could no  
longer sell registered instruments because he could not get insurance. In cross-  
examination, Ms. Taylor indicated that Daniel never said he gave up his licence;  
he said he no longer had a licence.  
[1057]  
There were cashflow problems with DPR. There was not enough  
money coming in to cover everyday expenses such as the lease. The cashflow  
problems started after Daniel started to expand. In cross-examination, Ms. Taylor  
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294 -  
said the cashflow problems started from the time of the purchase of the  
Jakobstettel Inn in 2004 and going forward. Ms. Gingrich was the other  
bookkeeper and Kim Kroeker took on Jakobstettel books at the end.  
[1058] The Jakobstettel Inn had cashflow problems and difficulties paying  
interest, payroll, HST and operating expenses at the deadline times.  
[1059]  
Without the investments coming in, the Jakobstettel could not meet its  
payments. Ms. Taylor was receiving lots of phone calls for interest payments  
from investors and it was obvious that they never could be paid either. She quit in  
August of 2008.  
[1060]  
Ms. Taylor brought to Daniel’s attention when interest payments were  
due and Daniel would tell her to give them a date for payment but on that date,  
the money would not be there. It was very seldom that the date set was met by  
payment.  
[1061]  
Daniel told her that the large amounts coming in were from investors.  
This money was being used to pay for the company’s operating expenses and  
Daniel and Ms. Reeve’s personal accounts.  
[1062]  
Ms. Reeve took no part in the operations and was not employed but  
received paycheques. Daniel directed approximately $2 million be paid to Ms.  
Reeve. In cross-examination, Ms. Taylor said that Ms. Reeve periodically was at  
the office when decorating, but not often, and Ms. Taylor did not know her duties.  
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Ms. Taylor was shown Exhibit 211A which is the $100,000 loan made  
by Ms. Gingrich to Celebrity Management in 2004. The letter is signed by  
Cynthia Taylor” as VP Finance of Celebrity Management. The signature is not  
[1063]  
“
hers and she was not VP of Finance. Further, her name in May 2004 was  
Cynthia Freeman. She had previously put on the document, “VOID – signature is  
not mine, Cynthia Taylor.” Ms. Taylor had never seen Exhibit 211B, a copy of  
the same document signed by “Daniel P. Reeve” before.  
[1064]  
Ms. Taylor had concerns and approached Daniel regarding the amount  
of money coming in and investments that could not be paid back. She told Daniel  
that taking money out personally has tax implications and that the companies  
were not making a profit and that she could not see the loans ever being paid  
back. In cross-examination, she indicated she could not remember the exact  
specifics of their conversation.  
[1065]  
Dave Webb from the Collins Barrow was involved in one of the  
conversations. Ms. Taylor supplied Mr. Webb with the documentation. This  
occurred in around 2004 or 2005. Mr. Webb confronted Daniel about the  
personal use of business monies. Ms. Taylor cannot remember Daniel’s exact  
response. In cross-examination, Ms. Taylor indicated that tax implications were  
discussed but she does not remember all the details.  
[1066]  
Company funds were used to pay personal construction expenses at  
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Daniel’s farm. He was doing extensive renovations, around $200,000’s worth,  
from 2006 to 2008.  
[1067]  
Money was taken out for personal use and was put down as a  
shareholder loan. There was $2 to $3 million outstanding as shareholder loans in  
the various companies. In cross-examination, Ms. Taylor indicated that all of  
Daniel’s personal expenses were put in the books and if it was a questionable  
expense, it would be put in as a shareholder loan. Also the only people with  
signing authority for Celebrity Management were Daniel, Ms. Gingrich, Ms.  
Kroeker, and Ms. Taylor in 2007 to 2008. Intercompany loans existed between  
Daniel’s companies.  
[1068] It is Ms. Taylor’s signature on the TD bank receipt Exhibit Stick File  
103 at page 2005 regarding the two cheques of $700,000 and $100,000  
deposited (this is the money from Pat Westerhout of which $500,000 went to Ms.  
Reeve as testified to by Ms. Gingrich).  
[1069]  
Likewise it is Ms. Taylor’s signature on the receipt in TD bank records  
at Exhibit Stick File 101 at page 2503, where $94,000 was transferred from  
Celebrity Management to Sutherland Mark on March 7, 2008.  
[1070]  
Ms. Taylor set up a suspense account which was her way of tracking  
incoming and outgoing monies that she did not have a source of information for.  
It was not a bank account but an account in the corporate books. If and when she  
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received documents, she would take the entry and name regarding who it was  
from. In cross-examination, Ms. Taylor indicated that one of her duties was to  
keep track of investors’ monies and the principal and interest to be paid on the  
transactions she was aware of. The others were put in the suspense account.  
[1071]  
Daniel directed where amounts of $5,000 or more should directed.  
Other than regular payroll, Ms. Taylor did not direct payment without Daniel’s  
instruction.  
[1072]  
Daniel purchased the Jakobstettel Inn for $800,000 to $900,000. It  
needed to be booked 100 percent of the time just to cover operating expenses,  
not including interest. She was not aware of any reserves. The general balances  
were close to the overdraft limit. There was a discussion regarding paying bills on  
average of once per week. Daniel was made aware of what needed to be paid  
and who was calling for overdue interest payments.  
[1073]  
Cheques had bounced and payroll cheques had bounced. There would  
be several cheque bounces in a month. She wanted to avoid that by issuing bank  
drafts and certified cheques that guaranteed payment.  
[
1074] The TD bank records in Exhibit Stick File 128 at pages 145-146 show  
a receipt signed by Ms. Taylor showing a variety of payments including a  
50,000 transfer to Ms. Reeve.  
$
[1075]  
Ms. Taylor’s reasons for quitting included (1) she was confident that  
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the dollar amounts arriving could not be repaid; (2) financially things were getting  
worse and there were complaints from clients; and (3) she didn’t want to be  
associated with it. She definitely voiced concerns that there were no profits and  
no money to pay interest and principal and operating expenses. Without money  
coming in, they could not cover expenses.  
[1076]  
In cross-examination, Ms. Taylor indicated she resigned, she thinks, on  
August 17, 2008 and handed Jakobstettel to Ms. Kroeker and the other  
companies to Ms. Gingrich. Ms. Taylor promised to complete her professional  
responsibilities and return after her resignation. She was working on the Celebrity  
Management books and other company loans when Ms. Gingrich resigned. It  
was Ms. Taylor’s practice to back up all her files on her computer at her office.  
[1077]  
After Ms. Gingrich resigned, Ms. Taylor became aware that Ms.  
Gingrich possessed hard copies of DPR financial information. After Ms. Taylor’s  
resignation, she also had copies of the books of Jakobstettel Inn on her computer  
as is her practice. She took them to Bob Waters’ office when she found out about  
Daniel’s investigation. Mr. Waters was also the lawyer for Ms. Gingrich.  
[1078] In re-examination, Ms. Taylor indicated that Daniel never requested her  
back up data. Other than the Jakobstettel, there were no other hotel expansions.  
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4. KIMBERLY KROEKER  
[1079]  
Kimberly Kroeker worked at the Jakobstettel from March to October of  
2008.  
[
1080]  
1081]  
She was the office manager and did the bookkeeping and payroll.  
Ms. Kroeker found it uncomfortable working there. Upset people would  
[
phone and cheques bounced. Her own first payroll cheque bounced but it was  
later replaced with a small bonus. That was a common experience.  
[1082]  
She obtained signing authority in April or May of 2008. The  
paycheques were from Celebrity Management. Transfers were always coming in  
and out of the Jakobstettel bank account. She would talk to Ms. Gingrich when  
cheques were about to bounce and Ms. Gingrich would transfer in money from  
Millionaire Mortgage or DPR Financial. Transfers would happen if money was  
needed elsewhere and the transfer would happen and there would be a shortfall  
for outstanding cheques.  
[1083]  
Daniel would, in person or over the phone, tell her to cut a cheque to  
someone who was not a vendor and this would occur once or twice per week.  
That went on for the whole time she was there. Ms. Kroeker believed that Daniel  
would make purchases, e.g., jewellery, as he was the only person who could use  
the bank account for a purchase. Cynthia Taylor told her to put it into a  
shareholder loan. This happened a dozen times over seven months while she  
 
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was there.  
[1084]  
People phoned to complain. Daniel told Ms. Kroeker not to tell clients  
she did not know the details. He told her to say instead that she would get more  
follow-up information. The people were very upset and crying at the situation.  
Daniel would tell her to phone the person and tell them to pick up a cheque at a  
certain time and place. She cut some of the cheques herself.  
[1085]  
The job environment affected her to the point that two weeks before  
her marriage in September of 2008, people were saying that they had never seen  
her so miserable. Ms. Taylor and Ms. Gingrich resigned and Daniel offered Ms.  
Kroeker Ms. Gingrich’s position but she declined. She turned in her own  
resignation in October due to the phone calls and feeling helpless when she said  
to people that she would try to get more information.  
[1086]  
Daniel would say that there would be a “money drop” and a large  
cheque would come in. Large money came from investors and only small  
amounts form the Inn from room rentals, lunches, etc. She could not pay the bills  
just from revenue generated by the Inn. Money would be transferred from  
Jakobstettel to other areas that needed it. However, there was no money  
transferred from Jakobstettel in connection with the Breadalbane or Plaza  
purchases.  
[1087]  
Ms. Kroeker had no personal contact with Cheryl Reeve.  
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5
. DIANE INTINI  
Diane Intini works for Account Temps. She has 25 years’ experience.  
She is a trouble-shooter for her employer.  
[1088]  
[1089]  
She was sent to DPR Waterloo on October 11 or 12, 2008 and worked  
there initially until December 5, 2008 at which time she was pulled for non-  
payment to her employer. She returned from December 14, 2008 to February 3  
or 16, 2009 when again she was pulled for non-payment. She came back in  
March to do T4s and T5s for the employees.  
[1090]  
When Ms. Intini arrived in October, the books were a mess. Nothing  
had been entered and nothing had been paid. It took four weeks to get the files in  
order. She noticed immediately that no income was coming in and no bills were  
being paid.  
[1091]  
From October 3 to December 5, 2008 she worked with Sarah Snow,  
the head of finance, until Sarah quit in or around December 14 because she had  
had enough. From December 5 onward, Ms. Intini reported to Daniel.  
[1092]  
Rent and vendors were not being paid and the majority of accounts  
were in overdraft. The investment money could not be deposited as it would be  
frozen. She would get cheques certified and take out bank drafts. This was not a  
normal way to do business.  
 
-
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[1093]  
The only money coming in was for commissions at about $4,000 per  
month. While she was there, the rent alone was $60,000 per month: $25,000 for  
Waterloo, $25,000 for Windsor, $10,000 for London.  
[1094]  
The investor money came in three different types of contracts: (1)  
timeshares for the Inn, (2) investments in Daniel’s company, or (3) loans to the  
company. All offered 15 to 20 percent interest.  
[1095]  
However, Ms. Intini never actually saw any money invested. The  
incoming cheque was certified and then paid out to other investors, bills or  
payroll. She remembers a Mark McGuire. They certified his cheque and  
immediately his money was used to pay bills and other investors.  
[1096]  
Someone brought over the Jakobstettel Inn books and she entered  
them into QuickBooks. The fees for the rooms were $200 for nine of the rooms  
and one for $400. There was no way that the income from the Inn, even if fully  
booked, could pay off the interest, payroll and expenses.  
[1097]  
“Freaky Fridays” happened weekly. Daniel would say that a big deposit  
was coming in on Friday. Usually no deposit came in. The doors would be locked  
and investors would come to the door and bang on it. They were not paying bills.  
The staff was just answering phones. There were just three women there. People  
were calling and yelling. Daniel was not there on “Freaky Fridays.” The term  
“Freaky Fridays” was part of the staff’s lexicon by January of 2009.  
-
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1098] Regarding the Wealth Institute, no tuition came in except for one  
5,000 cheque.  
[
$
[1099]  
The procedure to pay out money was to certify the cheque and then  
get bank drafts. They would then go to the investor’s bank and deposit the  
money.  
[
1100]  
1101]  
No direct deposits were set up while she was there.  
[
This work was very stressful. It was an obvious mess. Bailiffs were  
coming in, people were upset, and vendors were calling.  
[1102]  
Ms. Intini called a meeting with the accountant in January 2009. This  
meeting was after Ms. Snow had left in December of 2008 but before Ms. Intini  
was pulled in February. The meeting was attended by Daniel, David Webb from  
Collins Barrow, and Ms. Intini. No books were brought in. The accountant had  
done the books for the 2007 year-end. He was not aware of how bad things  
were.  
[1103]  
Daniel was provided with two options: (1) declare bankruptcy, or (2)  
draft a letter telling investors to hold off for 60 days for restructuring so that bills  
could be paid. Daniel did not want to do either. Neither option was implemented.  
Daniel said that the options would not look good to investors. Daniel was told that  
the current situation did not look good either.  
-
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[1104]  
Cheques were bouncing. In January 2009, a $100,000 cheque to  
Laura Kerr bounced – it had been post-dated. She told Daniel that he could not  
do that; it is against the law. Daniel said he thought the money would be there.  
She felt sorry for him.  
[1105]  
On February 3 or 4, 2009, she was pulled again by Account Temps for  
non-payment. When things were going crazy, she pulled out the financial records  
and in March of 2009, she met with Canada Revenue Agency and prepared the  
T4s and T5s. Daniel did not show.  
[1106]  
People were always yelling and screaming. Daniel was receiving  
threats. One time a vendor came in and Daniel hid behind Janice Berkin’s office.  
Daniel was very secretive. He did not want one company to know what the other  
was doing. There was only one financial advisor there. The others had left with  
David. Only Ms. Berkin, Lee-Anne Ruggle and Ms. Snow worked there.  
[1107] Ms. Intini was granted signing authority but never signed any cheques  
as there was no money in the account.  
[1108] In cross-examination, Ms. Intini indicated that Daniel said that it would  
get better. Daniel though had not paid the accountant for the year-end 2007.  
6. SARAH SNOW  
[1109]  
Sarah Snow currently lives in California. In 2008, she lived in  
 
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Kitchener. She has a degree from the University of Western Ontario and took  
accounting courses.  
[1110]  
In September of 2008, a neighbour told her that Daniel’s company was  
struggling and he needed help for his payroll as he was not getting paid. In cross-  
examination, Ms. Snow indicated that Daniel called her for a meeting at the  
Jakobstettel Inn.  
[1111]  
Daniel told her that he owned several companies. Ms. Snow started  
work at 423 King Street in Waterloo on October 5, 2008. The next day she went  
to the bank and was given signing authority for DPR Financial and Jakobstettel  
Inn and a variety of other companies.  
[1112]  
On the third day, Ms. Snow met Karen Gingrich just before Ms.  
Gingrich left. There used to be three women that worked there. Over lunch, Ms.  
Gingrich may have given her a USB stick containing the records. There were  
boxes of records. In cross-examination, she indicated that she unpacked boxes  
with computers in them and there were loose papers in disarray. Daniel told her  
to use Ms. Taylor’s computer. When she arrived, her office was not a functioning  
office. Ms. Snow was shown her written statement from June 16, 2009 where she  
indicated that files were not at the office; some were in Daniel’s car and others  
were in unlabelled boxes.  
[1113]  
She was to do payroll and accounts receivable for a variety of Daniel’s  
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companies. She looked at the general ledgers and saw tremendous losses year  
over year for all the companies. In cross-examination, Ms. Snow indicated that  
she wanted to resign once the picture was clear but Daniel convinced her to stay  
and told her to speak to the accountant and go from there.  
[1114]  
Ms. Snow took calls. Investors were phoning for their money. She  
asked Daniel what was going on as investors were looking for cheques. Daniel  
told her that there are all kind of records. People were wanting different amounts  
for principal and/or interest payments. Daniel gave her reasons not to pay.  
[1115]  
For example, Anne Colquhoun was looking for substantial payment.  
Daniel instructed Ms. Snow to say that they were waiting for funds and for  
cheques to clear. Ms. Snow was aware that there were no cheques since she  
had access to the banking records. Ms. Snow told Daniel that she would not lie  
for anyone so Daniel told her not to take calls anymore.  
[1116]  
Ms. Colquhoun received a partial payment on a Friday when she was  
in Windsor. Daniel would say that she would be paid when a “Friday drop” came  
in. Daniel used that phrase all the time. However there was no income or money  
coming in.  
[1117]  
After the Thanksgiving weekend in October, Ms. Snow received a call  
from a concerned investor that a large iron fence was being removed and the  
fountain was being disassembled at a DPR property. Daniel told the investor that  
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they were winterizing. That was a ridiculous lie – who would take out an iron  
fence for winterizing? The reason that the fence and fountain were being  
dismantled was because they were not being paid for.  
[1118]  
Ms. Snow met with some of the investors. Daniel introduced her to Pat  
Westerhout either at her home or at the Jakobstettel. Ms. Westerhout was  
concerned that she was missing cheques and payments. Daniel said he brought  
in a new person, Ms. Snow, who would fix it. Ms. Snow felt she was a prop;  
nothing had changed. Ms. Gingrich had not messed things up. There simply were  
no funds to pay Ms. Westerhout. In cross-examination, Ms. Snow indicated that  
Ms. Westerhout had some paperwork and had invested a very large amount  
($600,000) at a high interest rate.  
[1119]  
She also met a Heather Gardner and it was the same. Ms. Snow was a  
prop and the meeting was done to placate Ms. Gardner. In cross-examination,  
Ms. Snow indicated that she remembers seeing some papers and the investment  
by Ms. Gardner was large.  
[1120]  
The state of the books showed that all of Daniel’s companies were  
showing losses—massive losses. There was no revenue stream fueling any of  
the companies. There was nothing wrong with the books to prevent payment.  
They just were unable to pay because there was no money.  
[1121]  
The Jakobstettel Inn was a different company. It was a real inn and did  
-
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generate revenue. The investors in the inn had joint ownership. Interest  
payments were due to them. Ms. Snow told Daniel in October of 2008 that the  
inn would never meet the interest payments even if it were 100 percent rented  
without paying expenses. The Jakobstettel was just barely covering expenses.  
[1122]  
Assuming no interest needed to be paid, Ms. Snow indicated that she  
did not think the inn could ever turn a profit. The inn spent a lot of money on staff  
and renovations; if it slimmed down, it might make a small profit. The Jakobstettel  
was the only asset owned by the companies; there was no other real estate.  
[1123]  
Ms. Snow generally did not sign cheques and only prepared a few that  
they could cover. Daniel would write the cheques himself. At the end of October,  
he wrote a $100,000 cheque that bounced. There was no chance that it would  
clear. The account did not contain anything close to that number. Daniel would  
say he wrote that cheque to placate the couple. Ms. Snow told him not to do that  
as she did not want “cheque bombs” coming into the account.  
[1124] However, Daniel would continue to come in on weekends and  
evenings and write cheques that could never be covered.  
[1125]  
Every other day, lots of transfers had to be done. Daniel would say that  
a cheque was coming in and it needed to be certified and that he had a list of  
transfers. The cheque would be for $100,000 and his list was for more than  
$100,000. The vast majority of money coming in was from investors.  
-
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[1126]  
A typical dispersal of a $100,000 cheque was as follows: payroll,  
expenses such as unpaid hydro, payment to Ms. Reeve and Daniel. Daniel often  
took his pay in cash—around $5,000.  
[1127]  
Expenses such as rent and hydro were significantly behind; leases on  
vehicles such as a limo, Cadillac Escalade and Porsche Boxer were unpaid as  
automatic deductions from the DPR account usually bounced. Ms. Reeve had a  
BMW.  
[1128]  
Regarding the workhorse accounts, according to the “propaganda  
books” they were supposed to be invested in GIFs but some people had private  
equity investments in Millionaire Mortgage. For example, a Wynetta Hill was  
asking for her GIF but her cheque went into Millionaire Mortgage instead. It was  
not a mistake. A person was told that their money was in a secure investment but  
instead the money was being used for company expenses. In cross-examination,  
Ms. Snow admitted that she had not met Ms. Hill face to face but remembered  
the specific amount of $52,000 which went into the operating funds of Millionaire  
Mortgage and not into an investment.  
[1129]  
There were numerous bounced cheques regarding Millionaire  
Mortgage. Accordingly, investors in Millionaire Mortgage made their cheques out  
to Reeve Hotels and Resorts because if they were deposited in Millionaire  
Mortgage, the money would be used to pay the overdraft.  
-
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[1130]  
Ms. Reeve did not work at the company. Daniel said that if she tried to  
come in, to lock her out. In cross-examination, Ms. Snow indicated that Ms.  
Reeve would phone and shout and scream at her regarding Daniel and would  
issue threats. Daniel told Ms. Snow not to discuss finances with Ms. Reeve. Ms.  
Snow did not know the divorce settlement details.  
[1131]  
There were a number of transfers to Swan Creek, a farm with no  
animals.  
[1132]  
Ms. Snow got no money to invest on behalf of investors. She was  
never instructed to pay any monies to a mutual fund, segregated fund, or  
insurance company, and never wrote a cheque to any of those entities.  
[
1133]  
bullshit” and she was done. She came in on a Sunday, December 8, 2008, and  
signed some cheques and was gone.  
In the start of December 2008, Ms. Snow told Daniel that the job was  
“
[1134]  
The books were an accurate representation of the state of affairs. The  
state of affairs when Ms. Snow left was that there was financial chaos: there  
were overdue bills everywhere, Canada Revenue Agency had not been paid, and  
there was no money.  
[1135]  
In cross-examination, Ms. Snow indicated that Diane Intini from  
Account Temps was sent to help her. Ms. Intini suggested that Daniel close a  
variety of offices where no one was working anymore. It was suggested that the  
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Jakobstettel close but Daniel refused.  
[1136]  
In re-examination, Ms. Snow indicated that Daniel retained a speaker  
for the Wealth Institute who charged $37,000. Daniel sent half in advance and  
wrote a cheque for the other half which bounced.  
7. LINZIE BROWN  
[1137]  
Linzie Brown dated David Reeve but they broke up in April of 2006.  
However, they got back together again on Valentine’s Day in 2007, became  
engaged in November 2007, and were married on September 12, 2008.  
[1138]  
Ms. Brown was charged with fraud in either 2007 or 2008 for using her  
employer’s credit card and was sentenced in October of 2008. She is now a  
paralegal licenced by the Law Society of Upper Canada.  
[1139]  
Ms. Brown was hired by DPR in July 2007 and become the Executive  
Assistant to David. She did not disclose her fraud charges. She worked at DPR  
from July 2007 to October 2008, a period of 14 months. Her pay was $65,000 per  
year plus eventually a car lease from May to September 2008 and a $10,000  
bonus for meeting goals.  
[1140]  
At DPR, only Daniel had authority except that Janice Berkin could hire  
and fire people. Only Ms. Berkin could access client portfolios. Daniel and Janice  
did everything together. In early spring of 2008, Linzie took over Ms. Berkin’s job  
 
-
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as she had moved on to Millionaire Mortgage.  
[1141]  
Payroll cheques were bouncing and the TD bank would not accept  
them. In July of 2008, Karen Gingrich opened up an account to transfer funds to  
employees’ accounts. Ms. Brown and Ms. Gingrich has signing authority on that  
account.  
[
1142]  
008, a limo picked her up and she picked up a cheque from Canada Life and  
took it to the TD Bank.  
Daniel never gave Ms. Brown money to invest for clients. One time in  
2
[1143]  
Ms. Brown described the Millionaire Mortgage concept as borrowing on  
a mortgage and depositing the money in a workhorse account, which in turn  
would invest in a segregated fund or a T-SWP (which is a form of mutual fund)  
which would guarantee a return of 6 to 8 percent. Daniel brought the concept to a  
staff meeting and unveiled it. Daniel did the presentation at wine and cheese  
parties.  
[1144]  
David had clients that participated in the Millionaire Mortgage  
programme. Daniel approached everyone and told them that he had a private  
investment that would pay more.  
[1145]  
During 2007 to 2008, Daniel said he was pulling back because of  
conflicts and he was busy with the mortgage business and he could not hold both  
licences. Ms. Brown was not aware of Daniel’s licence status. In cross-  
-
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examination, Ms. Brown indicated she did not know that Daniel did not have a  
licence until November of 2008. Manulife kept sending Daniel documents with  
Daniel listed as the financial advisor until 2008.  
[
1146]  
clients and corporate agents, who were referring business. Clients could become  
angels” by incorporating and referring business and they would get part of the  
commission.  
Daniel did Millionaire Mortgage and dealt with mortgage brokers,  
“
[1147]  
Ms. Brown had never seen the corporate books and had no access to  
bank accounts. In cross-examination, she indicated that she had no signing  
authority and was not a director. However, she knew lots of money was going  
through the company but they could not get photocopies of documents.  
[1148]  
Daniel said he was the sole owner of the company. David became the  
president of DPR in early 2008. Before that, David was acting president.  
However, David’s job did not change. He could not hire or fire.  
[1149]  
Steve Haney left in August 2008 and officially on September 1, 2008.  
Daniel had the PIN number to access Mr. Haney’s files. After her honeymoon in  
September 2008, Ms. Brown reviewed documents and saw Mr. Haney’s client list  
and his “know your client” forms. Only the advisor and assistant were supposed  
to have access to this information.  
[1150]  
Exhibit 243 – 51A is minutes of a meeting that took place in  
-
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September 30, 2008 at the Jakobstettel. In attendance were Ms. Brown and  
Daniel and David Reeve. Concerns were brought up about sharing client  
information and it was decided this could only be done if a waiver was signed  
before the information was passed onto Millionaire Mortgage (Daniel wanted  
information-sharing between sister companies). In cross-examination, Ms. Brown  
indicated that the minutes were emailed out to the attendees on October 7, 2008.  
It was suggested in cross-examination that Ms. Brown fabricated the minutes but  
she denied that. She printed the minutes off and gave them to the attendees  
within a week. She denied the defence suggestion that there was just an  
argument and the bullet points were not discussed. She denied the suggestion  
that it was not a formal meeting.  
[1151]  
On October 1, 2008, David resigned as president. On October 10,  
2008, Ms. Brown resigned completely. Her resignation was prompted by  
investors that were phoning and complaining that they were not being paid and  
were not receiving their money. She indicated that when Adam Lippert called  
looking for his money, she decided to resign formally.  
[1152]  
Exhibit 243 – 51B is minutes of meetings dated October 21, 2008 and  
October 28, 2008. Attendees at these meetings were Daniel, David, Barb Menard  
and Ms. Brown. The minutes indicated that David told Daniel that he wanted  
private equity agreements between David’s clients and Daniel wound up. Daniel  
indicated that the private equity agreements would be wound up by the end of  
-
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the year. In cross-examination, Ms. Brown indicated she emailed these minutes  
on October 31, 2008 to Daniel at an email address that she had for him. Daniel  
never replied to her emails regarding the minutes. This meeting took place after  
her formal resignation. She denied that defence suggestion that Daniel was not  
there on October 21 or 28, 2008. The private equity winding-up agreement was  
due to upset and angry investors phoning. She denied the defence suggestion  
that Daniel never made any agreement to wind up the private equity by the end  
of the year.  
[1153]  
The October minutes refer to David selling Daniel’s products and David  
would compensate Daniel with a percentage. Ms. Brown denied the defence  
suggestion that there was never any agreement that Davlyn could sell Daniel’s  
products or Wealth Institute programmes. Ms. Brown explained that David was  
Daniel’s cash cow and had a large book of honest business. Daniel needed  
David’s contributions to meet the payroll. Daniel had no financial advisors except  
for Brent DeKoning. Daniel was grasping at straws. Ms. Brown denied the  
suggestion that Daniel would not agree to items in the minutes such as  
monitoring, a joint show for November 20, 2008 in Windsor (see Exhibit 37  
which indicates event occurred), access for use of office space for free, and  
permission for Davlyn to have access to DPR’s ACT system (a program  
containing clients’ information and notes) provided there was a waiver. At the  
time of the meeting, they were trying to make nice but that broke down two or  
-
316 -  
three weeks later. It was suggested that Daniel did not show for the Windsor  
event on November 20, 2008.  
[1154]  
Exhibit 246, filed by the defence, is a letter of intent dated October 28,  
2008 which Ms. Brown says she emailed to Daniel. The receipt of the email was  
confirmed by Lee-Anne Ruggle and the email discussed the use of Daniel’s  
trademarked products.  
[1155]  
In the summer of 2008, David met with Daniel at Manhattan Pizza in  
Guelph. David was upset because he had learned that Daniel was not buying  
Breadalbane. Daniel had said that he was going to turn the Breadalbane into  
condos. Daniel said that he had not finalized the Breadalbane and that was why  
he had not brought it to David’s attention.  
[1156]  
In late November or early December, Ms. Brown and Ms. Menard  
phoned Crime Stoppers to tell them that Daniel did not own the Breadalbane and  
that money collected at DPR was never submitted to the places it was supposed  
to go. Ms. Brown did not hear about Reeve Hotels and Resorts until after she left.  
[1157]  
Exhibit 244, filed by the defence, is a letter from the Crown Attorney  
wherein he undertakes to not use Ms. Brown’s statement against her in  
evidence. She received it in April 2014. Daniel was arrested in July of 2012. On  
July 23, 2012, she had declined to provide a statement to the police on advice of  
counsel. She did not know if David was a suspect. No deals were offered but she  
-
317 -  
only gave evidence when her lawyer said to do so.  
[1158]  
Exhibit 245, filed by the defence, is a letter dated October 28, 2008  
that was sent to clients to inform them that Davlyn Financial had been set up.  
The names of members of Davlyn were listed as David, Ms. Brown, Ms. Menard,  
Joshua Lane and Annie Smith. They all decided to leave together and form a  
new firm. Joshua had left DPR in mid-November as had Allison Briand. Davlyn  
obtained an office on Frederick Street in November 2008 and remained there  
until 2013.  
[1159]  
In cross-examination, Ms. Brown was referred to Exhibit Stick File 7C  
which is an email that Ms. Brown sent to Bob Caiger on May 28, 2008 asking Mr.  
Caiger, after his meeting with David and Daniel, to bring in a certified cheque  
payable to “Reeve Hotels and Resorts Inc.” Ms. Brown retreated from her  
previous evidence at trial that she learned about that company after she left and  
after the civil lawsuits. She indicated that she was wrong on that point; she had  
known the name of Reeve Hotels and Resorts.  
[1160]  
In cross-examination, Ms. Brown indicated that Exhibit 187, which  
refers to herself and Reeve Hotels and Resorts, is not in her handwriting. Her  
name is spelled wrong.  
[1161] In cross-examination, Ms. Brown indicated that her husband David  
loved his brother Daniel.  
-
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8. STEVE HANEY  
[1162]  
Steve Haney went to high school with Cheryl Reeve and he became  
friends with Daniel in the 1980s. In early 2000, Daniel became a financial  
advisor. In 2003, Daniel formed Daniel Reeve and Associates. In cross-  
examination, Mr. Haney indicated that, in 2003, he had a real estate licence and  
had sold real estate for five years.  
[1163]  
In 2003, Daniel approached him with the idea of opening a retail store.  
Emerald Met Inc. was formed and was the company that owned the store  
Millionaire in You. Millionaire in You opened in the Stone Road Mall in Guelph.  
Two hundred thousand dollars was invested in Emerald Met to open the store –  
see Exhibit 215 introduced by the defence. In cross-examination, Mr. Haney  
indicated that the purpose of the store was to pay for its employees and refer  
clients to DPR Financial. Mr. Haney had a 50 percent share of the company and  
would share in the profits. Mr. Haney managed the store and got an income in  
the low $40,000 range. Exhibit 216, introduced by the defence, is the  
shareholder agreement between Daniel and Mr. Haney.  
[1164]  
In cross-examination, Mr. Haney indicated that the Guelph store  
opened in 2006 and he worked there for a few months before becoming a  
financial advisor himself. The store never made any money but he does not know  
the extent of the losses.  
 
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[1165]  
Later, Daniel purchased the Jakobstettel Inn and Mr. Haney became  
the innkeeper. In cross-examination, Mr. Haney indicated that he was paid by  
Celebrity Management, the holding company for Jakobstettel. In 2004, there  
were extensive renovations at the inn to increase the revenue and price of the  
rooms.  
[1166]  
In September 2006, Mr. Haney got his financial advisor licence which  
allowed him to sell insurance products. Once he was a financial advisor he was  
no longer active in the store. Daniel bought out his share in the store mid-2006  
and Daniel gave him a note. Daniel gave Mr. Haney $50 and the balance of  
$199,950 was to be paid later but there was no set date for repayment – see  
Exhibits 217 and 218 introduced by the defence. In early August of 2008, Daniel  
said he would pay the note at the end of the year. In Mr. Haney’s words at trial,  
he is still waiting.  
[1167]  
In early 2007, Mr. Haney was doing his own investments and got  
clients through marketing and referrals. He assumed that Daniel was licenced but  
was aware that Daniel wanted to do other things.  
[1168]  
In early 2008, at a staff meeting, it was announced that Daniel was  
passing the running of the business to David who became president of DPR.  
However, Daniel still ran the company and David could not make decisions on  
his own. In cross-examination, Mr. Haney indicated that Daniel said he was  
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letting his licence go. It was not a secret. Mr. Haney took over a number of  
Daniel’s clients. Daniel would offer clients private investments and Daniel would  
still explain Millionaire Mortgage concepts.  
[1169]  
Regarding the Breadalbane Inn, Mr. Haney first heard about it during a  
meeting that Daniel had with Glen and Andrea Morgan. Mr. Haney did not see  
any documents but he had the impression that Daniel owned the Breadalbane  
because Daniel was creating limited partnerships with it. In cross-examination,  
Mr. Haney indicated that he was not privy to any details regarding the purchase  
of the Breadalbane but renovations to the Breadalbane were discussed.  
[1170]  
Daniel never disclosed any problems with the purchase of the  
Breadalbane with other clients or Mr. Haney. The Morgans had RRSPs and  
Daniel promised to pay the deferred sales charges and withholding taxes as part  
of the deal. In cross-examination, Mr. Haney indicated he may have done some  
of the deferred sales charge calculations. It was his general understanding that  
the Breadalbane was to be renovated and the capital losses could be written off  
against the capital gains.  
[1171]  
Regarding the Plaza Hotel, he first heard of it for during a client  
meeting with Daniel and Amos and Dorothy Lichty. Daniel said the Wellington  
Suite was being refurbished and he was offering joint ownership of the unit and a  
promised return of 18 percent.  
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[1172]  
The impression and language used indicated to Mr. Haney that Daniel  
owned it. Mr. Haney trusted Daniel and accordingly believed that he owned the  
Wellington Suite. Daniel had nice pictures and the impression was, according to  
Mr. Haney, when you walked out of the meeting, you believed were getting a  
piece of it.  
[1173]  
Daniel never disclosed that he did not own the Wellington Suite or any  
suite at the Plaza. The Lichtys were looking for something secure; they were  
seniors. The Croziers also invested in the Plaza as well.  
[1174]  
The Millionaire Mortgage was Daniel’s concept and Mr. Haney  
presented it. Daniel’s concept was to get a referral from a mortgage broker and  
get a new mortgage. The equity would be taken out to create the workhorse  
account.  
[1175]  
The workhorse account would be put in a no-load segregated fund.  
Money would be drawn out to pay the interest on the loans. The management  
expense ratio on these segregated funds was higher but there was no fee on  
withdrawal and they had death benefits. You would not buy a mutual fund but  
only a segregated fund. It was not part of the part of the plan to put workhorse  
account money into private equity or in Daniel’s companies.  
[1176] The leveraged piece would involve borrowing money and put it into a  
segregated fund for a five-year period. As the fund grew, you could pay down  
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your mortgage faster. These segregated funds were longer term and had  
deferred sales charges but lower management expense ratios.  
[1177]  
Regarding the Jakobstettel Inn, Glen and Sandra Brubacher invested  
in the Jakobstettel and got a portion of one of the ten suites in the Jakobstettel.  
Mr. Haney was present at the meeting with the Brubachers and Daniel.  
[1178]  
In May of 2008, Mr. Haney was approached by clients to go to another  
location. At the end of July 2008, he met with Daniel and told him he wanted to  
leave. Daniel was surprised but they split on friendly terms, dividing the clients as  
per normal practice. On September 1, 2008, Mr. Haney started with another firm  
after finishing up his files at DPR. After August, he did not work for DPR.  
[1179] When segregated funds were withdrawn, signatures would be needed  
on the withdrawal forms.  
[1180]  
Regarding the DeKonings, the withdrawal instructions, dated March 5,  
2008, to Canada Life from Frieda DeKoning at Exhibit Stick File 12D do not  
have Mr. Haney’s signature on them, nor did he print, nor was he present when it  
was signed. In cross-examination, Mr. Haney indicated that it was Janice Berkin  
who witnessed it and was to pick up the cheque from Canada Life; he believes  
that she was licenced.  
[1181] Regarding the withdrawal instructions, dated March 5, 2008, to Canada  
Life from Ronald DeKoning, the writing of “S. Haney” is not in Mr. Haney’s  
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handwriting and he was not present when it was signed. Mr. Haney has not seen  
these forms before. Again, in cross-examination, Mr. Haney indicated it was  
Janice Berkin who was to pick up the cheque and she had a licence.  
[1182]  
Regarding the withdrawal instructions of Mark Keddie and Michelle  
Keddie dated April 17, 2008, at Exhibit Stick File 23, E and F, the instructions  
do have his signature on them. The withdrawal instructions of Mr. Keddie were  
not filled out by Mr. Haney, but he signed and witnessed them.  
[1183]  
Regarding the withdrawal instructions of Lorna Eadie and David  
Hocking, dated April 22, 2008, both the documents have Mr. Haney’s signature  
on them.  
[1184]  
Regarding the withdrawal instructions of Deborah Raycroft dated  
August 12, 2008, Ms. Raycroft’s signature is witnessed by Mr. Haney but the  
financial advisor’s signature of “Steve Haney” is not his writing. He did the  
presentation and was aware of her investing with Daniel but he does not  
remember the details.  
[1185]  
Regarding Isaac Thiessen, he was a client who came with him from  
DPR. Mr. Thiessen had RRSPs and did leverage and had an insurance policy.  
Mr. Haney was not present for any discussions between Mr. Thiessen and  
Daniel.  
[1186]  
Daniel never discussed with clients about investing in DPR and Daniel  
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never disclosed problems with Daniel’s finances or his companies’ finances.  
[1187] Karen Gingrich worked out of the same office as Mr. Haney, and she  
did the bookkeeping but he was not involved in that.  
[1188]  
In 2008, Mr. Haney grossed $175,000; $130,000 came from DPR. This  
meant that, while at DPR, he earned $260,000 in commissions. Mr. Haney did  
not receive any money from Daniel or Daniel’s companies to invest on behalf of  
other investors.  
[1189]  
In cross-examination, Mr. Haney indicated that regarding Daniel’s  
private investments with his clients, sometimes he would be present and other  
times not.  
[1190]  
In re-examination, Mr. Haney was referred to the book Mirrored  
Butterfly, written by Daniel, with a first printing in July 2007. This book is referred  
to in the Millionaire Mortgage book (first printing in November 2007) at page 4. At  
chapter 5, at pages 79-80, the book indicates that the workhorse account opens  
a GIF that is a segregated fund or wrap account and could be done by other  
products. It was presented as a no-load segregated fund.  
[1191]  
In The Three Buckets, the three recommended investments were  
RRSPs, leveraged accounts and universal life insurance. RRSPs were  
recommended to be withdrawn slowly to minimize the tax hit.  
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Mr. Haney’s signatures were on some withdrawals but not others.  
Millionaire Mortgage did not generate income other than commissions.  
[1192]  
9. LEE-ANNE RUGGLE  
[1193]  
In 2000, Lee-Anne Ruggle joined Daniel Reeve and Associates as a  
receptionist.  
[1194]  
[1195]  
[1196]  
In 2001, she got her mutual funds licence.  
In 2002, she got her life insurance licence.  
In 2003, she worked with David as a marketing assistant and got a pay  
raise.  
[1197]  
In cross-examination, Ms. Ruggle indicated she was on maternity leave  
from December to September of 2004.  
[1198] In May 2007, Ms. Ruggle no longer worked with David. From May 2007  
to October 2008 she was the receptionist at DPR Financial.  
[1199] In October 2008, Ms. Ruggle became Daniel’s personal assistant after  
moving to the Waterloo office.  
[1200] In April 2009, Ms. Ruggle left DPR because she had not been paid for  
three months. Her last pay was in December of 2008.  
 
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In 2008, David became president of DPR. Daniel worked in Waterloo  
and David worked in Cambridge.  
[1201]  
[1202] In 2007, Daniel would tell Ms. Ruggle to phone clients to confirm  
appointments regarding investment opportunities.  
[1203]  
Regarding Anne Colquhoun, Ms. Ruggle stated she was a widow who  
phoned a number of times as she was not getting her interest payments from  
Daniel. Daniel told Ms. Ruggle to say, “Book an appointment.” Sometimes he  
would show, other times he would not. Ms. Colquhoun would phone and say  
Daniel had not shown and Daniel would tell Ms. Colquhoun to book another  
appointment. Eventually, Ms. Colquhoun phoned and said that she would call the  
police; in response, Daniel said that it was not necessary and he would work it  
out.  
[1204]  
From January 1 to April of 2009, Ms. Ruggle got calls from clients who  
were not getting money owed to them by Daniel. Ms. Ruggle would tell Daniel,  
and he would say, “Book an appointment and I will bring a cheque with me.” He  
said this at least a dozen times.  
[
1205]  
1206]  
Irate emails came in and she pointed them out to Daniel,  
[
In cross-examination, Ms. Ruggle indicated that Daniel told her to  
advise him of all the complaints as he wanted to meet all the clients who had  
complaints. She was inundated with calls and emails from irate clients. Doug  
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Duesling sent a rude email and she did not tell Daniel until she left. The defence  
asked for the particulars. Mr. Duesling left a phone message that he was going to  
break Daniel’s legs and that Daniel was a “fucking cocksucker” and that he would  
see Daniel in an orange suit when Daniel is in prison.  
[
1207]  
1208]  
In October of 2008, David left the company and took his files with him.  
Ms. Ruggle would be around when Daniel told clients that he had told  
[
her to book an appointment but it was not true. That happened approximately five  
times, but she is unable to say the exact number.  
[1209] Ms. Ruggle heard rumours that Daniel did not have a licence but  
Daniel never said so himself.  
[1210]  
In cross-examination, Exhibits 233 and 234 were introduced, which  
are DPR documents outlining the duties of a receptionist and marketing  
assistant. Ms. Ruggle never advised clients but due to her licences, she could  
sign certain documents and confirm instructions. She assisted Daniel in  
preparing payment schedules for clients with private investments. She does not  
recall Daniel holding a meeting wherein he stated he had no licence. If there was  
such a meeting, she was not there.  
10. LEN BRUNEN  
[1211]  
Len Brunen was introduced to Daniel in 2000. Mr. Brunen is a  
 
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construction contractor.  
[1212] In 2005, Mr. Brunen fixed up the Millionaire in You store on Stone  
Road in Guelph.  
[1213] In 2007 to 2008, Mr. Brunen contracted with Daniel to build an office in  
London. He did the design and built it at a cost of $400,000.  
[1214]  
He then contracted with Daniel to build an office for DPR Waterloo at a  
cost of $1.3 million. In cross-examination, Mr. Brunen indicated that he did not  
complete DPR Waterloo due to lack of payment for the walls.  
[1215] Mr. Brunen did work at the Jakobstettel, renovating two suites for a  
total of $250,000, or $125,000 per suite.  
[1216]  
In 2007 to 2008, Mr. Brunen renovated Daniel’s house and was paid by  
personal cheques. During that construction, cheques would bounce. Daniel  
would say, “Here’s the cheque but don’t cash it.” He would have to chase Daniel  
by phone and email. Eventually, Daniel would come through but a bank draft  
would replace the cheque.  
[1217]  
In 2007 to 2008, Daniel told him to take some money and invest it in  
the Breadalbane Inn. Mr. Brunen asked for a prospectus and he would take it to  
his accountant. Daniel said to give him a week and he would bring it over. Daniel  
never delivered anything. In cross-examination, Mr. Brunen indicated that Daniel  
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told him that construction was going to be required at the Breadalbane.  
[1218]  
Mr. Brunen received $1.7 million for DPR London and DPR Waterloo  
plus $250,000 for the Jakobstettel renovations for a total of $1.95 million. Daniel  
did not pay $600,000 and Mr. Brunen lost his lien rights. Daniel and Mr. Brunen  
arranged for a third mortgage on the Jakobstettel for $600,000. Mr. Brunen  
received half of the $600,000 and then moved to foreclose when mortgage  
payments were not made.  
[1219]  
Mr. Brunen eventually got $120,000 of the $300,000 still owing, for a  
total of $420,000 of the $600,000 original nonpayment. As a general contractor,  
Mr. Brunen had to pay his sub-contractors.  
[1220]  
His loss is a total of $180,000.  
11. HOWARD SOUTHWOOD  
[1221]  
Howard Southwood does renovation work. His daughter babysat for  
the Reeves.  
[1222] In 2004, Mr. Southwood did backyard work at the Reeves’ home on  
South Street in Elora.  
[1223]  
In 2004, Daniel bought the Jakobstettel. From 2004 to 2006, Mr.  
Southwood did renovation work at Jakobstettel as well as other locations in  
Peterborough and Guelph.  
 
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In 2006, Mr. Southwood did a lot of work at the Jakobstettel and then  
he was asked to do work at Swan Lake Farm in 2007 and 2008.  
[1224]  
[
1225]  
1226]  
In 2007, Daniel split up with Cheryl Reeve.  
[
In 2007 to 2008, Mr. Southwood did work at the Jakobstettel, South  
Street, Swan Creek Farm, and the Millionaire University building, plus in Windsor  
and Peterborough. During that time span, Mr. Southwood was paid every two  
weeks by Celebrity Management as an employee. His annual salary was  
$75,000. The arrangement ended in October of 2008 when Mr. Southwood’s last  
few cheques bounced and he quit.  
[1227]  
In 2007 to 2008, 70 percent of Mr. Southwood’s time was spent at the  
two residences, with 60 percent of that time at the farm and the other 40 percent  
at South Street. At the farm, he put in an exercise room, a bathroom for $70,000  
to $80,000 and a seven-car garage for $150,000. For South Street, $50,000 to  
$80,000 was spent on a new bathtub, garage exercise room, and renovations for  
Ms. Reeve’s office. In cross-examination, it was brought out that Daniel cancelled  
putting in a nine-hole golf course.  
[1228]  
In 2007 to 2008, the other 30 percent of Mr. Southwood’s time was  
spent at the Jakobstettel. He did a small bathroom for $10,000 or $15,000.  
Another contractor did the extra renovations for two bedrooms. He also did work  
at Windsor and a variety of other places. In cross-examination, he indicated he  
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did no work at the property adjacent to the Jakobstettel.  
[1229] In 2004 to 2006, Ms. Reeve was involved in decorating the  
Jakobstettel. She was in and out. Ms. Reeve was not there in 2007 and 2008.  
[1230]  
Regarding subcontractors, Mr. Southwood would pay them and give  
the bills to Daniel. Ms. Taylor would provide the receipts. Cheques were paid  
either from Celebrity Management or DPR. TD bank records at Exhibit Stick  
File 103 at pages 1418, 1469, and 1567 show payments of $10,000 on August  
13, 2007, $20,000 on August 21, 2007 and $10,000 on September 6, 2007.  
[1231]  
TD bank records at Exhibit Stick File 101 at page 1521 show a  
payment of $20,000 on September 18, 2007 by bank draft. This was either for  
the house or the farm. The house was the personal residence and the farm had  
no business activity. Mr. Southwood only saw Annie Smith and the limo driver  
there and there were no other contractors.  
[1232] The materials were high quality. Daniel provided instructions on the  
renovations and where to submit expenses.  
[
1233] In October of 2008, three or four of Mr. Southwood’s paycheques were  
returned NSF and he lost confidence in Daniel. He always got paid, except for  
7,000 of expenses for putting in slot walls at the Millionaire University building.  
$
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D. THE ATTEMPTED COMEBACK  
1. MARK JACKSON  
[1234]  
Mark Jackson lives in Fergus with his wife and five children. He owns  
his home, which was worth $230,000 in 2009 with an approximate $220,000  
mortgage.  
[1235]  
In 2009, his wife received cold calls regarding a programme that would  
allow them to pay off their 30-year mortgage in ten years. The woman told them  
on the second call that they would qualify and a representative would meet with  
them.  
[1236]  
In July 2009, a representative came and introduced himself as Daniel.  
He had a PowerPoint presentation which the defence introduced as Exhibit 242.  
The presentation indicated that if they invested in mutual funds and segregated  
funds, they could pay off their mortgage in seven years as opposed to ten.  
[1237]  
The representative give them a card which stated that he was “Daniel,  
Client Relations.” During the meetings with Mr. Jackson, a kit containing a  
number of videos was provided to him – including MyPerfectMortgage and  
MyPersonalCoach – see the videos in Exhibit Stick File 20. Daniel showed him  
a video of himself in a Canada A.M. interview. Daniel was asked for his last  
name and said it was “Keller.” The purpose of the videos was to help Ms.  
Jackson make money and help Daniel’s business by setting up appointments  
 
 
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with Daniel after the videos were distributed in the neighborhood.  
[1238]  
Daniel said $5,000 was to be paid at the time of the re-mortgaging. In  
cross-examination, Mr. Jackson did not understand whether the $5,000 was for  
the program. In the preliminary hearing, Mr. Jackson testified that he was going  
to spend $1,800 on legal fees and then another $5,000 to pay Daniel to put them  
through the programme.  
[1239]  
Daniel gave them a name of a mortgage broker but that broker phoned  
back and told them that they did not qualify. Daniel gave them the name of  
another broker and they qualified. They got an extra $6,800: $1,800 for legal fees  
and $5,000 for the program. The mortgage closed on September 10, 2009.  
[1240]  
They paid Daniel $600 for the video kits – see Exhibit 239 – 20A  
cheque payable to My Personal Coach Inc., dated August 24, 2009, for $600.  
Daniel told them how they could get two $200,000 loans in an approach similar to  
his Millionaire Mortgage concept.  
[1241]  
A neighbour recognized “Daniel Keller” as Daniel Reeve. Mr. Jackson  
did a Google search on Daniel Reeve. In cross-examination, Mr. Jackson  
indicated he saw good and bad articles and phoned the police on September 10,  
2009 regarding their dealings with Daniel and before confronting him. On  
September 11, their financing went through.  
[1242]  
Daniel was called and confronted with the fact that his real name was  
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Daniel Reeve and not Daniel Keller. Daniel said that he needed to use a different  
name due to the allegations. Daniel was told they wanted their $600 back and  
arrangements were made for Daniel to return the next evening with the $600.  
The meeting did not take place and there was no further contact.  
[1243]  
Mr. Jackson’s loss is $600 for the video kits, on which he never made  
any money, and $1,800 for re-mortgaging legal fees. They kept the $5,000 and  
the mortgage increased from $219,000 to $225,000 by about $6,800.  
2. NEIL BOYD  
[1244]  
In July 2009, Neil Boyd was living in Fergus with his wife and two boys.  
He did not know Mark Jackson. He owned a house and had a mortgage.  
[1245] He got a cold call from a lady asking if he was interested in a mortgage  
at a lower rate. He said he was.  
[1246]  
He got a call from a Daniel who arranged a meeting. In cross-  
examination, Mr. Boyd indicated that Daniel said, “I can get you a better rate.  
Let’s meet and discuss it.”  
[1247]  
The first meeting was at Mr. Boyd’s home, with Mr. Boyd, his wife, and  
Daniel in attendance. Daniel said that he could get a mortgage with a lesser rate  
and he had a system for paying down the mortgage. Daniel called it  
“
MyPerfectMortgage” and showed him the Exhibit 241 video.  
 
-
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[1248]  
Daniel told him to remortgage his home and invest in a workhorse  
account with segregated funds paying high interest, and to use the money  
earned to pay off the mortgage quicker.  
[1249]  
Daniel left the video and a business card just like Exhibit 238. Daniel,  
at the end of the meeting, indicated he was looking for independent business  
operators in order to participate in his business. There would be a $500 fee to do  
so. In cross-examination, Mr. Boyd indicated that he said he would think about it.  
However at that time, he was not going to do the MyPerfectMortgage program.  
[1250]  
There was a second meeting a week later. Mr. Boyd told Daniel he  
could not get refinancing. Daniel said he had people who could arrange a  
remortgage at a lower rate if Mr. Boyd was prepared to pay the penalty to get out  
of his higher-rate mortgage. Mr. Boyd told Daniel he was out of work and was  
interested in the independent business operators program. And in the meantime  
he would try to get refinancing.  
[1251]  
Later, Mr. Boyd told Daniel he wanted to be an independent business  
operator.  
[1252]  
There was a third meeting. Daniel brought a sign and a number of DVD  
videos. Daniel wanted the $500 registration fee but Mr. Boyd did not pay it. He  
wanted to see how legitimate the enterprise was. Daniel said he would pay $250  
for every referral, $500 for every sign, and $1000 for every referral if Mr. Boyd  
-
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were to become an independent business operator.  
[1253] Mr. Boyd put up the sign. In cross-examination, Mr. Boyd indicated that  
Daniel told him that he would get a $500 fee from every referral from the sign.  
[1254]  
Neighbours asked about Daniel’s last name. In cross-examination, Mr.  
Boyd indicated that the neighbours told him that Daniel was Daniel Reeve and he  
confirmed that on the Internet.  
[1255] As a result of speaking to the neighbours, Mr. Boyd contacted the fraud  
department of the police.  
[1256]  
In the first week of September 2009, Mr. Boyd asked Daniel what his  
last name was. Daniel said it was Keller. Mr. Boyd said that he had heard a  
different name and that Daniel was in trouble. Mr. Boyd told Daniel that he had  
looked him up on the Internet. Daniel told Mr. Boyd, in response, that anyone can  
say anything on the Internet. Mr. Boyd told Daniel that he had taken the stuff that  
Daniel gave him to the police. Daniel said he was using the surname Keller  
because he was starting over again due to the investigation relating to his  
companies.  
[1257]  
Mr. Boyd’s loss is zero as no monies were exchanged.  
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E. FAMILY MEMBERS  
1
. CHERYL REEVE  
Cheryl Reeve is Daniel’s ex-wife. They met in Conestoga College in  
982. They were married on May 5, 1984. They are now divorced.  
[
1258]  
1
[1259] They separated in December 2006. They were living at 295 South  
Street in Elora and had lived there for ten years.  
[1260] At the end of the marriage, small renovations were done by Jeff Weller  
and Howie Southwood which were finished in early 2007.  
[1261] Ms. Reeve says that she worked at Daniel’s companies. She answered  
the phone at home and did decorating for the companies starting in 1977.  
[1262] In 1998, they adopted Alex. A few years later, Ms. Reeve resumed  
decorating. The decorating ceased in 2006.  
[1263]  
After their separation in early 2007, Daniel was very terrified of an audit  
when she brought it up. He would become very angry and did not want one  
conducted.  
[
1264] From 2007 to 2009, Ms. Reeve did no work at his companies. Exhibit  
21 – 57A is a copy of their separation agreement, dated November 26, 2007  
and signed by Daniel on November 29, 2007. The separation agreement, at  
2
 
 
-
338 -  
paragraph 5.1, acknowledges that Daniel is paying her $18,000 per month with  
3,500 in child support and $14,500 in spousal support. Paragraph 5.2 indicates  
$
that commencing December 1, 2007, Daniel is to pay spousal support of $13,500  
per month, with the first lump sum payment of $500,000 due on November 30,  
2007, with monthly payments until June 15, 2008, at which time a lump sum  
totalling $2 million was to be paid in four installments. If the $2 million was paid  
on time, the monthly spousal support payments of $13,500 would cease.  
[1265]  
Paragraph 5.8 required Daniel to pay $3 million in $500,000  
instalments from November 30, 2007 until August 1, 2008. Ms. Reeve was  
required to resign any and all positions in the company. Ms. Reeve did not hold  
any positions except at Alex Realty. Paragraph 5.9 indicated that in the event of  
default lasting longer than 60 days, Ms. Reeve could obtain judgment for the  
amount owing plus interest or set the agreement aside.  
[1266]  
Ms. Reeve ended up getting paid $2 million by Daniel but not exactly  
according to the schedule. Spousal support ended in 2009 with the police  
investigation in 2009.  
[1267]  
The separation agreement indicated that Ms. Reeve would take the  
house and the $252,000 mortgage. Daniel would continue to pay for her BMW.  
The car was taken back after a year.  
[1268]  
Regarding Alex Realty, this was the holding company for 46  
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339 -  
Cambridge Street. Ms. Reeve had been the CEO since 2001. She had signing  
authority along with Cynthia Taylor. She signed cheques until 2007 and then the  
company closed up. Alex Realty was originally formed to pay off a loan becoming  
due. It was done according to a “grey area” of Daniel’s licence but Daniel  
assured her it was legal. Ms. Taylor took it over and did the day to day dealings.  
Ms. Reeve’s only instruction was asking for her pay (she does not remember the  
amount). Daniel rented 46 Cambridge Street for under a year and then Ms.  
Reeve sold the house on July 29.  
[1269]  
Exhibit 221 – 57B is the amended separation agreement dated  
January 15, 2009. It indicates that $1 million is still outstanding and that a $1  
million mortgage was to be placed on Daniel’s Swan Lake farm property. Daniel  
was also required to pay $17,000 per month in child support.  
[
1270]  
1271]  
Exhibit 221 – 57C is the divorce order, dated June 4, 2008.  
[
Ms. Reeve got her money from Daniel usually in bank transfers and  
does not know from where those transfers originated. She got cash in 2007 and  
in January 2009, she received $3,000  
[1272]  
In 2007, 2008, and 2009, Ms. Reeve never received any money on  
behalf of clients. In 2007 to 2008, Daniel asked for loans on three occasions in  
the following amounts: $100,000, $80,000 and $5,000. Daniel did not say what  
the loans were for, but he was desperate and had a sense of urgency. Ms.  
-
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Reeve gave the loans to Daniel directly and got the money back in one to three  
weeks.  
[1273]  
With the $2 million Daniel gave her, Ms. Reeve paid off her mortgage.  
Most of that money, $1.8 to $1.9 million, is partly in the house and partly  
invested. About $1.3 million was invested in segregated funds.  
[1274] There was no cross-examination and Daniel was crying when Cheryl  
gave her evidence.  
2
. DAVID REEVE  
David Reeve is the brother of Daniel. They had a professional and  
personal relationship.  
[1275]  
[
1276]  
1277]  
David married his wife Linzie Brown on September 12, 2008.  
[
He first gave a statement to the police on April 22, 2014 after receiving  
the Exhibit 247 letter, dated March 21, 2014, from the Crown Attorney that the  
Crown Attorney undertook not to use his statement against him. No immunity  
was offered to him by the police and/or Crown.  
[1278]  
In January 1997, David started to work for Daniel P. Reeve and  
Associates. David had two licences, an insurance licence and a mutual fund  
licence, which allowed David to sell both insurance and mutual fund products.  
 
-
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[
1279]  
1280]  
Daniel was a financial advisor who held an insurance licence.  
[
In 2007, David was a financial advisor working with his brother.  
Financial companies paid DPR or David directly and basically there was a 50/50  
split on commissions.  
[1281]  
In late 2007, Daniel was the acting president of DPR. In early 2008,  
Daniel announced that David was the president of DPR and he was stepping  
away from DPR to focus on other business.  
[1282]  
In early 2008, David had a conversation with Daniel that Daniel was  
stepping away as a financial advisor and possibly giving up his licence. In 2007,  
David believed Daniel had his life insurance licence. Daniel never told anyone  
including clients that he didn’t have his life insurance licence.  
[1283]  
In 2008, David was president of DPR and was to work with the  
financial advisors. In reality, he had no authority and did not make decisions,  
could not hire or fire, and was not permitted to see the books by either Daniel or  
Karen Gingrich (who acted on Daniel’s instructions). David did not sign cheques  
and could not provide instructions with what to do with money.  
[
1284] Ms. Gingrich would say she was having trouble meeting payroll so  
David would contribute his own money in 2008 for payroll. He contributed about  
250,000 and got half back. He also contributed $30,000 in cash withdrawals  
from his holding company account to pay for expenses.  
$
-
342 -  
[1285]  
David discussed the evident financial problems with Daniel in the  
summer of 2008. Daniel told David that they were going through “growth pains”  
while Daniel was going through stuff with his wife Ms. Reeve.  
[1286]  
Prior to 2007, David got two of his clients, Steve Huntley and his sister  
Candace Bailey, into Daniel’s “bricks and mortar” investment. Mr. Huntley and  
Ms. Bailey were put on title and received all of their principal and interest  
payments. In cross-examination, David indicated that sometimes the payments  
were late and they got all of their money back because they had a mortgage and  
got paid on a Power of Sale.  
[1287]  
In late 2007 to early 2008, Daniel spoke about doing private equity  
deals. For example, Bridgette Reinhardt and James Reinhardt were approached  
about buying property next to the Jakobstettel Inn.  
[1288]  
From January 1, 2007 to September 30, 2009, clients were buying a  
share of a room. Daniel told them he was using the money to renovate the rooms  
in order to make the Jakobstettel into a high-end inn.  
[1289]  
In the summer of 2008, Daniel told him over lunch that Daniel was  
interested in buying the Breadalbane. The second time David heard about it was  
when a client, Kerry Reibeling, spoke to David about the Breadalbane. David did  
not know that Daniel was approaching clients. David asked Daniel why he was  
hearing this from clients. Daniel smoothed it over with Kerry. Daniel said the  
-
343 -  
Breadalbane was to be similar to the Jakobstettel.  
[1290]  
Two of David’s clients participated in the Breadalbane investment:  
Doug Thiel, an engineer, and Dr. Bernstein. (David said he was not in the  
meeting between Dr. Bernstein and Daniel.)  
[1291]  
At the meeting with Mr. Thiel, Daniel explained the Breadalbane. It was  
bricks and mortar and a safe investment. Mr. Thiel asked David if it was a safe  
investment and David said yes.  
[1292]  
On September 11, 2008, the day before David and Ms. Brown’s  
wedding, Angela DeSalvo refused to take wedding pictures on September 12.  
David asked why and Angela told him that her mother was not being paid by  
Daniel and this was the only leverage she had. There was a meeting that  
followed with Daniel and David at the Jakobstettel. Daniel agreed that he owed  
money to Ms. DeSalvo and it was coming and would be paid next week. David  
told Daniel to pay within two weeks, before David got back from his honeymoon.  
[1293]  
The DeSalvos were happy with this arrangement and Angela took the  
wedding pictures on September 12, 2008. David did not get the pictures for a  
long time because Daniel did not pay. David told Daniel that Daniel had promised  
to pay and now David looked like an idiot. In cross-examination, it was suggested  
that David was telling people he was leaving DPR. David had no recollection of  
that and denied that he told Gord Black that he was leaving DPR. In re-  
-
344 -  
examination, David Reeve indicated that Mr. Black was very drunk at the  
wedding.  
[1294]  
Regarding the Breadalbane, Daniel said he was purchasing it in the  
summer of 2008 and the money was to be held in a lawyer’s trust account with  
an accounting firm. David was 100 percent sure that Daniel used the words,  
“lawyer’s trust” but is not sure about the name of the accountant.  
[1295]  
Regarding the Plaza Hotel, David heard about it after September of  
2009. Daniel said that he wanted to expand the hotel concept and was looking at  
the Breadalbane, Bayfield, New York, Las Vegas, and maybe the Caribbean.  
[1296] Daniel never told David that the Breadalbane purchase did not go  
through or that there were problems with the purchase.  
[1297]  
Regarding Millionaire Mortgage, David heard about it in late 2007 or  
early 2008 from Daniel with Janice Berkin present. The Millionaire Mortgage was  
a variation of the “Smith manoeuvre” which was a way to pull equity out of a  
house. That maneuver allows someone to borrow on their equity and put it into  
mutual funds; the interest payments can be deducted from taxes as interest paid  
on a loan for investment. Millionaire Mortgage was different as the borrowed  
money goes into segregated funds, which have guarantees regarding investment  
returns and life insurance, so segregated funds are less risky than mutual funds.  
[1298]  
The workhorse account was Daniel’s concept and it involved putting  
-
345 -  
borrowed monies into a very safe investment which was necessary as the client  
needed the money to pay interest on the new loan. There were two appropriate  
investments for the workhorse account: (1) T-SWP and (2) segregated funds. T-  
SWPs are a special type of mutual fund that guarantees cashflow. T-SWPs are  
primarily a return of principal and are 97 percent tax-free (only the 2008 financial  
crisis gave a lower return).  
[1299]  
Daniel had a Millionaire Mortgage PowerPoint that could be custom-  
tailored to clients’ circumstances. Only Daniel and Ms. Berkin were involved in  
the personalized PowerPoint. David attended a number of wine and cheeses with  
Millionaire Mortgage presentations for clients and potential clients.  
[1300]  
In October or November of 2008, David noticed that Mark McGuire had  
investments other than T-SWPs and segregated funds, in bonds. David spoke to  
Daniel about it. Daniel said Mr. McGuire’s investments safe; the money was all in  
mortgages and David should not worry.  
[1301] Daniel never said that the workhorse account was going into private  
equity. David does not recall:  
1. Daniel ever saying that the workhorse account was going to be put into  
private equity in Daniel’s companies;  
2. Daniel ever disclosing problems with Daniel’s companies at clients’  
meetings; or  
-
346 -  
3. Daniel ever disclosing at client meetings that Daniel was going to take  
the clients’ money and give it to Ms. Reeve.  
[1302]  
David’s reasons for leaving DPR follow:  
1
. In September of 2008, Daniel wanted client information from one  
company for the use of other companies. David knew there was an  
obligation to keep confidential information confidential and to not use it  
for other purposes. But Daniel wanted information about Steve  
Haney’s clients. His wife indicated that what could they do – they were  
in Europe at that time and sent that message back.  
2
. Cheques were bouncing. Linzie Brown had joined in July of 2007 and  
five paycheques had bounced. Four cheques to David had bounced.  
3. David was president but had no authority.  
David resigned as president on October 1, 2008.  
[1303]  
Exhibit 243 – 51A is the minutes of a meeting that took place on  
September 30, 2008. Present were Ms. Brown, David and Daniel. Daniel said  
that Karen Gingrich left because David was difficult. David was concerned that  
the Bernachis’ workhorse account was in private equity and Daniel promised to  
pay Joshua Lane commission that Mr. Lane would have gotten from the T-SWP.  
David was unhappy that the Bernachis’ workhorse account was in private equity  
-
347 -  
as the T-SWP money was there for ten years and was very safe. Daniel said the  
clients were happy with the change.  
[1304]  
David indicated that Ms. Brown distributed the meeting minutes to the  
participants on October 7, give or take a day, about a week later. Daniel never  
said the minutes were inaccurate. In cross-examination, David was shown his  
police statement wherein he indicated that he did not know who wrote the  
minutes. David did not tell Daniel at the meeting on September 30, 2008 that he  
was resigning and starting Davlyn.  
[1305]  
On October 1, 2008, a day after the September 30 meeting, David  
resigned as president of DPR. Between October 1 and 10, clients were  
complaining that they were not getting their money. On October 10, 2008, David,  
Ms. Brown and Barb Menard resigned from DPR.  
[1306]  
Daniel then raised the prospect of a continued relationship. In 2008,  
David had gross commissions of $1 million which was split 50/50 with some  
exceptions. Accordingly, approximately $500,000 went to DPR Financial. DPR  
paid the rent and the employees. In cross-examination, David indicated that he  
was Daniel’s biggest financial advisor.  
[
1307]  
8, 2008 meetings with David, Daniel, Ms. Brown and Ms. Menard present.  
Things were still reasonably friendly. Deals were proposed with splitting  
Exhibit 243 – 51B is the minutes of the October 21, 2008 and October  
2
-
348 -  
commissions between Millionaire Mortgage and Davlyn and other business  
arrangements. In the meeting, other issues such as access to ACT were  
addressed. David would only have access to his clients’ information. It was  
suggested in cross-examination that there were no discussions regarding the use  
of Daniel’s trademarked products or sharing of meeting space but David  
indicated those discussions did occur and denied the defence suggestions.  
[1308]  
It was also suggested that Daniel never said he would wind up his  
private equity deals by the end of the year. David insisted that Daniel did say  
that. David indicated in examination-in-chief that Daniel was receiving a huge  
amount of money and he was going to wind up all the private equity by year end.  
[1309]  
The minutes also refer to a joint wine and cheese party on November  
20, 2008. David indicated that Daniel set it up and it was held. In cross-  
examination, David indicated that the tickets came from the Millionaire Mortgage  
office  
[1310]  
Daniel came over to dinner on November 10, 2008. Daniel and David’s  
relationship became acrimonious thereafter as Daniel was contacting David’s  
clients. In cross-examination David confirmed that he was aware that Daniel was  
going behind David’s back and contacting David’s clients to continue to do  
private equity deals. David’s book of business had followed David to his new firm.  
[1311]  
David indicated that all three meeting minutes were accurate, and that  
-
349 -  
Daniel had been provided with copies and never said they were inaccurate. Both  
David and Daniel got their minutes sent to their emails.  
[1312]  
Exhibit 246 is an email and letter, dated October 28, 2008, sent by Ms.  
Brown to Daniel regarding a notice of intent to implement their arrangement but it  
was never signed.  
[1313]  
Regarding RRSPs, the DPR approach was that they were a good way  
to save for investments and get tax breaks on the year of deposit and thereby  
defer tax. Daniel’s approach was the same and DPR sold RRSPs.  
[1314]  
David was present when Daniel advised clients to withdraw their  
RRSPs. These withdrawals were the source of funds for private equity. He heard  
of if after-the-fact once the RRSP withdrawal had been made.  
[1315]  
Regarding deferred sales charges, David was present when Daniel told  
clients that Daniel would cover those fees in private investments. David  
recommended some of the private equity investments.  
[1316]  
The Exhibit 181 letter, dated April 2, 2009, indicating that there were  
allegations of wrongdoing by Daniel and indicating that David did not encourage  
Daniel’s private investments, was the third in a series of letters sent in October  
2008, November 2008 and April 2009. Daniel had promised verbally and in  
writing that he would not contact David’s clients regarding private equity  
investments.  
-
350 -  
[1317]  
Regarding David’s client, Sherrill (Martin) Stevenson, he had met her a  
year earlier. She was involved in Millionaire Mortgage. The key component of  
Millionaire Mortgage is the workhorse account which had to be invested  
conservatively. David was not present when Daniel talked to her and she went  
ahead with the Millionaire Mortgage concept. On November 20, 2008, Ms.  
Stevenson told David that Daniel was going to invest her Millionaire Mortgage  
funds into private equity. David was in total shock. It was his intention that her  
workhorse account was to be in a T-SWP and segregated funds. David had no  
prior knowledge that Daniel was contacting clients like Ms. Stevenson. There  
was no reason for Daniel to speak to her.  
[1318]  
Regarding his client Theresa Kaup, she was a widow with few assets.  
She had a private equity investment in the Jakobstettel. David was not involved  
in recommending it and never met with her when Daniel was present. The  
withdrawal request in Exhibit 104 – 22B, dated July 10, 2008, does not have his  
signature on it although he was her financial advisor. Lee-Anne Ruggle  
witnessed Ms. Kaup’s signature. The instructions indicated that a DPR  
representative would pick up the cheque. David stated that happened  
infrequently and that there must have been some rush. The advisor is supposed  
to sign off on all the deposits and that did not happen here. The practice was that  
he would witness the redemption. He was not aware of it at that time.  
[1319]  
In cross-examination, David indicated that Ms. Menard and Ms. Ruggle  
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351 -  
had licences but denied that any staff member that had licences could fill out and  
execute the documents. He does not recall meeting with Ms. Kaup and Daniel in  
June of 2008 and discussing with Ms. Kaup the collapsing of her RRSPs. The  
defence entered Exhibit 251 which is a letter dated July 10, 2008 which is the  
boilerplate letter of direction signed by Ms. Kaup that she was withdrawing the  
RRSP against the advice of her financial advisor. David indicated that there was  
no way he prepared this letter and denied the suggestion that he was aware of  
Ms. Kaup’s private investment. Ms. Brown was not his assistant at that time; she  
was VP of Administration. David indicated that anyone in DPR could have printed  
off this document. Exhibit 252 is the confirmation of withdrawal by Canada Life  
dated July 10, 2008 listing David Reeve as financial advisor. David indicated that  
he has no recollection of meeting with Ms. Kaup that summer. He has no  
meeting notes and would be shocked if he recommended withdrawing her RRSP  
for a private investment with Daniel as he would have a hard time justifying a  
private investment to Ms. Kaup.  
[1320]  
Regarding Exhibit Stick File 9E, he was personally present for Anne  
Colquhoun’s withdrawal from Manulife, dated September 19, 2007, for her  
private investment with Daniel and the withdrawal instructions bear his signature.  
However he did not know what the funds withdrawn were to be used for.  
[1321] Regarding Frieda and Ronald DeKoning, they were clients of Daniel  
who were transferred to David. They had a private equity investment. They said  
-
352 -  
their money needed to be safe as this investment constituted all their investable  
assets. Exhibit 24 – 12D is the withdrawal instructions dated March 7, 2008.  
This document was faxed by Ms. Berkin who never faxed any of David’s  
documents. The instructions indicated that Janice was to be contacted and the  
advisor would pick up the cheque. David did not prepare the form and was not  
aware of the withdrawal and did not pick up the cheque.  
[1322]  
In cross-examination, David confirmed that Exhibit 26 is the notes he  
prepared when meeting the DeKonings on January 14, 2008 with Steve Haney  
and Daniel and they discussed leveraged loans, segregated funds and Millionaire  
Mortgage. David confirmed that his signature is not on the withdrawal instructions  
and the financial advisor should sign it. He believes it is Ms. Berkin who  
witnessed Ms. DeKoning’s signature and he does not know if she was licenced  
on March 3, 2008 when she witnessed the document. In November of 2008,  
David told the DeKonings that Daniel did not own the Breadalbane and had just  
gotten that information from a credible source. Further David told them that their  
son was still there and that they contact the police if the information turned out to  
be true. David met with Mr. DeKoning and discussed his concerns, but David  
denied that his sole purpose in that meeting was to convince Mr. DeKoning that  
he should not work with Daniel.  
[1323]  
Regarding Mark McGuire, the withdrawal instructions at Exhibit 73 –  
28H indicate they were faxed by Lee-Anne Ruggle on July 10, 2008. Ms. Ruggle  
-
353 -  
was not responsible for sending David’s faxes. The document indicates that the  
cheque was to be made available for pick up and asks the recipient to contact  
Monica Frey for pick-up. David indicated that he did not print this form or sign it  
despite his name on the form under financial advisor. Other people knew his  
code and Ms. Berkin had access to everyone’s codes. He was not aware of this  
redemption at this time but became aware of it afterward. Mr. Haney was not the  
agent of record. It was rare for any other advisor to do another financial advisor’s  
withdrawal. It was only done in emergency but he could not think of it ever  
happening.  
[1324]  
In cross-examination, it was pointed out that Exhibit Stick File 28, E is  
a private equity agreement between Mr. McGuire and Reeve Hotels and Resorts  
dated April 3, 2008. It was funded by the Exhibit Stick File 28, B withdrawal of  
funds from Manulife. David Reeve is the listed financial advisor. The signature is  
not his and the signature on his behalf could be Lee-Anne Ruggle’s. Again, the  
boilerplate letter in Exhibit 73 – 28B dated April 2, 2008 and the same letter  
dated July 9, 2008 in Exhibit Stick File 28, H indicate that the withdrawals were  
being made against the advice of the financial advisor and appear with the  
withdrawal instructions. David was not able to agree that he prepared these  
letters. David would have no specific objections to the April withdrawal at that  
time. Anyone at DPR could have printed the letter. The original intention of that  
letter was that Daniel was meeting with his clients without his permission or  
-
354 -  
knowledge. He does not recall instructing Ms. Ruggle regarding this withdrawal  
and there is no way he would have done so. Regarding the Exhibit Stick File  
28, H withdrawal, he believes that Daniel instructed Ms. Ruggle to do it. The  
confirmations of withdrawals, such as Exhibit Stick File 28, I, are routine  
documents that would be scanned into the ACT system. David would not have  
had any reason to look into ACT as he did not know the transaction had  
occurred. David denied he was aware of these private investments on the basis  
that his signature is nowhere to be found, he has no client notes, and he never  
instructed Ms. Ruggle to do this paperwork. He has no specific recollection of  
talking to Mr. McGuire regarding these withdrawals.  
[1325]  
Exhibit 74 was shown to David. These are the notes of David’s  
meeting with Mr. McGuire on June 8, 2008. The document indicates the  
alternatives to the workhorse account: segregated funds, mutual funds, and  
private equity investments. What is circled as the preferred alternative is the  
mutual fund alternative with a T-SWP. The private equity option was raised by  
Mr. McGuire after Daniel had spoken to him regarding the workhorse account.  
[1326]  
Regarding Doug Thiel, he had a private equity investment in the  
Breadalbane. David did not know about this investment at the time but he  
learned of it later. The withdrawal form on Exhibit Stick File 40, B dated May 19,  
2008 has David’s signature on it. David admits he was aware of the withdrawal  
as it is his own printing on the form. David was in favour of the withdrawal and  
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was aware that the withdrawal was for the Breadalbane. Mr. Thiel was a  
sophisticated investor with a good portfolio. Mr. Thiel could afford to take a short-  
term tax hit in return for a more favorable return.  
[1327]  
Daniel told Mr. Thiel that the Breadalbane was a “bricks and mortar”  
investment and there was very, very little risk. There was a lawyer with a trust  
account and accountant involved. Daniel did not talk about a lawyer’s trust  
account with anyone else. Daniel never said it was a high-risk investment.  
[1328]  
In cross-examination, David indicated that Daniel had mentioned Mr.  
Thiel and Dr. Bernstein. David went to Mr. Thiel and told him that Daniel had an  
opportunity before him. There was a meeting with David, Daniel and Mr. Thiel at  
Tim Hortons at which Daniel brought up the Breadalbane investment. Mr. Thiel  
had a house paid for and was a good saver. Daniel told him that the purpose of  
the investment was for the purchase of the Breadalbane and renovations. David  
did not recall if Daniel told Mr. Thiel that there would be a tax write-off of capital  
losses against capital gains. David did not recall if he brought the paperwork with  
him.  
[1329]  
Further, in cross-examination, David denied saying, in November 2008  
to Mr. Thiel, that Daniel had used his money for other purposes. Mr. Thiel had  
done some digging and indicated that Daniel had never purchased the  
Breadalbane. This was the first time that David had heard that. David testified  
-
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that after the Tim Hortons meeting, he had no dealings with the Breadalbane.  
David was surprised that Daniel had not purchased the Breadalbane. He told Mr.  
Thiel to get his money back – see Exhibit 46 note. Mr. Thiel left David’s firm and  
named David in his civil suit against Daniel and his companies.  
[1330]  
Regarding Mr. Bernachi, David was supposed to do the Millionaire  
Mortgage and the workhorse account was supposed to be mutual funds with  
Joshua Lane in Windsor. However, during David’s wedding and honeymoon,  
Daniel said he wanted to put the money somewhere else. David was upset.  
Daniel was saying this was being done and the client was happy. David said that  
was not fair to Mr. Lane as he would have been entitled to commissions and that  
changes the Millionaire Mortgage concept.  
[1331]  
Daniel was very excited about Exchange Magazine – see Exhibit 174.  
He told David that the magazine wanted to devote a full issue to their firm. Later  
he got an irate call from Exchange Magazine that Daniel had not paid the money  
that was owing. Daniel said that things had changed and Daniel had to put a little  
money into the issue. When David left, Daniel still owed the money.  
[1332]  
Regarding Daniel’s lifestyle, David observed that Daniel lived large.  
Daniel flew from Kitchener to Windsor by helicopter. Daniel had a driver to  
chauffer him to meetings. Daniel bought a farm and was renovating it. Daniel  
lived with Annie Smith at the farm which was his personal residence.  
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[1333]  
In cross-examination, David indicated that Daniel was amazing with  
concepts and wrote books incorporating them. Daniel was not a big advocate of  
RRSPs or long-term investments. No other firm had one employee just to monitor  
segregated funds. Tom Handler was to monitor the segregated fund and advise  
clients when there was a 10 percent change.  
[1334]  
David did not read pages 183-184 of Millionaire Mortgage, filed as  
Exhibit 7, where the last paragraph indicates that the author is not licenced.  
Exhibit 20 – 55A at page 22 of the Millionaire Mortgage presentation also says  
the speaker is not licenced. David gave that presentation and he is licenced but  
he could not tamper with the PowerPoint.  
[1335]  
Regarding Dr. Bernstein, David could not say what his involvement  
was. Exhibit 48 – 3F is the boilerplate letter dated April 28, 2008 indicating that  
Dr. Bernstein’s withdrawal was against the advice of his financial advisor. David  
Reeve was his financial advisor. In cross-examination, David indicated that David  
does not recall meeting with Daniel with Dr. Bernstein in Toronto. He would have  
to see his client notes. Daniel did meet with Dr. Bernstein in Toronto. He spoke  
with Dr. Bernstein after and never advised Dr. Bernstein against Breadalbane  
because of the lawyer’s trust account and it was an investment in real estate. It  
was a good investment if it was done properly. David denied that Exhibit 48 – 3F  
was drawn up to protect him. He doesn’t know who drafted the letter and he  
doesn’t know if he was involved with the letter. David referred to the Kaup  
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documents which he had nothing to do with.  
[1336]  
David did not recommend to Dr. Bernstein not to withdraw the money.  
He advised Dr. Bernstein to seek independent tax advice and Dr. Bernstein  
signed the document and understood it after David gave it to him.  
[1337]  
Exhibit 250 is the Manulife withdrawal instructions dated March 27,  
2008. They purport to be signed by David Reeve as the financial advisor. David  
testified that the signature is not his. However the withdrawal instructions, dated  
April 29, 2008, in Exhibit 48-3E show his signature witnessing Dr. Bernstein’s  
signature.  
[
1338]  
0, 2008. At page 20, the two private investments with Reeve Hotels ($583,195  
and $215,655) are listed and are listed again at their purchase amounts at page  
5 ($507,126 on April 28, 2008 and $189,678 on May 1, 2008). It was suggested  
Exhibit 48 – 3J is a financial plan prepared by Mike Floyd dated June  
1
6
that by at least June 10, 2008, the date of the financial plan, that David was  
aware of these two investments. David testified that he did not know when he  
became aware of these two investments. However, he agreed that he was  
present at a meeting with Mr. Floyd and Dr. Bernstein at Dr. Bernstein’s office in  
Toronto. Further, it was suggested that by April or May of 2008, he would have  
been aware of Reeve Hotels and Resorts.  
[1339]  
In November 2008, David heard from Mr. Thiel that Daniel did not own  
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the Breadalbane. David had met with both Mr. Thiel and the DeKonings. He  
phoned Dr. Bernstein that November, which was the first time that Dr. Bernstein  
became aware that Daniel did not own the Breadalbane. David does not recall if  
he told Dr. Bernstein that Daniel did not have a licence. David’s purpose was not  
to have Dr. Bernstein withdraw his private investment with Daniel.  
[1340]  
It was suggested that David had been involved in recommending this  
investment but now was telling Mr. Thiel to contact the police. David doesn’t  
recall drafting an email on Dr. Bernstein’s computer to send to Daniel. He  
remembers making the phone call and meeting with Dr. Bernstein in December.  
[1341]  
David denied talking to his wife regarding her testimony and the  
October 7, 2008 email at Exhibit 249. In his video statement, he could not  
remember where the October 21, 2008 meeting was, whether at the office or  
Jakobstettel.  
[1342]  
David Reeve did refer some of his clients for private equity  
investments. The first investment was that of Steven Huntley and Candace  
Bailey. That investment was backed by a mortgage and a lawyer drew it up.  
Daniel did not have enough money to buy the Jakobstettel and he believed they  
invested $200,000. Daniel said that Breadalbane would be similar to Jakobstettel  
and “they [were] going to be on title.” Daniel said it, not the clients.  
[1343]  
The investment in the Breadalbane was for purchase and renovations.  
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Daniel had not purchased it yet and the client money was going to a lawyer in  
trust.  
[1344]  
David recalls bringing Daniel to meet Ms. DeSalvo to talk about  
investments but David talked to the daughter’s boyfriend while Daniel spoke to  
Ms. DeSalvo so David was not part of that discussion. He never told Ms.  
DeSalvo to not listen to Daniel regarding private investments. David had no idea  
what the agreement between Daniel and Ms. DeSalvo was. She handed Daniel a  
cheque and got no paperwork in return. In November of 2008, David doesn’t  
recall telling Ms. DeSalvo that Daniel did not own the Breadalbane.  
[1345]  
At the Exhibit 37 November 20, 2008 function, Daniel and BDO didn’t  
show up.  
[1346]  
David was asked about transactions regarding Barry Cunningham but  
could recall little of it. He recalls meeting Mr. Cunningham at their office and not  
at his home. David was present when Daniel discussed a Millionaire Mortgage  
investment. Later, Mr. Cunningham was upset when Daniel was late on  
payments.  
[1347]  
In cross-examination, David indicated that the workhorse account in  
the millionaire mortgage plan had to be in a safe investment with no penalties for  
withdrawal. The two options regularly suggested were T-SWP mutual funds and  
conservative segregated funds. It was suggested by the defence that the  
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361 -  
workhorse account could be invested in anything so long as there was a regular  
flow of funds. David agreed, but that was not in the book and was a deviation  
from the plan. David indicated that a T-SWP earns 6 to 8 percent and should last  
12 to 14 years. A T-SWP is 97 percent return on principal and 3 percent interest  
and capital gain. The only time in the last 30 years that capital payments were  
shortened was in the 2008 financial crisis. However, David disagreed that a T-  
SWP in 2008 was an inappropriate investment as a T-SWP in 2008 paid a  
regular amount. The market going down does not affect the monthly payments.  
[1348]  
Clients putting private equity into the workhorse account was a  
deviation from the original plan, although low interest rates in 2007 to 2009 made  
GICs inappropriate.  
[1349]  
The defence showed David his Exhibit 103 notes regarding Dr. Chin  
Tan, dated September 14, 2007. The notes refer to a cheque payable to  
Celebrity management and a $200,000 “JV.” David does not recall talking about  
private equity but was aware of Celebrity Management by September 14, 2007. It  
was pointed out that the Exhibit Stick File 38, D had the same date, September  
14, 2007, as his notes. The Exhibit Stick File 38, D agreement is a joint  
ownership regarding the Plaza in the amount of $200,000 which is consistent  
with David’s Exhibit 103 notes.  
[1350]  
David does not recall talking about the Plaza to Dr. Tan or anyone  
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else. There is nothing in his notes regarding the Plaza or Reeve Hotels.  
[1351]  
At a December 18, 2008 event, clients were raising reports of  
wrongdoing and press reports and David told them that he no longer had any  
relationship with DPR. David denied the suggestion that he was distancing  
himself from Daniel and his companies. David denied that he recommended a  
private investment to Dr. Tan despite doing so with Mr. Thiel and Dr. Bernstein.  
[1352]  
David was referred by the defence to Exhibit 186, which are the notes  
of his meeting with Lynette Caiger on May 28, 2008. The notes indicate that  
Daniel was presenting. David is not sure if Daniel’s handwriting is present. The  
notes indicate a discussion of the workhorse account going to Reeve Resorts in  
the amount of $100,000. On June 1, 2008 there is an agreement between  
Millionaire Mortgage and Lynette Caiger for $100,000. Exhibit 188 is his notes of  
October 21, 2008 changing beneficiaries regarding the $100,000 investment.  
[1353]  
David was referred to Exhibit 199 which is the notes of his meeting  
with Paul Meleg dated May 22, 2008. The notes indicate that the workhorse  
account balance is $276,000 and $200,000 is to go to a corporate bond for  
Celebrity Management Inc. David indicated that different options were discussed  
regarding the $200,000 and he was not happy with the $200,000 bond choice.  
Exhibit Stick File 30, E indicates that the day after this meeting, a corporate  
bond agreement was entered on May 23, 2008 between Reeve Hotels and  
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363 -  
Resorts c.o.b. as Breadalbane and Paul and Elizabeth Meleg for $200,000. It  
was suggested that the Breadalbane was discussed. David said that it is not in  
the notes.  
[1354]  
Exhibit Stick File 30, G is the withdrawal instructions signed by  
Elizabeth Meleg and witnessed by David, dated June 26, 2008. Attached to the  
withdrawal instructions is the usual boilerplate letter of direction, dated June 26,  
2008, indicating that the withdrawal is against the instructions of her financial  
advisor. David denies any conversation where he recommended the withdrawal  
not be made. David did not think the withdrawal was a good idea.  
[1355]  
The Melegs went with David to Davlyn Financial and received the April  
6, 2009 letter wherein David says that “we” (meaning Davlyn Financial) had not  
encouraged people to invest in Daniel’s companies. The defence suggested that  
this statement is contradicted by his Exhibit 199 note of May 22, 2008. That note  
states that $200,000 needed to be put into a corporate bond and the cheque was  
to be made out to Celebrity Management, one of Daniel’s companies. The  
agreement that followed, the next day, was with Reeve Hotels and Resorts,  
c.o.b. as Breadalbane, another one of Daniel’s companies. David indicated that  
he was against that investment and told the clients he was not happy.  
[1356] In the summer of 2008, cheques were bouncing and Mr. Haney  
resigned. It was an agreed statement of fact that on August 22, 2008, David, as  
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former president of DPR Financial, was concerned about his personal liability.  
[1357]  
David’s resignation as president formally took effect on October 1,  
2008. On October 10, 2008, Ms. Menard, Ms. Brown and Ms. Smith also  
resigned. Mr. Lane left on November 20, 2008. David denies there was no one  
left in Windsor. A significant number of clients left DPR Financial and went to  
Davlyn.  
[1358]  
The letters of direction were not prepared to protect himself from  
personal liability. After he left DPR, he told clients to get out of the private equity  
investments. In November, 2008 he told three clients to call the police.  
[1359]  
David denied that the April 2009 letter contradicted his previous actions  
with clients like the Melegs. The letter was prepared with counsel and he was  
trying to make clients aware of what was going on.  
[1360]  
He regretted that he got Mr. Thiel and Dr. Bernstein involved in the  
private equity investments.  
F. CROWN FORENSIC ACCOUNTING EVIDENCE (CAROLINE HILLYARD)  
[
1361]  
000. It was prepared by Grant Thornton LLP and was entered as Exhibit 256  
GT Report). The defence forensic accounting report was prepared by Nagel and  
Associates and was entered as Exhibit 257 (Nagel Report). The Crown replied  
The Crown forensic accounting report is located at Exhibit Stick File  
1
(
 
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365 -  
to defence Exhibit 257 with a supplementary report. The Crown’s supplementary  
report was entered as Exhibit 258.  
[1362]  
Caroline Hillyard was qualified by the Crown to give opinion evidence  
regarding (1) summarizing financial records; (2) identifying the source and use of  
funds; (3) identifying and tracing the flow of funds; and (4) forensic accounting  
practices generally. Her C.V. was entered as Exhibit 254. Exhibit 255 is an  
engagement letter dated August 22, 2013 and it contains a memo from Detective  
Norm De Boer outlining the tasks required of the forensic accountants. The letter  
itself indicates that the team of forensic accountants (which includes Ms. Hillyard)  
retained by the Crown would do a source and use of funds analysis summarizing  
the use of all funds, with a particular focus on the 41 alleged victims to determine  
where money came from and where it went to.  
[1363]  
It should be noted that the Crown called 46 alleged victims to testify.  
The five alleged victims that are not included in the forensic analysis are Nancy  
Herlick, Andrea Morgan, the Reinhardts, Keith Austin and Lloyd Hoffman.  
[1364]  
The findings in the executive summary of the GT Report are  
summarized at pages 6-10 of Exhibit 256. The period of review was from  
January 1, 2007 to September 30, 2009, which is the period outlined in the  
indictment.  
[1365]  
The essential conclusions with respect to the 41 alleged victims are  
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summarized at pages 9-10 of the GT Report as follows:  
Detailed Findings - Source & Use of Funds Analysis  
4
1 Alleged Victims  
Sources & Uses  
Based on bank statements or supporting bank documentation provided  
(i.e. copies of cheques and bank drafts) and, in some cases, statements  
provided by the Alleged Victims to [Waterloo Regional Police Service],  
we have identified $10,094,948.45 as the net investment amount relating  
to the 41 Alleged Victims. A summary of these net investments can be  
seen in Appendix D.  
We identified the following relating to the 41 Alleged Victims during the  
Period of Review:  
$11,964,138.67 was deposited into the Reeve Bank Accounts  
from the Alleged Victims; and  
$2,192,620.79 was disbursed from the Reeve Bank Accounts to  
the Alleged Victims.  
We reconciled the transactions that relate to the Alleged Victims to their  
witness statements to determine which amounts to include or exclude  
from their net investments. For example, some amounts related to tuition  
paid to Reeve, and some amounts repaid by Reeve to the Alleged  
Victims related to prior period investments that are not included in the  
scope of this report. We therefore did not include these amounts in the  
net investment amount, as shown below. Specifically:  
$339,430.13 has been identified by the Alleged Victims as not part  
of the receipts relating to their purported investments (for the  
reasons noted in Appendix D); and  
$662,860.70 has been identified by the Alleged Victims as not part  
of the disbursements relating to their purported investments (for  
the reasons noted in Appendix D).  
As noted above, the net investment amount relating to the Alleged  
Victims is therefore $10,094,948.45 [($11,964,138.67 - $339,430.13) -  
$
2,192,620.79 + $662,860.70]. A break-down of these investment  
receipts and disbursements (by date) can be found in Appendix E (pages  
4 to 17 and 162 to166).  
1
Flow charts demonstrating how the above noted money received from  
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the Alleged Victims was disbursed by Reeve can be seen in Appendix G.  
Please refer to the Cash Flow Analysis section below for further details  
relating to these flow charts.  
Potential Investments Using the Alleged Victims’ Money  
Uses  
$
389,236.59 was identified as disbursements from the Reeve Bank  
Accounts using the Alleged Victims’ money that could potentially relate to  
their purported investments (see Appendix C), including:  
$263,506.50 to Kramer Levin Naftalis Frankell in relation to a  
down payment on The Plaza Hotel. This amount was disbursed  
from Reeve’s personal bank account immediately following a  
deposit from Peter Steenbergen on January 16, 2008;  
$
100,000 to Grand River Contracting in relation to renovations at  
Jakobstettel Inn. This amount was disbursed from the Reeve Bank  
Accounts immediately following a deposit into the Reeve Bank  
Accounts from Marina Ognjanovski on March 12, 2008;  
$5,000 to Royal LePage in relation to a possible down payment on  
2
Isabella Street (a property located in close proximity to the  
Jakobstettel Inn). This amount was disbursed from the Reeve  
Bank Accounts immediately following a deposit into the Reeve  
Bank Accounts from Barry Cunningham and Sharon Hepburn on  
June 2, 2008; and  
$20,730.09 for general business and operating expenses that  
could relate to Ms. Patricia Westerhout’s investment on December  
4
, 2007.  
No other disbursements were identified that appear to relate to the  
purported investments using the Alleged Victims’ money. Details of  
potential investments using Alleged Victims’ money can be seen in the  
flow charts and supporting schedules provided in Appendix G, as well as  
in Appendix E (pages 115 to 116).  
[1366]  
The flowcharts referred to in the report were based on the “FIFO”  
methodology, or “first in, first out.” This methodology was chosen to reflect the  
trail of funds once deposited into an account and thereafter disbursed. The  
methodology works well when there is no comingling of other funds but, when  
funds deposited are comingled with other funds, the FIFO methodology breaks  
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down and presents challenges. As outlined at page 7 of Exhibit 258, there are a  
number of other methodologies that are available (i.e. “LIFO” [“last in, first out”],  
relative ratio, and others, as detailed at page 7 of the supplementary report) but  
they were considered not to be appropriate – see reasons at pages 7-8 of  
Exhibit 258. FIFO was chosen as it was considered the most appropriate  
methodology to trace funds through a bank account since it is ordered on the  
basis of chronological dates and provides a helpful reflection of the activity in the  
account. FIFO assumes that the monies withdrawn from an account are taken  
from those that were first deposited into the account (i.e., the first amount  
deposited into the account is the first amount that is withdrawn).  
[1367]  
Attached to the report are several appendices. Appendix A is a list of  
Reeve bank and credit card accounts. Appendix B is a list of key individuals  
including employees and relatives. Appendix C is a list of the 41 alleged victims  
and a summary of their investments. Appendix D is a summary of alleged net  
investments; this summary does not depend on FIFO. Appendix E is a detailed  
source and use of funds schedule and includes 100 percent of the transactions in  
the Reeve bank accounts. Appendix F is a detailed source and use of funds  
schedule of the Reeve credit card account.  
[1368]  
Appendix G contains 70 cashflow charts relating to the 41 victims and  
depends on the FIFO methodology. Of the approximately $11.9 million received  
from the 41 alleged victims for investments, only $389,236.59 was actually put  
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toward investments for the 41 alleged victims.  
[1369] In cross-examination, it was pointed out that Ms. Hillyard had always  
testified as an expert for the police and Crown.  
[1370]  
Before doing work on this file, the Exhibit 255 engagement letter was  
drawn up and it set out the scope of the requested investigation, including the  
timeframe (January 2007 to September 30, 2009) and the 41 alleged victims.  
The final scope of work was something that was agreed upon with the Waterloo  
Regional Police Service (WRPS). The scope of work agreed upon was  
something that Grant Thornton was comfortable with. There was no reason given  
as to why the start date was January 2007, but parameters were probably  
required due to limited resource and cost considerations. The parameters could  
later be adjusted if needed.  
[1371]  
It was not part of Grant Thornton’s mandate to look at the employees.  
It was Ms. Hillyard’s understanding that Daniel Reeve was under arrest and this  
was why they examined his role.  
[1372]  
For the source and use of funds analysis, it is typical to just look at the  
bank records as they provide an accurate picture of money transactions, while  
other records may not be reliable. A decision was made not to go beyond the  
banking records. Accounting records were not used due to their potential  
unreliability.  
-
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[1373]  
Grant Thornton took the police spreadsheets and checked every entry  
and prepared their own spreadsheets. This would still qualify as independent,  
unbiased work if the finished product was Grant Thornton’s own work. The  
finished products in Appendix G are called “i2 charts” (or cashflow charts) and  
they are supported by spreadsheets included in Appendix G in the various tabs  
that follow the i2 charts. Grant Thornton did use the police template but did its  
own background work on the material. It took the police charts and checked them  
line-by-line to prepare its own spreadsheets and i2 charts.  
[1374]  
The defence pointed out that, for example, Appendix G at Tab 15, the  
supporting spreadsheet prepared by Grant Thornton (regarding Andrew Eplen)  
makes no reference to expenses of $10,858.41 paid by DPR Financial for  
expenses arising between August 29 and September 2, 2008. The related  
cashflow chart at Tab 15 of Appendix G has that $10,858.41 expense listed on  
it and so does the cashflow chart prepared by the police – see Exhibits D1 and  
D2. Ms. Hillyard’s explanation was that her chart (Exhibit D2) has an overdraft of  
DPR Financial of approximate $29,000 and the $7,500 transfer would have been  
used up by the overdraft. The police version does not have bank balances listed  
on it and Ms. Hillyard should have deleted the $10,858.41 expense figure in her  
cashflow chart.  
[1375]  
Ms. Hillyard did not use accounting records although they might have  
provide context for a potential fraud. Her work was to see who received what  
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371 -  
money and not categorize transactions as accounting records would do. It was a  
mutual decision by the police and Grant Thornton not to rely on accounting  
records as their accuracy was unknown.  
[1376]  
The Nagel Report indicated that $2.2 million of receipts could be  
revenues. Evidence of revenues could indicate a bona fide business. Ms. Hillyard  
did not look at revenues as she included all sources of deposits and her mandate  
was to focus on the transactions of the 41 victims.  
[
1377] After going through Appendices C and G of the GT Report, Ms.  
Hillyard conceded that the $4,000 transfer to Daniel’s account on August 21,  
007, in both the Brossard and Brubacher findings at page 2 and 3 of Appendix  
C, was a double-counting of that $4,000 amount and is an error.  
2
[1378]  
It was also suggested that there was a further error of double-counting  
of $57,154.44 with reference to transfer items in the support spreadsheets in  
Appendix G of the GT Report. The errors were underlined in the support  
spreadsheets Exhibits E1 (later entered as Exhibit 269A) and E2 (later entered  
as Exhibit 269B) relating to Brossard and Brubacher again. Ms. Hillyard  
explained that the deposits of both these alleged victims were made on the same  
day and the two supporting spreadsheets relating to them covered the combined  
total of the two alleged victims’ deposits. The combined expenses covered off  
both Brubacher and Brossard’s deposits.  
-
372 -  
[1379]  
The Brubacher and Brossard situation illustrates the challenge of using  
FIFO where deposits are comingled. The difficulty arises when deciding how to  
attribute expenses to the deposits. FIFO is used to trace inventory but it is not  
uncommon to use it for cashflow. It was conceded that FIFO presents challenges  
where monies are comingled. At page 7 of the supplementary report – Exhibit  
258 – it was pointed out why FIFO was used and that not using FIFO could lead  
to different results. There was no mention in the original report regarding FIFO  
weaknesses.  
[
1380]  
Accounting (IFA) standards that govern her are outlined in Exhibit 259. At item  
00.08(h) on page 15, the IFA standards require Ms. Hillyard to include in the  
It was conceded by Ms. Hillyard that the Investigative and Forensic  
6
report the procedures used and the rationale for using them. This was not done  
in the original GT Report.  
[1381]  
The only double-counting that occurred was the $4,000 deposit to Mr.  
Reeve’s account. In 33 of the 70 cashflow charts, there were other deposits that  
day. In some cases they were quite large but in others they were smaller. The  
bigger deposits would present challenges but the lesser ones would not. What  
they saw, using FIFO, was that monies deposited from one alleged victim would  
go to other alleged victims. Subsequent payments to deposits were not ignored.  
[1382]  
Overdrafts may have been a possible source of repayment. Overdrafts  
-
373 -  
were funding a specific repayment to the DeKonings and Heather Gardner as no  
other money was available.  
[1383]  
Subsequent deposits that became comingled with the alleged victim’s  
deposits are not included in the tracing of funds as the FIFO methodology  
excludes them to determine repayment.  
[1384] Regarding opening balances in the accounts, the balance that was  
considered was the balance immediately before the victim’s deposit was made.  
[1385]  
The reliability of accounting records that have not been reviewed or  
audited could be affected. Accordingly, rather than rely on accounting records  
that were not reviewed or audited, Ms. Hillyard relied on the bank records.  
Canada Revenue Agency does not require accounting records to be reviewed or  
audited.  
[1386]  
In re-examination, Ms. Hillyard indicated that in the detailed source and  
use of funds schedule of Reeve bank accounts, the $4,000 deposit into the  
Reeve account on August 21, 2007 just appears once. At page 20 of the GT  
Report, the $4,000 deposit is only counted once. In the Brubacher and Brossard  
summary at pages 2 and 3 of Appendix C to the GT Report, the $4,000 amount  
paid to Mr. Reeve had to be attributed to at least one of them—it could not be  
attributed to neither of them.  
[1387]  
In a comparison of the Exhibit D1 cashflow chart prepared by the  
-
374 -  
police and the Exhibit D2 cashflow chart prepared by Grant Thornton, it is clear  
that the D1 chart prepared by the police has no bank balances whereas the D2  
chart has a number of bank balances for the Reeve companies, and the expense  
figures in D1 differ from D2 in at least four different areas.  
DEFENCE EVIDENCE  
A. DEFENCE FORENSIC ACCOUNTING EVIDENCE (EDWARD NAGEL)  
[1388]  
Edward Nagel from Nagel and Associates was called by the defence  
as its expert in forensic and investigative accounting. He was qualified to give  
opinion evidence regarding (1) the source and use of funds and asset analysis,  
and (2) forensic and investigative accounting generally. His report (the Nagel  
Report) was entered as Exhibit 257. Appendix B to the Nagel Report contains  
his C.V.  
[1389]  
Appendix A to the Nagel Report, Exhibit 257, outlines the scope of  
review. In addition to the Crown disclosure, item 4 (Collins Barrow – now MNP –  
accounting records) and item 11 (other electronic evidence) were considered.  
Persons listed in items 13 to 18 were corresponded with or spoken to. This  
includes the accused. Item 3 (QuickBooks records of a number of Reeve  
companies) was in the disclosure and examined. The Grant Thornton report (GT  
Report) of January 29, 2014 was reviewed. The GT Report did not consider item  
3. Exhibits 260A and 260B were entered. They contain witness statements and  
 
-
375 -  
documents and records considered in the Nagel Report.  
[1390]  
The GT Report did not consider Collins Barrow records due to their  
unknown reliability. The Nagel Report did consider these accounting records.  
The records were not audited or reviewed but Collins Barrow indicated that they  
did the compilation work and had no reason to believe the information was false  
or misleading – see paragraphs 20 and 21 at page 5 of the Nagel Report.  
[
1391] At paragraph 14 at pages 2 to 3 of the Nagel Report, the author  
expresses an opinion about the limitations to the GT Report’s scope of review:  
1) the focus of the GT Report was limited to Daniel Reeve alone without  
(
explanation as to why; (2) the GT Report was limited to 41 investors out of 150  
to 200 investors in the Reeve entities without explanation as to why; (3) only a  
certain number of Reeve entities were reviewed while others were excluded  
without explanation for the rationale of this decision; (4) the time was limited to  
January 2007 to September of 2009 despite Daniel being in business for 15  
years and there is no explanation as to why that timeframe was chosen; (5)  
external accounting working papers, financial statements and detailed accounting  
records were not referenced without explanation as to why; and (6) the GT  
Report did not examine the QuickBooks files or accounting records.  
[1392]  
It was Mr. Nagel’s experience that it is unusual for the client to limit the  
scope of the forensic investigation. At least $2.2 million of revenue was earned  
-
376 -  
over that two-year, nine-month span and it was not considered. A greater scope  
of investigation could have resulted in a different conclusion by the GT Report  
author.  
[1393]  
The reasons for selecting the FIFO method were not set out in the GT  
Report. This decision to use FIFO excluded some transactions that could have  
produced a different result. FIFO was a key assumption and it was up to Grant  
Thornton to explain the reasons for which it was used – see the IFA guideline at  
600.08(i) which states that the underlying assumptions and reasons for the  
underlying assumptions should be explained in the GT Report – see Exhibit 259  
at page 15.  
[1394]  
Mr. Nagel has not heard of FIFO being applied in a cashflow analysis.  
At page 7 of Exhibit 258 (the GT Supplementary Report), several methodologies  
are explained and it is claimed that FIFO was the most appropriate methodology  
for the circumstances. Mr. Nagel’s opinion is that FIFO is not applicable and was  
chosen to achieve a certain result. When comingling of funds occurs, even Ms.  
Hillyard agrees that FIFO presents a challenge. It is Mr. Nagel’s opinion that  
none of the methodologies outlined in the GT Supplementary Report are to be  
used for tracing funds in a fraud investigation. The results would be different  
depending on the methodology chosen. It is not standard practice to use FIFO to  
trace funds.  
-
377 -  
[1395]  
As outlined in paragraphs 46 to 51 of the Nagel Report, the FIFO  
methodology is flawed and has produced flawed results for a variety of reasons  
including excluding income and subsequent deposits to the investors’ deposits.  
Further, there was inconsistent application of the FIFO methodology.  
[1396]  
Exhibit 261 is a PowerPoint presentation that outlines the problems  
that arise when excluding subsequent deposits, the effect of overdrafts or  
opening or existing balances, and the inconsistent application of FIFO. Schedule  
3
A of the Nagel Report and the PowerPoint outline concerns with respect to  
conclusions arrived at in Appendix C to the GT Report. Appendix C suggests  
that, of the 41 investors, 22 received repayments on their investments. An  
examination of the 22 repayments was conducted and six specific issues or  
discrepancies were uncovered.  
1. APPENDIX C ISSUE #1  
[1397]  
The first issue is found in Schedule 3A of the Nagel Report: “GT  
does not attribute overdraft as a possible source of repayment.” Exhibit 262 was  
an illustration of this issue. Exhibit 262 indicates that alleged victim Mark  
McGuire deposited $169,000 on April 4, 2008, when the DPR account had an  
overdraft of $29,544.71. On April 4, immediately thereafter there were debit  
amounts of approximately $46,050 and the balance of the account was then  
$93,589.96. On April 4, 2008, there was a draft made out to Pat Westerhout for  
 
-
378 -  
$100,000 which reduced the account to negative $6,410.04. Then, there was a  
$10,000 draft made out to Glen Brubacher and this increased the overdraft to  
$17,210.04. Accordingly, the entire payment to Mr. Brubacher was funded by the  
DPR overdraft and the payment to Ms. Westerhout included an overdraft amount  
of over $6,000. This is not reflected in the Appendix C conclusions in the GT  
Report regarding Mr. Brubacher at page 3, and regarding Ms. Westerhout at  
page 13. The conclusions are that there has been improper attribution to Mr.  
McGuire’s deposit to Mr. Brubacher and improper attribution to Ms. Westerhout  
from Mr. McGuire of over $6,000 and therefore an inconsistent use of FIFO.  
[
1398] Exhibit 263 demonstrates another example of this issue. A payment of  
1,666.66 went to Ms. DeSalvo and this increased DPR Financial’s overdraft by  
that amount. This is not reflected in Appendix C of the GT Report at page 5.  
$
[1399]  
Therefore, Issue #1 occurs in 18 of the 22 investors (or 82 percent of  
cases) that received repayment. Overdraft was used as a method of financing  
payments.  
2. APPENDIX C ISSUE #2  
[1400]  
The second discrepancy is detailed in Schedule 3A of the Nagel  
Report: “GT ignores other deposits that could have funded the repayment.”  
Exhibit 264 is an example illustrating this concern. Exhibit 264 indicates that on  
May 23, 2008, a deposit of $200,000 was made from Paul and Elizabeth Meleg.  
 
-
379 -  
Between May 23 and May 26, 2008, additional deposits of over $6,000 were  
made. On May 27, 2008, a draft of $2,000 relating to alleged victim Barry  
Cunningham was made. In the GT Report, Appendix C at page 5, the $2,000  
payment to Mr. Cunningham is attributed as coming from the Melegs. It can be  
concluded that the other deposits were not included and the GT Report therefore  
ignores other deposits that were made from bona fide income. This type of error  
was seen in 14 of the 22 investors that were received repayment (or 64 percent  
of cases).  
3. APPENDIX C ISSUE #3  
[1401]  
Schedule 3A of the Nagel Report describes the third issue: the “GT  
Report ignores the existing balance that could have funded repayment.” Exhibit  
66 indicates that Anne Colquhoun deposited $11,500 into the Jakobstettel  
account on August 1, 2008. At the end of July 31, 2008, the bank balance was  
14,035. The next day, $7,000 was transferred to Marina Ognjanovski. Using  
FIFO, this payment would have come from the opening balance on August 1,  
008. The existing balance is not noted as a possible source of repayment in  
2
$
2
Appendix C at page 10. What is noted is an August 1, 2008 repayment with Ms.  
Colquhoun listed as a source of payment. This type of error was seen in 14 of the  
22 investors that received repayment (or 64 percent of cases).  
[1402]  
Exhibit 265 is an example illustrating both the second and third issues.  
 
-
380 -  
The opening bank balance of the Jakobstettel account on July 19, 2009 was  
$
7,342.13. On January 20, a deposit from Steve Manuel was made. On January  
1, 2009 there were deposits from credit cards (these were income) of $218.90  
2
and $875.60. On January 21, 2009 a payment of $2,235.90 was made to Gary  
Raycroft. Using FIFO, the payment should have come from the opening balance.  
The payment of $2,235.90 could have come from the opening bank balance, or  
Mr. Manuel’s deposit, or other deposits, or a combination of all three. In the GT  
Report at Appendix C at page 10, the repayment is attributed to Mr. Manuel and  
unknown. It was concluded that this is an example of the flaws of using FIFO and  
that improper attributions were made.  
4. APPENDIX C ISSUE #4  
[1403]  
The Nagel Report describes a fourth issue: the “GT Report reflects  
total repayments that are not consistent with the banking records.” An example is  
included in Exhibit 267. Regarding alleged victim Heather Gardner, the banking  
records indicated that repayments totaled $106,808.70. After exclusions outlined  
in Appendix D of the GT Report, net repayments should be $34,000. The net  
repayments per Appendix C at page 6 is $43,000, which is $9,000 more than  
the actual total of $34,000. This error is made with respect to four other investors.  
Four investors of the 22 investors who received repayments represents 18  
percent. Specifically, the four alleged victims and amounts that should be added  
to the total investment are: (1) Ms. Gardner – add $9,000; (2) Mr. Brossard – add  
 
-
381 -  
$91,006; (3) Mr. Cunningham – add $13,000; and (4) Ms. Westerhout – add  
$6.50 for a total increase of $100,026 increase in investment. This would  
increase the Appendix D total net investment for the 41 alleged victims to  
10,194,974.45.  
$
5
. APPENDIX C ISSUE #5  
The Nagel Report indicates a fifth issue: the “GT Report includes  
repayment that did not clear the bank because cheque was NSF.  
Exhibit 268 includes a bank record that shows, on July 16, 2008, a cheque in  
[1404]  
”
the amount of $15,000 to Pat Westerhout was returned NSF. On page 13 of  
Appendix C of the GT Report, July 16, 2008 is listed as a repayment date. The  
total repayment of $500,000 is correct. This is the only example of this type of  
error, occurring in one of 22 investors (or 5 percent of cases).  
6. APPENDIX C ISSUE #6  
[1405]  
The sixth issue is that the “GT Report includes repayments that are not  
reflected in the bank statements.” There was an error as to the date of repayment  
as the bank records did not show a repayment on the listed date. This occurred  
once in 22 cases (or 5 percent of cases).  
[1406]  
The overall conclusion of Schedule 3A in the Nagel Report is that  
there are issues with Appendix C of the GT Report. Appendix C represents  
 
 
-
382 -  
key conclusions taken from Appendix G conclusions. The first three issues  
represent examples of attribution of sources of repayments to the alleged victims  
and show that FIFO was not applied, or if it was, improper attributions were  
made. Had FIFO not been applied, different conclusions may have been  
reached.  
[1407]  
Accordingly, Mr. Nagel does not agree with the approach stated by the  
Exhibit 258 GT Supplementary Report, at page 10, that overdraft, subsequent  
deposits, opening balances and reconciliation differences were not  
considerations in the cashflow analysis. Mr. Nagel agrees with the conclusion at  
page 11 that the July 16, 2008 NSF cheque to Ms. Westerhout should not be  
listed as a repayment, but that error did not impact the dollar value  
considerations noted.  
[
1408]  
500,000 to Cheryl Reeve in the Ms. Westerhout findings, the accounting  
records listed this as a loan to Ms. Reeve on December 4, 2007 – see Exhibit  
68. Accordingly, this loan would be listed as an asset on the company books.  
Regarding the page 13 reference in Appendix C to a payment of  
$
2
[1409]  
Regarding Exhibit E1 (Exhibit 269A) and Exhibit E2 (Exhibit 269B), it  
is unclear and inconclusive, due to the FIFO approach, where to attribute the  
blocked-in amounts in the exhibits, which total $57,154.44. Both Brossard and  
Brubacher were attributed this amount. That $57,154.44 was duplicated in those  
-
383 -  
two exhibits.  
[1410] In Schedule 3B of the Nagel Report, there are five issues identified  
as problematic with respect to Appendix G of the GT Report.  
7. APPENDIX G ISSUE #1  
[1411]  
First, “GT attributes disbursements in excess of the alleged victim  
deposit.”  
[1412]  
In Exhibit E2 (Exhibit 269B) and the cashflow chart in the GT Report  
at Appendix G at Tab 5, there is the Mr. Brossard investment of $100,000 on  
August 21, 2007 that increases the DPR Financial account total to $310,000.  
Even though only $310,000 is available for transfers, the cashflow chart shows  
transfers on August 21, 2007 of $460,154. The date of these transfers should be  
August 22, 2007. Accordingly, the chart is misleading.  
[1413]  
The Mr. Brossard cashflow chart relating to Exhibit 269B is an  
example of this first issue where there is an over attribution in excess of the  
alleged victim`s deposit.  
[1414]  
Per Schedule 3B of the Nagel Report, this first issue occurred in the  
cashflow charts (there were 70 charts in Appendix G of the GT Report) in 33 of  
the 41 total investors (or 80 percent of cases).  
 
-
384 -  
8
. APPENDIX G ISSUE #2  
Schedule 3B in the Nagel Report identifies a second issue: “GT does  
not fully attribute the alleged victim deposit to subsequent disbursements.”  
[1415]  
[1416]  
In some cases there was under attribution of the alleged victim`s  
deposit. For example in Exhibit 270, in the cashflow chart in GT Report at  
Appendix G at Tab 19, Kevin Hillman deposited $41,031.00 on July 9, 2008.  
This was added to the Millionaire Mortgage account, raising its balance to  
$61,473.96, which was available for disbursement. The amount disbursed in the  
cashflow chart is $52,169.09. The result is an under-attribution of disbursements  
of approximately $9,000.  
[1417]  
This second issue occurred in the cashflow charts (there were 70  
charts in Appendix G of the GT Report) in 32 of the 41 total investors (or 78  
percent of cases).  
9. APPENDIX G ISSUE #3  
[1418]  
A third issue is identified: “GT incorrectly references entity name or  
account number in their schedules.”  
[1419]  
This error was admitted in the GT Supplementary Report (Exhibit 258)  
at page 12 where it is indicated that the cashflow charts in Appendix G of the  
GT Report contain typographical errors with respect to Ms. Gardner and Peter  
 
 
-
385 -  
Steenbergen that do not impact the dollar value considerations. Mr. Nagel  
indicated that the Steenbergen error was not a typo but in fact a reference to a  
different account. This could impact the cashflow chart.  
[1420]  
The third issue occurred in the cashflow charts (there were 70 charts in  
Appendix G of the GT Report) in two of the 41 total investors (or 5 percent of  
cases).  
10. APPENDIX G ISSUE #4  
[1421]  
The Nagel Report describes the fourth issue: “GT’s scope period (i.e.  
date parameter) is not inconsistent with the WRPS schedules.”  
[1422]  
Mr. Nagel reviewed the WRPS cashflow charts and supporting  
spreadsheets and found inclusions in those charts and sheets regarding  
subsequent deposits in chronological order. Because of the FIFO approach,  
these subsequent deposits were deleted. Accordingly, bona fide deposits which  
could include bona fide income were excluded. At page 12 of the GT  
Supplemental Report, it is indicated that the GT cashflow charts were prepared  
independently. At trial, Ms. Hillyard said the WRPS material was used as  
templates. Mr. Nagel testified that using the WRPS documents as templates is  
not “independent” preparation of cashflow charts or spreadsheets. For example  
this resulted in the errors regarding tracing of the cash deposits in the Mr.  
Brossard cashflow chart in Exhibit E2 (Exhibit 269B).  
 
-
386 -  
1
1. APPENDIX G ISSUE #5  
The firth issue identified by the Nagel Report is that “[a]ccount  
balances/entity names are either incorrect or missing in the GT i2 charts.”  
[1423]  
[1424]  
Incorrect balances in a chart can be misleading. Exhibit 271 relates to  
the Mr. Raycroft flow chart in the GT Report in Appendix G, Tab 31. The GT  
chart shows a bank balance of $50.40 but the bank balance as shown in Exhibit  
271 was $25,250.40 just prior to transfer, and was followed by an intercompany  
transfer of $25,100 and then transfer of $25,147.28 for expenses.  
[1425]  
Exhibit 272 is an example of an entity name that is incorrect. The  
cashflow chart in the GT Report in Appendix G, Tab 2 shows transfers from the  
Eva Bernachi deposit eventually flowing in part to Millionaire Executive Suites.  
The correct entity is Millionaire Executive Services. This error is duplicated in the  
WRPS flowchart. The GT cashflow chart was prepared using the WRPS  
cashflow charts and this error was not corrected but sustained.  
[1426]  
Per Schedule 3B in the Nagel Report, this fifth issue occurred in the  
cashflow charts (there were 70 charts in Appendix G of the GT Report) in 16 of  
the 41 total investors (or 39 percent of cases).  
[1427]  
Schedules 3A and 3B of the Nagel Report need to be read together  
 
-
387 -  
to assess the errors that were made. Schedule 3A of the Nagel Report relates  
to Appendix C of the GT Report; Schedule 3B of the Nagel Report relates to  
Appendix G of the GT Report.  
[1428]  
Mr. Nagel disagrees with the comments at page 12 of the GT  
Supplementary Report that the missing information within the GT cashflow charts  
does not affect the conclusions in the GT Report. Mr. Nagel asserts that missing  
information does affect the conclusions and cites the Mr. Brossard example as  
proof of this assertion.  
[1429]  
The GT Report at Appendix F is a straight summary of Daniel’s credit  
card expenses but does not obtain any supporting documentation relating to  
them. As pointed out at paragraphs 101, 102 of the Nagel Report, this  
undermines Karen Gingrich’s assertions that these expenses were for personal  
use. Mr. Nagel indicated that if he were to do an “Appendix F,” he would have  
prepared a spreadsheet and looked for supporting documentation to determine  
whether the expenses were for business or personal expenses. It is common for  
a sole shareholder to charge personal expenses on a credit card and to later  
claim it as a personal loan.  
[1430]  
Mr. Nagel indicated that page 6 of the GT Report does not give a clear  
picture of what was happening. The GT Report looked only at banking records,  
while the Nagel Report looked at both banking and accounting records. The  
-
388 -  
categorization of key individuals in Appendix E of the GT Report, at page 173,  
includes an ex-spouse, employees and financial advisors, which is not helpful.  
[
1431]  
1432]  
Income is the primary source of a bona fide business.  
[
Page 6 of the GT Report does not refer to income. However, at page  
15 of the GT Report, Visa and MasterCard receipts from Jakobstettel and  
Emerald Met are listed as $746,000 of revenue. In the PowerPoint presentation  
filed as Exhibit 261, Mr. Nagel excludes intercompany transfers and then breaks  
down the key sources of funds at the third-to-last page. The total source of funds  
is $23,287,028 with approximately $2.2 million of revenue.  
[1433]  
At page 1 of Schedule 1A of the Nagel Report, Mr. Nagel does a  
source of funds chart which includes the $2.2 million in revenue. This does not  
appear in Appendix E of the GT Report.  
[1434]  
At page 2 of Schedule 1A, the use of funds is compiled including  
Daniel’s shareholder loans. Daniel had a right to borrow from the company as  
outlined in the articles and by-laws of the company. In Exhibit 261, at the  
second-to-last page, Mr. Nagel has outlined the top categories of use of funds.  
These categories are (1) investors/creditors at $7,499,803 or 32 percent; (2)  
capital asset purchases and leasehold improvements at $3,151,914; (3) office  
and related expenses of $8,740,630, which combined with (2) comprise 50  
percent; and (4) loans to Cheryl, Daniel, David and others at $3,106,422 or 13  
-
389 -  
percent. The last page of the PowerPoint shows a pie chart of these uses from  
January 2007 to September 2009, which is the time frame canvassed by the GT  
Report. The GT response to this approach is that it focused on the 41 victims  
and the Nagel Report does not identify whether it agrees with the identified  
amount of $389,236.59 that was used to invest the alleged victims’ money – see  
the GT Supplementary Report at Exhibit 258. Mr. Nagel indicated that he has  
not conducted a detailed analysis and would want more evidence than just  
witness statements; he would want to personally interview the 41 witnesses.  
[
1435]  
Schedule 2A of the Nagel Report is a detailed version of Schedule  
A. Both relate to sources and uses of funds from January 1, 2007 to September  
0, 2009.  
1
3
[
1436] At page 1 of Schedule 2A of the Nagel Report, credit card revenue is  
listed at a combined $750,000, which is similar to the credit card revenue total of  
746,000 at page 15 of the GT Report.  
$
[1437]  
Page 3 of Schedule 2A of the Nagel Report shows that Daniel  
reinvested 23,500. At page 7, it is clear that Daniel paid back $80,664.65 on his  
shareholder loan.  
[1438] Page 6 of Schedule 2A of the Nagel Report shows the total value of  
other investors/creditors at $7,506,538.79.  
[1439]  
The uses of funds is detailed at pages 8 to 23 of Schedule 2A of the  
-
390 -  
Nagel Report.  
[1440] Page 8 of Schedule 2A of the Nagel Report shows that  
$2,192,620.79 was returned to the 41 investors.  
[1441]  
Page 9 of Schedule 2A of the Nagel Report shows total loans to  
Cheryl Reeve as $1,539,231.14. These would be listed as an asset and would be  
recorded as asset/receivable in QuickBooks and in the Collins Barrow accounting  
records.  
[1442]  
Page 10 of Schedule 2A of the Nagel Report shows funds advanced  
to David as $189,664.58, as repayment of advances as outlined previously in  
Schedule 2A. It also shows cash payment to Daniel of $164,399.50. There were  
no payroll entries for Daniel.  
[1443] Page 13 of Schedule 2A of the Nagel Report shows total leasehold  
improvements of $2,881,801.46.  
[1444] Page 16 of Schedule 2A of the Nagel Report shows total office  
expenses of $1,631,723.16.  
[1445] Page 18 of Schedule 2A of the Nagel Report shows amounts paid to  
other investors at $5,307,182.01.  
[1446] Page 19 of Schedule 2A of the Nagel Report shows total payroll at  
$2,828,579.82.  
-
391 -  
Page 21 of Schedule 2A of the Nagel Report shows total  
professional services at $686,493.11 and shows rent and mortgage at  
1,061,874.13  
[1447]  
$
[1448]  
Page 27 of Schedule 2A of the Nagel Report shows a shareholder  
loan to Daniel at $1,345,526.74. This would be listed as an asset of the  
company.  
[1449] Schedule 1B of the Nagel Report is similar to Schedule 1A but  
instead lists sources and uses of funds in Daniel’s personal bank account.  
[
1450]  
1451]  
Schedule 2B provides further details of Schedule 1B.  
[
The GT Report treats the Reeve personal account as a transfer but in  
Mr. Nagel’s opinion, personal and corporate accounts should not be treated  
together but as separate and distinct entities. Accordingly, Schedule 1A is a  
corporate source and use of funds and Schedule 1B is a personal source and  
use of funds.  
[1452]  
At paragraphs 14(d) and 39 of the Nagel Report, reference is made to  
the particular period of January 2007 to September 2009, which was a time of  
volatility in the capital markets the global economy. The global crisis really took  
hold in September 2009 and would have had an adverse effect on Daniel’s  
companies. This was not considered by the GT Report – see the Exhibit 258  
Supplemental Report at page 6.  
-
392 -  
[1453]  
If he had been retained to do the GT Report, Mr. Nagel would have  
interviewed all 41 alleged victims and would have reviewed the QuickBooks and  
accounting records. He would have employed a broader scope of review.  
[1454]  
Mr. Nagel’s overall opinion is that the scope of review was too limited  
in a number of ways: (1) the persons looked at, (2) the time frame used, (3) the  
limited entities and bank accounts reviewed, (4) the limited investors analyzed  
and (5) the limited accounting and other records considered. If he had been  
approached with these confines, he may have not accepted the engagement.  
The GT Report used FIFO which is not applicable in this situation. The  
challenges and issues and discrepancies as outlined in the Nagel Report in  
Schedules 3A and 3B, along with the errors he found and the non-applicable  
methodology, make the GT Report’s findings unreliable.  
[1455]  
In cross-examination, Mr. Nagel confirmed that corporate documents  
permitted Daniel to borrow money from the Reeve entities, as he was the sole  
shareholder and director of the companies. The Crown asked Mr. Nagel what  
documents those were. One was a share certificate which stated that directors  
have power to borrow money, issue debt obligations and make guarantees on  
behalf of the company. Another provision in the Articles of Amalgamation  
indicated that the board of directors could borrow money on the credit of the  
company. These documents were dated October 2007. The Crown suggested  
that these documents did not empower Daniel to borrow from the company. Mr.  
-
393 -  
Nagel indicated that it is common for a shareholder to borrow money from a  
shareholder.  
[1456]  
A Ponzi scheme is a scheme wherein an individual uses one investor’s  
money to pay another investor. Mr. Nagel testified that it was not his job to  
determine whether this was a Ponzi scheme or not. He was tasked with critiquing  
the GT Report, not with conducting his own investigation. Mr. Nagel and his  
assistants spent 800 hours on this file. They endeavoured to maintain their  
independence and avoid preconceived notions. Their task was to review  
Appendices C and G of the GT Report, regarding source and use of funds and  
trace all the transactions to the banking records. They also used external sources  
such as the accounting records.  
[1457]  
By reviewing Appendices C and G of the GT Report, he was, in turn,  
reviewing Appendix E. Mr. Nagel does not recall identifying any issues with  
Appendix E. His only issue with Appendix E was in the way it categorized the  
sources and uses. For example, the GT Report did not have a category for  
income sources. Other than that, he did not notice any problems. Mr. Nagel did  
not do a detailed review of Appendix F and his answers would be similar to his  
answers given for Appendix E. Accordingly, other that categorization, Mr. Nagel  
had no issue with Appendix F. Mr. Nagel cannot conclude from reviewing  
Appendix F which expenses were Daniel’s personal expenses.  
-
394 -  
[1458]  
Mr. Nagel met with David Webb from Collins Barrow and bank officials.  
He visited Daniel once and had two key phone calls. He relied on information  
from Daniel regarding the running of the businesses.  
[1459]  
His opinion was that with reference to Appendix D, the net investment  
should be increased by over $100,000 due to errors with reference to four of the  
investors.  
[1460]  
In Exhibit 267, Mr. Nagel took the date of repayments from Appendix  
C of the GT Report and traced them back to the bank records. He established  
that that there was a $9,000 underreporting of repayments. Appendix C is based  
on Appendix E. At page 14 of Appendix E, the receipts from Heather Gardner  
are listed as $775,000. This is the figure also listed in Appendix D. At page 164  
of Appendix E, the total disbursements to Ms. Gardner are listed as $115,808.  
This figure also appears in Appendix D. In Appendix E there is a disbursement  
to Ms. Gardner of $9,000 on January 2, 2008. This date of January 2, 2008 is not  
listed in Appendix C; it is this omission in Appendix C that accounts for the  
$9,000 discrepancy. Accordingly, Mr. Nagel agreed that the Appendix D amount  
of net investment of $732,000 is correct and the net investment was not  
understated by $9,000 in Appendix D. Mr. Nagel did not compare Appendix D  
to Appendix C.  
[1461]  
Regarding two other investors, Mr. Cunningham and Ms. Westerhout,  
-
395 -  
the unreconciled totals of $13.00 and $6.50 were fees paid for bank drafts.  
Accordingly the totals for them in Appendix D are also correct.  
[1462]  
Regarding the fourth and last investor to have an unreconciled  
difference, Mr. Brossard, the unreconciled difference is $91,006.50. Again the  
amounts in Appendix E confirm the amounts listed in Appendix D for the  
Brossards. The problem here, again, is that Appendix C did not list all the dates  
of repayments. At page 165, Appendix E lists six repayments from January 22,  
2007 to March 3, 2008 totalling $91,006.50. None of these six repayment dates  
are listed in Appendix C. Accordingly the figures listed in Appendix D are correct  
and confirmed by Appendix E.  
[1463] The final conclusion is that that the net investment figure of  
$10,094,948.45 is correct and should not be adjusted all.  
[1464]  
With reference to Schedule 3A, the greyed-out portions are where  
there were no repayments to individuals (19 of the 41 alleged victims). In  
addition, there were no issues with the repayments made to Lorna Eadie or Chin  
Tan.  
[1465]  
In Schedule 3B, there was at least one issue of the five Appendix G  
issues applicable to each of the 41 investors. There were a total of 70 charts for  
the 41 investors but this is not broken down by chart. If there was an issue in one  
of multiple cashflow charts for one investor, an X was put in the box for one of  
-
396 -  
the five issues. Exhibits 3A and 3B summarized 50 boxes of material.  
[1466] Adding in the other 29 charts for the 41 investors would have doubled  
the size of the Exhibit 3B chart.  
[1467]  
Regarding Eva Bernachi, there was an issue, namely Appendix C  
Issue #1 (overdraft a possible source of repayment). Ten thousand dollars was  
skipped and expenses were allocated to the victim’s deposit. Appendix G Issue  
#1 (disbursements in excess of deposit) is also a problem. This occurred in the  
second cashflow chart at Tab 2 of Exhibit G. The Crown went through the  
banking records and Mr. Nagel agreed that there was a bank balance of $253.87  
as listed in the second chart. Then there was a $300,000 deposit from the  
Bernachis on September 12, 2008. Of that deposit, taking into the account the  
initial bank balance of $253.87, at least $99,764.13 of the Bernachis’ money went  
to Ms. Reeve on September 12, 2008. This was placed in the ledger as a loan to  
Daniel. At least $14,746.13 of the Bernachis’ money went to David Martin  
(husband to Sherrill Martin) on September 12, 2008. At least $79,746.13 of the  
Bernachis’ money went to Keith Austin Holdings Inc. on September 12, 2008. At  
least $47,746.13 of the Bernachis’ money was transferred to DPR Financial on  
September 12, 2008 and at least $26,746.13 went to DPR Windsor on  
September 12, 2008. Mr. Nagel agreed with these amounts and the revised chart  
reflecting these figures was entered as Exhibit 273. The accounting record of the  
September 12, 2008 payment to Ms. Reeve was entered as Exhibit 274.  
-
397 -  
[1468]  
Mr. Nagel indicated that one must look at all the information to give  
context to the transactions. For example, the Millionaire Mortgage agreement at  
Exhibit Stick File 2, K makes no reference to any restrictions on the distribution  
of funds. Mr. Nagel could not comment on the Crown suggestion that it was  
possible that Daniel was using Millionaire Mortgage as a shell company to  
borrow money to give to his ex-wife. However it is common for companies to loan  
money to each other and the owner has the right to transfer funds between the  
entities. This was a transfer from the investor to Millionaire Mortgage and then a  
transfer to the ex-wife. Mr. Nagel does not know what representations were  
made to the investor.  
[1469]  
IFA standards, as outlined in Exhibit 259, at Rules 400.12 and 400.13,  
require IFA practitioners to review all information received during an IFA  
engagement and to consider and address all reasonable alternative theories. Mr.  
Nagel indicated that he could not recall seeing Daniel having to pay large sums  
of money to Ms. Reeve during the period of review. His engagement was to  
critique the GT Report, not to conduct an independent investigation. The money  
to Ms. Reeve was in the form of loans. Regarding the alternative theory that the  
money transfers were not loans, Mr. Nagel relied on the accounting records  
(which stated they were loans) and that was the extent of the information to him.  
[1470] Regarding Dr. Ira Bernstein at Tab 3 of Appendix G of the GT  
Report, there are two flow charts. The second flow chart contains an incorrect  
-
398 -  
balance (Appendix G Issue #5). The chart shows the Reeve Hotels account to  
have had a balance on May 2, 2008 of $85, but the bank records show the  
balance to be $235.18. This correction means that at least $189,443.60 of Dr.  
Bernstein’s money was transferred to DPR Financial. The bank records show the  
DPR balance to be $6,149.26 and not the negative $18,909.79 in the chart at  
Tab 3 of Appendix D. Deposits of $4,677.16 came in as what appears to be  
income and this raises the bank balance to $18,826.42 Deducting this balance  
from the $200,000 transferred to Ms. Reeve on May 2, 2008, at least  
$178,617.18 of Dr. Bernstein’s money went to Ms. Reeve. The revised chart  
reflecting this transfer was entered as Exhibit 275.  
[1471]  
Regarding Sherrill (Martin) Stevenson her cashflow chart appears at  
Tab 36 of Appendix G of the GT Report. Schedule 3B of the Nagel Report  
lists two issues with this chart. First, this chart differs from the WRPS schedules  
and account balances (Appendix G Issue #4), and second, entity names are  
incorrect or missing (Appendix G Issue #5). On the chart the bank balance is  
negative $20.00. A deposit of $58,715 as made on November 10, 2008 along  
with Ms. Stevenson’s deposit of $75,000 increased the bank balance to  
$133,569.69. Payments were then made to Ms. Reeve on November 10 in the  
amount of $75,000, and drafts to Keith Austin Holdings were made on November  
12 and 13 in the total amount of $40,000. This reduced the bank account to  
$18,549.78. Significant portions of Ms. Martin’s $75,000 went to either Ms.  
-
399 -  
Reeve or Keith Austin Holdings.  
[1472] Schedule 3B of the Nagel Report indicates that Appendix G Issue #4  
(WRPS charts different) and Issue #5 (incorrect account balance/entity names)  
again appear in their cashflow charts regarding the DeKonings. Issue #4 appears  
in both charts and Issue #5 in the second cashflow chart.  
[1473]  
Regarding the second cashflow chart at Tab 12 in Appendix G, the  
money went to the law firm Sutherland Mark and not to “Mark Sutherland.” The  
balance as indicated in the chart in Reeve Hotels was $385 at the time of the  
$106,000 deposit and transfer on March 10, 2008. Therefore at least $105,615 of  
the DeKonings’ money went to pay the lawyers at Sutherland Mark. This revision  
of the cashflow sheet was entered as Exhibit 276.  
[1474]  
Similarly the first cashflow chart at Tab 12 of Appendix G of the GT  
Report mistakenly refers to “Mark Sutherland” instead of the law firm Sutherland  
Mark. Also when the $94,000 was deposited on March 7, 2008, there was  
$6,040.16 in the Celebrity-Jakobstettel bank account. Accordingly, at least  
$87,959.84 of the DeKonings’ money went to pay Sutherland Mark. Exhibit 277  
is the revised chart of the first flow chart at Tab 12 of Appendix G of the GT  
Report.  
[1475] Putting Exhibits 276 and 277 together, 96.79 percent of the  
DeKonings’ money went to pay Sutherland Mark. Mr. Nagel indicated that what is  
-
400 -  
missing is what part of these transactions form a part of the bigger business.  
[1476]  
Regarding Ms. Westerhout, her cashflow chart appears at Tab 41 of  
Appendix G of the GT Report. The amount on this chart regarding the DPR  
Financial bank account total of $70,653.45 is incorrect. The bank records show  
that on December 3, 2007, the bank balance was negative $29,346.55. The  
following day on December 4, 2007, Ms. Westerhout made out cheques of  
$700,000 and $100,000 for a total deposit of $800,000. That day there was a  
transfer of $500,000 to Ms. Reeve. Taking the $29,346.55 overdraft into account,  
at least $470,653.45 (or 94.13 percent) of the money that went to Ms. Reeve on  
December 4, 2007 came from Ms. Westerhout. This transaction went into the  
books as a loan to Ms. Reeve and was an asset on the books. The revised chart  
was entered as Exhibit 278.  
[1477]  
Mr. Nagel testified that you need to look at the whole picture. He  
conceded that the 41 alleged victims received back a lot less than they put in. A  
lot of money went to Ms. Reeve. The businesses were struggling and ceased to  
operate by September 2009 when the book balances were very low. Fifty percent  
of the $23.5 million went to operating expenses and leasehold and capital  
improvements. Three million dollars went to loans, and this was not financially  
responsible. A lot of Reeve entities were financed by investors.  
[1478]  
The Nagel Report identifies that the GT Report incorrectly referenced  
-
401 -  
entity name or account number in the Gardner and Steenbergen flow charts. Ms.  
Gardner had seven cashflow charts. In the first and second cashflow charts, GT  
missed the 5 in the TD bank account number 5206583. In the second cashflow  
chart, a 5 was substituted for a 6 in the TD account number 5215868. In the  
Steenbergen supporting spread sheet, the account number for Daniel was  
wrongly substituted for Reeve Hotels. In the cashflow chart Daniel’s account  
number of 6251462 is missing the initial 6. The Crown suggested that these were  
minor errors but Mr. Nagel did not agree. On their own, these errors would not  
cast doubt on the GT Report but the total of 161 errors that they found (and  
more they continue to find) give rise to doubt the GT Report.  
[1479]  
The Crown entered Exhibit 279A which is a spreadsheet breaking  
down income and expenses of the Reeve entities from 2007 to 2009. The  
document shows total income over that period of approximately $3.21 million,  
with expenses at approximate $8.99 million and a total loss of $5,783,389.84  
over that period. Mr. Nagel was asked to revise Exhibit 279A in order to give  
every benefit to overstate the income and understate the expenses. The revised  
chart was entered as Exhibit 279B. After very minor revisions, the total loss over  
the period is $5,821,141.04. The loss could be higher if one took into account  
depreciation and amortization. Mr. Nagel indicated that these charts were  
accurate mathematically and represent a tie-back to the bank records, but do not  
say anything more.  
-
402 -  
[1480]  
Mr. Nagel indicated that this business was suffering financially. It was a  
start-up business. Incoming funds were mainly from investors/creditors, with the  
money going out the same day it came in and being used to fund disbursements  
for expenses.  
[1481]  
Mr. Nagel indicated that start-up businesses are risky and money  
coming in from a source of funding and then going out to pay for expenses is not  
fraud by itself. In general terms, when a person invests for a 16 percent return, all  
they care about is getting their return and preservation of their capital.  
[1482]  
It was obvious that the business was losing money year after year. The  
business was funding itself through loans. There is nothing wrong with  
intercompany loans, as this is often a way to achieve greater rates of return.  
There were no restrictions in the agreement documents between Daniel and the  
investors. It was pointed out that a number of investors testified that the money  
was to be used for the purchase and renovation of the Breadalbane Inn. There  
was no documentation to support what the investors were told.  
[1483]  
Any business that funds 83 percent of its receipts from loans is a  
struggling business, but that alone is not unusual for a start-up business. The  
accounting records show the loans that supported the business. At page 5 of the  
Nagel Report, Mr. Nagel cites the fact that the external accountant had no  
reason to believe the information presented was false or misleading.  
-
403 -  
[1484]  
There are three levels of accounting assurance: (1) an audit which  
gives positive assurance; (2) a review which gives negative assurance; and (3) a  
compilation which gives no assurance. A number of the accounting documents  
contain a Notice to Reader which cautions readers that the accounting  
statements may not be appropriate for their purposes. Mr. Nagel also relied upon  
the fact that the external accountants were highly regarded and had CFA  
designations and many years of accounting experience—and they did not see  
any red flags.  
[1485]  
Paragraph 84 of the Nagel Report makes reference to the fact that the  
majority of the Reeve entities’ financial statements were Notice to Reader  
statements. He did not explain in the report what that meant.  
[1486]  
Mr. Nagel testified that money from the victims was funding the Reeve  
operations. Other than the $263,000 that went to the Plaza, Mr. Nagel could not  
say whether any money went to the Plaza, other N.Y. hotels, the Breadalbane  
purchase, or renovations because he did not conduct the investigation.  
[1487]  
Mr. Nagel’s job was not to embark upon an investigation but to review  
70 cashflow charts wherein he found 161 errors. Mr. Nagel checked the GT  
Report to see from where the money came in and from where it went out. He  
found nine instances where expenses were skipped and the GT Report did not  
consider subsequent transactions. There were some errors identified in the GT  
-
404 -  
Report that appear in the Nagel Report but were not summarized.  
[1488]  
Mr. Nagel thinks Appendix E of the GT Report is reliable regarding  
the numbers, but he does not agree with the categories. Appendix D is reliable  
to the extent that it is based on Appendix E.  
[
1489]  
Tab 4 in Appendix G in the GT Report. It demonstrates the Appendix G Issue  
5 (account balance/entity name error) as outlined in Schedule 3B of the Nagel  
Regarding Warren Boldt, there is one cashflow chart that appears at  
#
Report. The DPR Financial bank balance should be negative $31,473.05 and not  
negative $29,573. Issues #2 (disbursements not fully attributed) and #4 (the  
WRPS schedule inconsistent) were also present.  
[1490]  
After reviewing the Boldt cashflow chart and the supporting schedule,  
Mr. Nagel agreed that, of the $300,000 invested by Mr. Boldt, $31,473.05 went to  
pay out the DPR Financial overdraft; payments of $30,000 and $100,000 went to  
the alleged victim, the Brossards; $18,000 payments went to Jim and Joan Hall;  
$
4,500 went to Claudette and Don Taylor; $1,000 went to Wilma Jordan. Another  
6,000 went to the Claudette Taylor, but up to approximately $5,200 could have  
$
come from other sources such as subsequent deposits; accordingly only $800 of  
the $6,000 could be attributed to having come from the Boldt money.  
[1491] Whether transfers from one investor to another are legitimate or a  
Ponzi scheme would depend on getting more information from the investors.  
-
405 -  
Regarding the Brossards, there are three cashflow charts in Tab 5 of  
Appendix G. In the first chart, it can be seen that the Brossards invested  
120,000. Most of it was put into the DPR account which had an overdraft  
[1492]  
$
balance of negative $25,219.92. Approximately $100,000 of Brossard money  
was then transferred to DPR Windsor where most of it went to pay expenses.  
There were some deposits made—at least $5,000 worth. There was a major  
payment to Midtown Business Centre of $100,000. Mr. Nagel indicated that a  
little less than $75,000 of this $100,000 payment to Midtown was the Brossards’  
money.  
[
1493]  
1, 2007 the Brubachers invested $350,000 in Reeve Hotels. On the same date,  
the Brossards invested $100,000. Therefore the Reeve Hotel account, on August  
1, 2007, had a bank balance of $450,000 (it had a $0 balance before these  
In the second Brossard chart, the bank records show that, on August  
2
2
deposits). A cheque was written on August 21, 2007 to DPR Financial in the  
amount of $349,500. This money came from the combination of Brubachers and  
Brossards’ deposits. On August 22, 2007, there was another deposit by the  
Brossards of a further $400,000 to the Reeve Hotels account (which had an  
account balance of $490). Also on August 22, there was a further payment from  
the Reeve Hotels account to DPR Financial of $400,000. On August 30, 2007,  
there was a further $100,000 deposit by the Brossards and the same day another  
$100,000 was paid out to DPR Financial. The Brossards’ and Brubachers’  
-
406 -  
money, and a small amount of Reeve Hotel account money, was transferred to  
DPR Financial. The ultimate conclusion is that the money in the second flow  
chart that was paid out on August 21, 2007 came from the Brubachers and  
Brossards’ investments.  
[1494]  
Regarding the third cashflow chart for the Brossards, Appendix G Issue  
#5 is present. After examining the transactions in the DPR Financial account at  
Exhibit Stick File 103 at pages 1470-1480, all of the money disbursed on  
August 21 had come from the Brubachers and Brossards. The balance in the  
DPR account on August 21, 2007, after the disbursements that day, was  
$
150,562.62. On August 22, the Brossards made a $400,000 deposit into the  
Reeve Hotels account (which had a balance of $490). On that same day,  
400,000 was transferred from Reeve Hotels into the DPR Financial account.  
This raised the total in the DPR Financial account to $550,550.12. The transfer of  
250,000 from DPR to Celebrity/Jakobstettel and the $300,000 transfer from  
$
$
DPR to Emerald Met on August 22, 2007 came from the Brossards and  
Brubachers’ money, Reeve Hotels ($490), and DPR Financial overdraft of  
$16,322.24. The Celebrity-Jakobstettel account received two further deposits of  
$280.04 and $431.80 on August 22, 2007. Turning to the spreadsheet, on August  
22, 2007, Celebrity-Jakobstettel paid Ms. Westerhout $15,000 and the Hoffmans  
$216,000. The majority of these payments came from the Brossard and  
Brubacher deposits.  
-
407 -  
[1495]  
Regarding the Caigers, there is one cashflow sheet in Tab 7 of  
Appendix G of the GT Report. Appendix G Issues #1, #2 and #4 are present.  
The Caigers deposited $100,000 into the Reeve Hotels account on May 30,  
2
008. Forty thousand dollars of the Caiger money went to pay Grand River  
Contracting on May 30, 2008. Mr. Nagel agreed that at least $20,000 of the  
25,000 paid to Ms. Reeve on May 30, 2008 originated from the Caigers’ money.  
The $25,000 payment to Ms. Reeve was placed in the books as a loan.  
$
[1496]  
The total of loans to Cheryl Reeve on the books was $1,619,622.27.  
There was never any payment on the loan. There was $100,000 paid in 2008 by  
Ms. Reeve but it was not referenced as a loan.  
[
1497]  
Appendix G. She invested $64,996.70 on February 9, 2009. On February 9,  
009 there was a payment of $5,000 to Ms. Reeve and a further $1,565.82 to  
Mark McGuire from Ms. Chaffe’s funds.  
Regarding the Linda Chaffe, there is one cashflow chart at Tab 8 of  
2
[1498]  
Regarding Anne Colquhoun, three cashflow charts were prepared at  
Tab 9 of Appendix G. Regarding the first chart, Mr. Nagel agreed, after  
reviewing the chart and the bank statements, that Ms. Colquhoun deposited  
$100,000 on September 12, 2007 into the Celebrity-Jakobstettel account. Then  
on September 12, 2007 the Brubachers received $20,000. At least $12,000 of  
that $20,000 came from Ms. Colquhoun. The Hoffmans also received $16,000. At  
-
408 -  
least $8,000 of that $16,000 came from Ms. Colquhoun.  
[1499]  
Regarding the second cashflow chart, Ms. Colquhoun deposited  
$200,000 into the Reeve Hotels account on September 24, 2007. Appendix G  
Issue #5 is present in this chart. The account balance of 2048498 Ontario Inc.  
should be $104.66 instead of the negative $180.20 indicated in the chart. Mr.  
Nagel agreed, after surfing through the bank records, that Ms. Colquhoun’s  
money was used to pay off a DPR Financial overdraft balance of negative  
$22,570.20. There was a payment by DPR Financial of $10,000 to Daniel Reeve  
on September 24, 2007. It was recorded as a shareholder loan. At least $8,200  
of this money came from Ms. Colquhoun. There was also a Visa payment on  
behalf of Daniel Reeve on September 24 of $9,054.00 At least $7,200 came from  
Ms. Colquhoun. There was a transfer of $59,700 to Emerald Met on September  
24, 2007 of which $58,000 came from Ms. Colquhoun’s investment. Emerald Met  
used this money to pay $59,640 to the Brossards. At least $57,600 of this  
payment came from Ms. Colquhoun’s money.  
[
1500] Regarding the third cashflow chart, after reviewing the bank records  
and other documents, Mr. Nagel agreed that of the $200,000 deposited on July  
0, 2008, factually speaking, $100,000 (except for the approximately $48.00  
3
opening balance in the Reeve Hotels account) was paid to Barry and Sharon  
Cunningham. Approximately $29,000 of the Colquhoun money went to pay off  
the DPR Financial overdraft. Approximately $50,000 went to pay Grand River  
-
409 -  
Contracting. Due to intervening transactions, the $7,500 paid on August 1, 2008  
to Ms. Reeve as a loan came from the DPR Financial overdraft.  
[1501]  
Referring to the PowerPoint presentation in Exhibit 261, 83.5 percent  
of the funds for the Reeve entities came from investors and only 9.6 percent  
came from income. On the expense side, 32 percent of the funds were used to  
pay creditors/investors and 50 percent went to capital asset purchases,  
leasehold improvements, and office and related expenses. Thirteen percent of  
the funds went to loans to Ms. Reeve, Daniel, David and others.  
[1502]  
Regarding Brian Crozier, there is only one cashflow chart which  
appears at Tab 10 of Appendix G of the GT Report. The chart indicates that  
Mr. Crozier deposited $159,601.95 on March 7, 2008 into the Celebrity-  
Jakobstettel account. That account was in overdraft of negative $53,561.95. Mr.  
Crozier’s money went to pay off the overdraft and fund the $100,000 that was  
paid out to Sutherland Mark on March 7, 2008. Another $94,000 was paid to  
Sutherland Mark on March 7, 2008 and the bulk of that came from the  
DeKonings’ deposit into the Celebrity-Jakobstettel account on March 7, 2008. On  
March 7, 2008, $5,000 was paid out to Daniel as a shareholder loan and this  
$5,000 came from the comingling of the DeKoning and Crozier deposits.  
[1503] Regarding Barry Cunningham and Sharon Hepburn, there are two flow  
charts at Tab 11 of Appendix G.  
-
410 -  
Regarding the first, Mr. Cunningham and Ms. Hepburn deposited  
200,000 into the Celebrity-Jakobstettel account on June 4, 2007 by way of two  
[
1504]  
$
$
2
100,000 cheques. This money was disbursed in a variety of ways on June 4,  
007.  
[1505]  
After sifting through the bank records of numerous accounts for a June  
4
transaction, it was determined that $150,000 of the Cunningham/Hepburn  
money was transferred to the DPR Financial account. The account had an  
overdraft balance of negative $33,307.71 until the Cunningham/Hepburn money  
was deposited. Seventy-five hundred dollars of their money was paid to David. A  
further $100,000 was paid to DPR Windsor (which had an overdraft balance of  
negative was  
$41,911.61),  
of  
which  
approximately  
90  
percent  
Cunningham/Hepburn money. There was a shareholder loan to Daniel for  
$
25,000 of which $20,000 was Cunningham/Hepburn money. There was a  
6,500 payment to Ms. Reeve which was funded by Cunningham/Hepburn  
$
money. There was a transfer to Emerald Met of $18,000 also funded by  
Cunningham/Hepburn money. Emerald Met used at least $16,025.69 of this  
money to fund an $18,500 payment to another individual, Gloria Spencer.  
[1506]  
Regarding the second cashflow chart, Mr. Cunningham and Ms.  
Hepburn deposited $500,000 into the Reeve Hotels account on June 2, 2008,  
which had a balance of $17.01. After this deposit, payments were made on June  
2, 2008 as follows: (1) $6,000 to Claudette Taylor, (2) $3,000 to Samuel  
-
411 -  
Sherman (who had deposited $100,000 in October of 2007), (3) $5,400 to the  
Brubachers, and (4) $1,500 to Amos Lichty. All of this money came from Mr.  
Cunningham and Ms. Hepburn except for the $17.01 originally in the account. On  
the same day of June 2, 2008, $484,000 was transferred to the DPR Financial  
account. All of this transferred money was Cunningham/Hepburn money except  
for perhaps the $17.01 amount. This transfer was used initially to pay off the  
overdraft in the DPR Financial account of negative $19,224.79. This left a new  
balance of $459,775.21 in the DPR account. A number of transfers were made  
on June 2, which were entirely from Cunningham/Hepburn money except for  
$17.01. A transfer of $108,000 went to Ms. Reeve. A $9,000 transfer went to  
Daniel as shareholder loan. One thousand dollars went to Lloyd Hoffman. Two  
hundred thousand dollars was paid to Pat Westerhout. Nine hundred sixteen  
dollars was paid to Shoemaker Mill, and $583 to Shoemaker Mill again. A $5,000  
draft went to David Metcalf, $6,882.92 to the Receiver General, $8,500 to Inform  
Design Canada and $7,500 to Hatch D. These transfers were funded by Mr.  
Cunningham and Ms. Hepburn’s money except for $17.01. There was a transfer  
of $35,000 to Celebrity-Jakobstettel of $35,000 which then put the DPR money  
into overdraft of negative $4,891.92 (by my calculation from the bank accounts).  
The first transfer was a transfer to the alleged victim Marina Ognjanovski of  
$75,000. This was funded arguably by the overdraft of negative $4,891.92 and  
the remaining $2,608.08 by Cunningham/Hepburn money.  
-
412 -  
Regarding Josephine DeSalvo, there are two cashflow charts that  
appear in Tab 13 of Appendix G of the GT Report.  
[1507]  
[
1508]  
deposited $200,000 into the account of Emerald Met, which had a balance of  
172.86. Emerald Met, that day, paid $111,800 to Helene Brossard. Due to the  
opening balance and a subsequent deposit, Mr. Nagel agreed that at least  
In the first chart, it can be seen that Ms. DeSalvo, on June 19, 2007,  
$
$109,627.14 came from Ms. DeSalvo. Emerald Met also transferred on June 19,  
2007, $88,000 of Ms. DeSalvo’s money to DPR Financial, which had an overdraft  
of negative $28,815.72, which the DeSalvo money paid off. A further $20,000 of  
Ms. DeSalvo’s money was paid that same day to David Reeve. One thousand  
dollars of Ms. DeSalvo’s money went to Lloyd Hoffman.  
[1509]  
Regarding the second chart, Ms. DeSalvo deposited $100,000 on  
March 14, 2008 to Reeve Hotels, which at that time had a balance of $385.00.  
That same day $100,000 was transferred to DPR Financial along with another  
deposit of $1,035 for a total of $101,035.64. On March 13, the previous day,  
there was a balance of $43,627.74 which had originated from Marina  
Ognjanovski’s deposit. Deposits of $447.79 and $581.56 from Manulife were also  
made on March 14. On March 14, $5,000 was paid to Ms. Reeve of which a  
small portion could be attributed to Ms. DeSalvo and Ms. Ognjanovski’s deposits,  
after accounting for subsequent deposits and overdraft. There was also $68,000  
paid to David; after deducting subsequent deposits of $5,102, Mr. Nagel  
-
413 -  
indicated that $62,897.80 of it came from DeSalvo/Ognjanovski money.  
[1510] Regarding Lorna Eadie and David Hocking, there is one cashflow chart  
at Tab 14 of Appendix G of the GT Report.  
[1511]  
Lorna Eadie and David Hocking made, on April 25, 2008, two deposits  
totalling $244,235.49 into the Reeve Hotels account, which had an account  
balance of $26.19. That day, $244,000 was transferred to the DPR Financial  
account, which had an overdraft balance of negative $29,151.54. After paying the  
overdraft, there was $214,848.16 of Eadie/Hocking money. That same day there  
was a transfer to Ms. Reeve of $100,000, which was paid entirely by  
Eadie/Hocking money. There was a transfer of $45,000 to DPR Windsor (the  
account had a previous balance of $276.04) which in turn paid Robert Pigeon  
$44,499.01, of which $44,196.78 came from Eadie/Hocking money. There was a  
payment of $6,500 to Celebrity-Jakobstettel of $6,500, which came from Eadie  
Hocking money. There was a payment to the Canada Revenue Agency of  
$16,729.79 which also came from Eadie/Hocking money. There was a $75,000  
payment to Ms. Westerhout of which $46,592.48 came from Ms. Eadie and Mr.  
Hocking’s money; the rest came from overdraft.  
[1512] Regarding alleged victim Andrew Eplen, there is one cashflow chart at  
Tab 15 of Appendix G of the GT Report.  
[1513]  
Mr. Eplen deposited $78,000 on April 29, 2008 into the Celebrity-  
-
414 -  
Jakobstettel account, which at that time had a balance of $1,128.46. Due to  
subsequent deposits and the original balance, at least $40,376.44 of Eplen  
money went into the DPR bank account which had an account balance of  
$81.06. At least $40,295.38 of Mr. Eplen’s money was available to flow out. From  
August 29 to September 2, 2008, expenses of $22,549.81 were paid, $21,275.15  
of which went to payroll expenses. At least 90 percent of the $21,275.15 payroll  
expenses came from Mr. Eplen’s money.  
[1514] Regarding the alleged victim Pilita Galano, there is one cashflow chart  
at Tab 16 of Appendix G of the GT Report.  
[
1515] On September 8, 2008, Ms. Galano deposited $74,000 into the  
Millionaire Mortgage account which had a balance of $553.87. That same day  
9,600 was paid to David Reeve, of which $9,046 was Ms. Galano’s money. Of  
$
the $64,700 transferred to DPR Financial that day, $64,146.13 came from Ms.  
Galano. This transfer paid off the DPR Financial overdraft of negative  
$27,486.13.  
[1516] Regarding the alleged victim Heather Gardner, there are seven  
cashflow charts in Tab 17 of Appendix G of the GT Report.  
[
1517]  
007, $50,000 into the Celebrity-Jakobstettel account which had a positive  
account balance of $4,851.52. A transfer of $45,148.48 went to DPR Financial,  
Regarding the first cashflow chart, Ms. Gardner deposited, on June 28,  
2
-
415 -  
which had an overdraft of negative $16,629.66, and which Ms. Gardner’s monies  
paid off. That same day, DPR Financial paid Canada Revenue Agency $50,000,  
of which at least $29,518.82 came from Ms. Gardner’s money.  
[
1518]  
Regarding the second chart, Ms. Gardner, on July 6, 2007, deposited  
150,000 into Celebrity-Jakobstettel, which had a positive account balance of  
2,057. That day a bank draft of $125,000 was paid to Helene Brossard of which  
$
$
at least $122,943.08 came from Ms. Gardner’s money. After that payment,  
another $175,000 came in from Joan Hall, so her money was comingled with the  
Ms. Gardner’s money.  
[1519]  
The third cashflow chart demonstrates that on July 13, 2007 Heather  
Gardner deposited $100,000 (along with other deposits of $816.58 that were  
made) into the DPR Financial account. This money paid off the DPR Financial  
overdraft of negative $21,786.75. At least $20,970.17 of Gardner money went to  
pay the overdraft. That same day $10,200 was transferred to DPR Windsor, of  
which $9,383.42 was Gardner money. Ten thousand dollars was sent to  
Millionaire Travel, of which $9,183.42 was Gardner money. Forty-five hundred  
dollars was transferred to Millionaire Executive Services, of which $3,683.42 was  
Gardner money. Fifteen hundred dollars was paid to Emerald Met, of which at  
least $683.42 was Gardner money. Twenty thousand dollars was transferred to  
Celebrity-Jakobstettel, of which $19,183.42 was Gardner money. Sixty-five  
hundred dollars was paid to Ms. Reeve as a loan, of which at least $5,683.42  
-
416 -  
came from Gardner money. Three thousand dollars was paid to Daniel, of which  
at least $2,183.42 came from Gardner money. After all these transfers were  
made, there was $1,330 left. Over the two years and nine months, Daniel did not  
receive anything from payroll but received $160,000 beyond the shareholder  
loans.  
[1520]  
Regarding the fourth cashflow chart, Ms. Gardner deposited, on  
August 3, 2007, $63,000 into the DPR Financial account, which had an overdraft  
of negative $27,679.97. Her money paid out the overdraft. On that day, $60,000  
was transferred to Celebrity-Jakobstettel, of which $33,432.97 was Ms.  
Gardner’s money. That same day, Celebrity-Jakobstettel paid $60,000 to Ms.  
Brossard, of which $33,290.31 came from Ms. Gardner’s money.  
[1521]  
Regarding the fifth cashflow chart, on August 13, 2007, Ms. Gardner  
deposited $37,000 into the DPR Financial account which had an overdraft of  
negative $26,738.48, which the Gardner money paid off. Ten thousand dollars of  
Ms. Gardner’s money on that day was paid to Howard Southwood.  
[
1522]  
on May 20, 2008 into the Reeve Hotels account which had a positive balance of  
63.96. Reeve Hotels, on that day, transferred $100,000 into the DPR Financial  
Regarding the sixth cashflow chart, Ms. Gardner deposited $100,000  
$
account. It had a negative balance of $32,549.48 which was paid off by Gardner  
money (minus $63.96). Thus, Ms. Gardner’s money went $32,485.52 toward the  
-
417 -  
overdraft. That same day $26,000 was transferred to DPR Windsor, of which at  
least $25,936.04 was paid by Gardner money. This transfer of Ms. Gardner’s  
money eliminated the $25,629.49 overdraft. Twenty-one hundred dollars was  
transferred to Celebrity-Jakobstettel, of which $2,036.04 came from Gardner  
money. On that same day, $69,000 was paid to Ms. Reeve, which Mr. Nagel did  
not find in the ledger as a loan. Of that $69,000, Ms. Gardner effectively paid for  
$39,281.56.  
[
1523]  
, 2008 into the Reeve Hotels account which had a positive balance of $14.82.  
That same day $248,000 was transferred to DPR Financial, of which  
247,985.18 was Ms. Gardner’s money. There was an overdraft of $4,163.27 of  
Regarding the seventh char, Ms. Gardner deposited $275,000 on July  
2
$
which $4,148.45 was paid off by Gardner money. On that same day, numerous  
disbursements were made. Nine thousand dollars was transferred to Ms.  
Gardner herself, of which $8,985.15 came from her own money. Fifty-four  
hundred dollars was paid to Glendra Farms, of which $5,385 was Ms. Gardner’s  
money; $1500 was paid to Amos Lichty, of which $1,485.18 came from Gardner  
money; $6,000 was paid to Claudette Taylor of which $5,985.18 was Gardner  
money; $3,000 was paid to Samuel Sherman, of which $2,985.18 was Gardner  
money; $1,666.66 was paid to Joan Reibeling, of which $1,651.18 was Gardner  
money; $55,000 was transferred to Celebrity-Jakobstettel, of which $54,985.18  
was Gardner money. From this money, the following amounts, except for $14.82,  
-
418 -  
were paid by Gardner money: to Marina Ognjanovski, $6,500; to Wilma Jordan,  
1,000; to the Brubachers, $4,000; and to Claudette Taylor, $4,500. One  
$
thousand dollars was transferred to Daniel, of which $985.18 was Gardner  
money. Finally, $170,464.25 was paid to Grand River Contracting, of which  
$170,449.43 was Gardner money.  
[1524] The alleged victim Jeanette Harrop has two cashflow charts in Tab 18  
of Appendix G of the GT Report.  
[1525]  
Regarding cashflow chart #1, on October 31, 2008, Ms. Harrop  
deposited $47,606.87 into the Celebrity-Jakobstettel account. This was one of  
three deposits that were made that day. Before the three deposits, the Celebrity-  
Jakobstettel account had an overdraft of negative $6,583. The other two deposits  
were $100,000 from Ms. Reeve and $40,890.24 from Isaac Thiessen. That same  
day $186,000 was paid to Andrea Morgan. Discounting the contributions from  
Ms. Reeve and sums from bank accounts, at least $83,819.41 came from Mr.  
Thiessen and Ms. Harrop’s money, or 45.1 percent of the total $186,000 paid to  
Ms. Morgan. The $83,819.41 paid to Ms. Morgan was 94.7 percent of the total  
combined investment of $88,497.11 by Mr. Thiessen and Ms. Harrop. Mr.  
Thiessen’s corresponding cashflow chart appears at Tab 40 of Appendix G of  
the GT Report. The $100,000 contributed by Ms. Reeve was put in the unknown  
loan account in the QuickBooks ledgers.  
-
419 -  
[1526]  
Regarding Ms. Harrop’s cashflow chart, Ms. Harrop deposited on  
November 4, 2008, $15,107.37 into the Celebrity-Jakobstettel account, which  
had a positive account balance of $3,553.49. That same day, $4,500 was paid to  
Claudette and David Taylor, of which at least $946.51 came from Ms. Harrop’s  
money. That same day, $5,000 was paid to Mark and Michelle Keddie of which at  
least $1,446.51 came from Ms. Harrop’s money.  
[1527] The alleged victim Kevin Hillman has two cashflow charts in Tab 19 of  
Appendix G of the GT Report.  
[1528]  
Regarding the first cashflow chart, Mr. Hillman, on July 9, 2008,  
deposited $41,031 into the Millionaire Mortgage account, which had a positive  
balance of $20,442.98. On that same day, there was a transfer of $12,000 to  
Celebrity-Jakobstettel, of which at least $557.02 was Mr. Hillman’s money. The  
next day Millionaire Mortgage transferred $30,500 to pay off DPR Financial’s  
overdraft of negative $26,781.10. Of this $30,500 transfer, at least $10,057.02 of  
Hillman money went to pay the overdraft.  
[1529]  
Regarding the second cashflow chart, Mr. Hillman, on August 8, 2008,  
deposited $144,360.44 into the Celebrity-Jakobstettel account, which at that time  
had a positive balance of $1,562.87. That same day, $100,000 was paid out to  
Ms. Reeve, of which at least $98,437.13 was Mr. Hillman’s money. This  
$100,000 payment was put into the accounting records in account number 20120  
-
420 -  
in the “unknown loan account” and is recorded essentially as an asset.  
[1530] The alleged victim Wilma Jordan has two cashflow charts in Tab 20 of  
Appendix G of the GT Report.  
[
1531]  
into the Celebrity-Jakobstettel account which had a positive balance of  
1,521.33, but after paying Canada Revenue Agency $6,095.86, it went into  
Regarding the first, on January 30, 2007, Ms. Jordan deposited $6,000  
$
overdraft of negative $4,574.53. Accordingly, Ms. Jordan’s money would have  
been used to pay that overdraft and would not have funded the $6,000 transfer  
that day to DPR Financial.  
[1532] Regarding the second cashflow chart, Ms. Jordan, on February 2,  
2007, deposited $90,000 into the Celebrity-Jakobstettel account which, at that  
time, had a positive balance of $97.88. That same day, $59,000 was transferred  
to Daniel, of which at least $58,902.12 was Ms. Jordan’s money. Fifteen hundred  
dollars was also sent that day to “C&D Reeve” of which $1,402.12 was Ms.  
Jordan’s money. That day, $24,000 was also transferred toward a DPR Financial  
overdraft of negative $29,721.91, of which at least $23,902.12 was Ms. Jordan’s  
money.  
[1533] The alleged victim Theresa Kaup has one cashflow chart in Tab 21 of  
Appendix G of the GT Report.  
[1534]  
On July 14, 2008, Theresa Kaup deposited $100,000 into the  
-
421 -  
Celebrity-Jakobstettel account, which at the beginning of the day had a balance  
of $625.00. Mark McGuire (see Tab 27, Appendix G of GT Report, second  
cashflow chart) had earlier that day deposited $171,932.54 to raise the balance  
to $172,557.58. Ms. Kaup’s deposit raised the balance to $272,557.58. That  
same day, $100,000 was paid to Ms. Reeve, of which $99,374.96 came from  
Kaup/McGuire money. The $100,000 was recorded in the accounting records as  
reducing the “unknown loan account” with the same effect as reducing a liability  
or increasing an asset. Another $115,000 was paid to Nancy Herlick, of which at  
least $114,374.96 came from Kaup/McGuire money. Twenty-five thousand  
dollars was paid to the Brossards, of which (after accounting for other deposits  
and the Celebrity-Jakobstettel opening balance) $21,668.48 came from  
Kaup/McGuire money. $30,000, of which $29,374.96 came from Kaup/McGuire  
money, was transferred to DPR Financial which paid off the DPR overdraft of  
negative $26,338.32.  
[1535] Mark and Michelle Keddie have two cashflow charts in Tab 22 of  
Appendix G of the GT Report.  
[1536]  
Regarding the first chart, the Keddies, on February 5, 2008, deposited  
$
$
$
90,000 into the Millionaire Mortgage account, which had a positive balance of  
490.64. On that day, $90,000 was transferred to Ms. Reeve, of which at least  
89,509.36 came from the Keddies’ money. The $90,000 was recorded in the  
books as paying off a Home Trust mortgage.  
-
422 -  
Regarding the second chart, the Keddies deposited $100,000 into the  
Reeve Hotels account on April 24, 2008, which had a previous balance of  
[1537]  
$26.19. On that same day, $30,000 was paid to the Brossards, of which  
$29,973.81 was the Keddies’ money. Seventy thousand dollars, of which  
$69,973.81 was the Keddies’ money, was transferred to DPR Financial which  
paid off the DPR overdraft of negative $29,151.04. On April 25, 2008, $65,983.71  
was paid to Robert Pigeon, of which at least $37,134.06 was the Keddies’  
money. On April 25, 2008, Daniel received $4,000 which could have been paid  
by overdraft instead of Keddie money.  
[1538]  
Laura Kerr has one cashflow chart in Tab 23 of Appendix G of the GT  
Report.  
[1539]  
On September 14, 2007, Ms. Kerr deposited $100,000 into the Reeve  
Hotels account, which had a previous positive account balance of $475. That  
same day, $100,000 was transferred to DPR Financial, of which $99,525 came  
from Laura Kerr.  
[1540] Amos and Dorothy Lichty had one cashflow chart in Tab 24 of  
Appendix G of the GT Report.  
[1541]  
On September 6, 2007, the Lichtys deposited $100,000 into the Reeve  
Hotels account, which had a previous positive account balance of $475. On that  
same day, $100,000 was transferred to DPR Financial, of which $99,525 was the  
-
423 -  
Lichtys’ money. On that same day, another $25,000 was deposited into the DPR  
Financial account by June and Ryan Caron. DPR Financial had an overdraft of  
negative $24,089 and this was paid off by the Lichtys and Carons’ money. Ten  
thousand dollars was paid to Daniel through a combination of the Lichtys and  
Carons’ money. A further $12,000 was paid to Ms. Westerhout by a combination  
of the Lichtys and Carons’ money.  
[1542] Steve Manuel has one cashflow chart in Tab 25 of Appendix G of the  
GT Report.  
[1543]  
On January 19, 2009, Steve Manuel deposited $50,000 into the  
Millionaire Mortgage account, which had a previous balance of $6,060.99. On  
that same day, $20,000 was paid to two individuals: $15,000 to Marina  
Ognjanovski and $5,000 to Robert Pigeon. Of the $15,000 paid to Ms.  
Ognjanovski, at least $8,939.01 came from Mr. Manuel’s money. Another  
$25,499.50 was paid to Daniel on January 19, 2009, of which $19,438.51 came  
from Mr. Manuel’s money. There was also a $5,000 payment to Ms. Reeve which  
could have come from Mr. Manuel’s money.  
[1544] Craig Mason has one cashflow chart in Tab 26 of Appendix G of the  
GT Report.  
[1545] On September 2, 2008, Mr. Mason deposited $100,000 into the  
Celebrity-Jakobstettel account which had a previous positive balance of  
-
424 -  
25,027.32. On that same day $100,000 was paid to Grand River Contracting, of  
which at least $74,972.68 came from Mr. Mason’s money.  
$
[1546] Mark McGuire has three cashflow charts in Tab 27 of Appendix G of  
the GT Report.  
[1547]  
Regarding the first cashflow chart, on April 4, 2008, Mr. McGuire  
deposited $169,590.39 into the Reeve Hotels account, which had a previous  
positive balance of $47.70. On that same day, $169,000 was sent to DPR  
Financial, of which $168,952.30 was Mr. McGuire’s money. DPR Financial had  
an overdraft of negative $29,360.04, of which $29,312.34 came from Mr.  
McGuire’s money. Four thousand dollars was sent to Daniel, of which $3,952.30  
came from McGuire money. One hundred thousand dollars was paid to Pat  
Westerhout, of which $99,952.30 came from Mr. McGuire’s money. David Reeve  
then deposited $5,308.67. Then, $10,800 was paid to the Brubachers, of which  
at least $5,443.63 came from Mr. McGuire.  
[1548] Turning to the second chart, see the discussion regarding Theresa  
Kaup and the second cashflow chart above.  
[1549]  
Regarding the third cashflow chart, on October 15, 2008, Mr. McGuire  
deposited $173,736.85 into the Millionaire Mortgage account which had a  
previous balance of $125.92. No further deposits were made on October 15 or  
October 16, 2008. On October 16, several disbursements were made to other  
-
425 -  
individuals. The largest payment was $65,000 to Adam Lippert, of which  
64,874.08 was Mr. McGuire’s money. On October 16, $1,000 was paid to Ms.  
$
Ognjanovski, of which $874.08 was McGuire money. A further payment of $4,000  
was made that day to Ms. Westerhout, of which $3,874.08 came from McGuire  
money. On October 15, there was a $20,000 transfer to Celebrity-Jakobstettel, of  
which $19,874.08 was McGuire money. On October 16, 2008, $9,500 was paid  
to the Brubachers, of which (after taking into account other deposits and account  
balances) at least $540.63 came from Mr. McGuire’s money.  
[1550] Cherrin Meleg has one cashflow chart in Tab 28 of Appendix G of the  
GT Report.  
[1551]  
Ms. Meleg, on June 27, 2008, deposited $43,337.03 into the Millionaire  
Mortgage account, which had an opening day balance of $706.20. Another  
individual, Robert Livingstone, also deposited $40,484.65 into that account that  
day. That same day $79,027.88 was transferred to DPR Financial which had an  
overdraft of negative $26,585.28 which was paid off, with $25,879.08 being paid  
by Meleg/Livingstone money. Fifty-three thousand dollars was paid to Daniel  
which returned the DPR Financial account to overdraft, with negative $3,585.51  
as the balance. Of the $53,000 paid to Daniel, at least $48,708.29 came from  
Meleg/Livingstone money. Of the same $53,000, at least $8,223.64 came from  
Meleg money.  
-
426 -  
Paul and Elizabeth Meleg have two cashflow charts in Tab 29 of  
Appendix G of the GT Report.  
[1552]  
[1553]  
Regarding the first cashflow chart, on May 23, 2008 the Melegs  
deposited $200,000 into the Celebrity-Jakobstettel account which had a previous  
positive account balance of $5,341.50. On that same day, $166,000 was  
transferred to DPR Financial; the entirety of that money was the Melegs’, except  
for the opening Celebrity-Jakobstettel account balance of $5,341.50. DPR  
Financial had an overdraft balance of negative $27,675.56, which was paid off by  
the transfer by using at least $23,334.06 of the Melegs’ money. Ninety thousand  
dollars was paid to Grand River Contracting, of which at least $84,658.50 was  
the Melegs’ money. Thirty thousand dollars was paid to Ezra Jantzi, of which at  
least $24,658.80 was the Melegs’ money. Twenty-one thousand dollars was paid  
to Ms. Reeve, of which (due to subsequent deposits and overdraft funding) at  
least $7,982.94 came from the Melegs’ money.  
[1554]  
Regarding the second cashflow chart, on July 8, 2008, the Melegs  
deposited $68,676.44 into the Millionaire Mortgage account, which had a  
previous account balance of $1,249.44. On July 8 and 9, 2008, there were cash  
withdrawals of $4,032.90 of which $2,783.46 came from the Melegs. On July 8,  
2008 there was a transfer to DPR Financial of $20,000 of which $18,750.56 was  
the Melegs’ money. This money was used to reduce the DPR overdraft of  
negative $27,510.43. There was a $20,000 payment to Steve Huntley on July 9,  
-
427 -  
2008, of which at least $18,750 came from Meleg money. On July 8, 2008, there  
was a $2,000 payment to Andrea Morgan, of which at least $750.56 came from  
Meleg money.  
[1555] The alleged victim Marina Ognjanovski has two cashflow charts in Tab  
30 of Appendix G of the GT Report.  
[1556]  
Regarding the first cashflow chart, on March 12, 2008, Ms.  
Ognjanovski deposited $300,000 into the Celebrity-Jakobstettel account, which  
had a previous account balance of $462.48. One hundred thousand dollars was  
paid to Helen Brossard, of which $96,970.88 was Ms. Ognjanovski’s money. Ms.  
Brossard had received several payments regarding a joint ownership agreement.  
That same day $200,000 was transferred to the DPR Financial account, of which  
$
199,537.52 was Ms. Ognjanovski’s money. The DPR Financial account had a  
32,616.83 overdraft, of which $32,154.35 of Ms. Ognjanovski’s money was  
$
used to pay the overdraft. There was a transfer of $20,000 to Daniel Reeve, of  
which $18,487.52 was Ms. Ognjanovski’s money. There was a payment to  
Howard Southwood of $15,000, of which $14,537.52 was Ms. Ognjanovski’s  
money. There was a payment of $100,000 to Grand River Contracting of which  
$
99,537.52 was Ms. Ognjanovski’s money. This payment was referred to at page  
of the GT Report as going to renovations at the Jakobstettel.  
6
[1557]  
Regarding the second cashflow chart, Ms. Ognjanovski deposited, on  
-
428 -  
March 13, 2008, $100,000 to the Celebrity-Jakobstettel account, which had a  
previous balance of $4,267.06. That same day, $100,000 was transferred to the  
DPR Financial account, of which at least $95,732.94 was Ms. Ognjanovski’s  
money. DPR had an overdraft of negative $26,104.31 which was paid off using at  
least $21,837.25 of Ms. Ognjanovski’s money. Thirty thousand dollars was paid  
to King Street Management for leasehold improvements, of which $25,732.94  
came from Ms. Ognjanovski’s money.  
[1558] Gary and Deborah Raycroft have three cashflow charts in Tab 31 of  
Appendix G of the GT Report.  
[1559]  
Regarding the first cashflow chart, on April 29, 2008, the Raycrofts  
deposited $100,000 into the Celebrity-Jakobstettel account, which had a previous  
positive balance of $2,729.35. On that same day, $100,000 was transferred to  
the DPR Financial account, of which at least $97,270.65 came from Raycroft  
money. DPR Financial had an overdraft of negative $24,900.34, which was paid  
off by Raycroft money to the tune of at least $22,170.99.  
[1560]  
Regarding the second cashflow chart, on August 18, 2008, the  
Raycrofts deposited $100,000 into the Celebrity-Jakobstettel account which had  
a previous positive balance of $2,094.54. That same day, $54,000 was  
transferred to the DPR Financial account, which had an overdraft of negative  
$29,938.61, which was paid off using at least $27,844.07 of the Raycrofts’  
-
429 -  
money. Celebrity-Jakobstettel, also that day, paid Daniel $3,000, of which at  
least $905.46 was the Raycrofts’ money. Celebrity-Jakobstettel also paid Canada  
Revenue Agency $15,063.74, of which $12,969.20 was the Raycrofts’ money.  
Jim and June Hall were paid $30,000 from Celebrity-Jakobstettel, of which  
$12,905.46 was the Raycrofts’ money (due to a subsequent $15,000 deposit and  
opening Celebrity-Jakobstettel balance). DPR Financial paid $20,000 to David on  
August 18, 2008, of which $17,844.07 was the Raycrofts’ money.  
[1561]  
Regarding the third cashflow chart, on January 2, 2009, the Raycrofts  
deposited $250,000 into the Royal Bank account for Millionaire Mortgage, which  
had a previous balance of $48.23. There was a $20,000 credit memo from  
alleged victim Heather Gardner, which may have been a cancelled transaction.  
That same day $15,000 was paid to Ms. Reeve, of which $14,951.77 was  
Raycroft money or Raycroft/Gardner money. There are two scenarios depending  
on whether there was in fact a $20,000 deposit by Heather Gardner. In scenario  
#1, assuming that Ms. Gardner’s money was not included in the account, there  
was $142,000 paid to the alleged victims (Mr. Brubacher, Ms. Gardner, Ms.  
Colquhoun, Ms. Ognjanovski, and Ms. DeSalvo), of which $141,951.77 came  
from the Raycrofts’ money. There was $110,000 paid to other individuals, of  
which $109,951.77 came from the Raycrofts’ money. Robert Livingstone was the  
largest payee of the “other individuals” category; he received $88,000, of which  
$87,951.77 was the Raycrofts’ money. Assuming Ms. Gardner’s $20,000 deposit  
-
430 -  
was included, of the $142,000 paid to the alleged victims, $121,957.77 came  
from the Raycrofts’ money. Of the $110,000 paid to other individuals, $89,951.77  
came from the Raycrofts’ money. Of the $88,000 paid to Robert Livingstone,  
$67,951.77 came from the Raycrofts’ money.  
[1562]  
Mr. Nagel indicated that one cannot determine fraud from looking at  
these charts which cover only 290 days of the 1,004 days comprising the period  
between January 1, 2007 and September 30, 2007. The cashflow charts cover  
just 10 percent of the population of transactions. Schedule 3A of the Nagel  
Report summarizes that other sources could have funded the repayments  
including overdraft, subsequent deposits, and opening balances. Mr. Nagel  
indicated that it was financially irresponsible for Daniel to pay his wife out of a  
struggling business’s funds.  
[1563] Lisa and Paul Schnarr have one cashflow chart in Tab 32 of Appendix  
G of the GT Report.  
[1564]  
On January 5, 2009, the Schnarrs deposited $75,000 into the  
Millionaire Mortgage account, which had a previous balance of $1,795.73. On  
that same day, $10,000 was transferred to Annie Smith, of which $8,204.27 was  
the Schnarrs’ money. Between January 5 and 6, 2008, $29,000 was paid to Ms.  
Jordan, Mr. Ashman, Mr. Boldt and Ms. Galano, of which $27,304.29 was the  
Schnarrs’ money. Then, $32,266.43 was paid to other individuals, of which at  
-
431 -  
least $30,470.7 was the Schnarrs’ money. The largest payout to other individuals  
was $15,000 to Tony Herlick, of which $13,204.27 was paid by the Schnarrs.  
[1565] Wayne Schroeder has one cashflow chart in Tab 33 of Appendix G of  
the GT Report.  
[
1566]  
Celebrity-Jakobstettel account, which had a previous positive balance of  
1,147.67. That same day, $3,000 was paid to Ms. Reeve, of which $1,852.33  
On August 25, 2008, Mr. Schroeder deposited $59,524.74 into the  
$
came from Mr. Schroeder’s money. On that same day, $47,000 was transferred  
to DPR Financial, of which $45,852.33 was Mr. Schroeder’s money. The transfer  
paid off the DPR Financial overdraft of negative $29,768.35, of which $28,620.68  
was Mr. Schroeder’s money.  
[1567] Carin and Dave Smith have one cashflow chart in Tab 34 of Appendix  
G of the GT Report.  
[1568]  
The Smiths, on November 17, 2008, deposited $70,000 into the  
Millionaire Mortgage account which had a previous positive balance of $9.19. On  
that same day, Ms. Colquhoun received $10,000, of which $9,990.81 was the  
Smiths’ money. Keith Hall received $10,000, of which $9,990.81 was the Smiths’  
money. Keith Austin received $10,000, of which $9,990.81 was the Smiths’  
money. Paul Pilzner received $25,412.03, of which $25,402.94 was the Smiths’  
money.  
-
432 -  
Peter Steenbergen has three cashflow charts in Tab 35 of Appendix  
G of the GT Report.  
[1569]  
[
1570] Regarding the first, Mr. Steenbergen, on January 8, 2008, deposited  
200,000 into the Millionaire Mortgage account, which had a previous positive  
balance of $422.25. On that same day, $214,617.93 (other deposits of  
14,617.93 in addition to Mr. Steenbergen’s money) was transferred to DPR  
$
$
Financial, of which $199,577.75 was Mr. Steenbergen’s money. This transfer  
paid off the DPR Financial overdraft of negative $20,081.48, of which $5,040.82  
of Mr. Steenbergen’s money was used. That same day DPR paid $181,028.18 to  
Midtown Business Centre for rent, mortgage and leasehold improvements of  
which $165,988 was Steenbergen money.  
[1571]  
Regarding the second cashflow chart, on January 16, 2008, Mr.  
Steenbergen deposited $249,427.90 into the Millionaire Mortgage account which  
had a previous positive account balance of $1,067.78. That same day $250,000  
was transferred to Daniel Reeve’s account, of which $248,932.22 was Mr.  
Steenbergen’s money. On that day, $263,506.50 was paid to Kramer Levin for a  
potential Plaza Hotel investment, of which $244,441.35 was Mr. Steenbergen’s  
money. It was suggested that Mr. Steenbergen did not agree to this transaction  
until months later, and if this investment was in Daniel’s name, one would have to  
see the restructuring arrangements before concluding that there was anything  
inappropriate being done. This investment in Daniel’s name was not a red flag  
-
433 -  
and may have been done for a good reason.  
[1572] Regarding the third chart, it is related to the Cherrin Meleg chart at Tab  
28 of Appendix G in the GT Report. On June 27, 2008. Mr. Steenbergen  
deposited $50,000 in the Reeve Hotels account, which had a previous positive  
balance of $78.69. That same day $50,000 was transferred to Daniel’s personal  
account of which $49,921.31 came from Steenbergen money. Prior to the  
transfer, Daniel’s personal account had a positive balance of $1,873.41. There  
was another transfer into the personal account of $53,000 that day, which  
originated in large part from Meleg/Livingstone money – see Cherrin Meleg  
cashflow chart at Tab 28 of Appendix G of the GT Report. That same day  
$100,000 was paid to Ms. Reeve, of which at least $45,047.90 came from  
Steenbergen money.  
[1573] Sherrill and Bob Stevenson have one cashflow chart in Tab 36 of  
Appendix G of the GT Report.  
[1574]  
On November 10, 2008, the Stevensons deposited $75,000 into the  
RBC Wealth Institute account, which had a previous balance of $58,695. On that  
same day, $115,000 was paid to Ms. Reeve ($75,000) and Keith Austin  
(
$40,000). Of the $115,000 paid out to those two individuals, at least $56,305  
came from the Stevensons’ money. Of the $75,000 paid to Ms. Reeve, at least  
16,305 came from the Stevensons’ money.  
$
-
434 -  
Chin and Chun Tan have one cashflow chart in Tab 37 of Appendix G  
of the GT Report.  
[1575]  
[1576]  
On September 18, 2007, the Tans deposited $200,000 into the  
Celebrity-Jakobstettel account, which had a previous balance of $14,262.91.  
That same day there was a payment to Howard Southwood of $20,000, of which  
at least $5,737.09 was the Tans’ money. That same day there was a transfer of  
$190,000 to DPR Financial which had a previous account balance of $12,323.56.  
Of the $190,000 transfer to DPR Financial, at least $175,737.09 was the Tans’  
money.  
[1577] Dave and Claudette Taylor have two cashflow charts in Tab 38 of  
Appendix G of the GT Report.  
[1578]  
Regarding the first cashflow chart, on November 1, 2007, the Taylors  
deposited $400,000 into the Reeve Hotels account, which had a previous  
positive balance of $445.00. On that same day, $400,000 was transferred to the  
DPR Financial account of which $399,555 was the Taylors’ money. The DPR  
account had, prior to the transfer, an overdraft balance of negative $9,133.48 that  
was paid off by at least $8,688.48 of the Taylors’ money. On that same day,  
Daniel Reeve received $10,000, of which $9,555 was the Taylors’ money. Two  
hundred thousand dollars was paid to Grand River Contracting, of which  
$199,555 was the Taylors’ money. Forty-eight thousand dollars was paid to  
-
435 -  
Exchange Business Communications, of which $48,355 came from the Taylors’  
money. Steve Haney was paid $25,500, of which $25,050 came from the Taylors’  
money. A further deposit of $3,022.50 was made, and accordingly the $3,000  
payment to Ms. Reeve cannot be attributed to Taylor money.  
[1579]  
Regarding the second cashflow chart, on November 1, 2007, the  
Taylors deposited $300,000 into the Celebrity-Jakobstettel account, which had a  
previous positive balance of $8,314.20. On that day, $200,000 was transferred to  
the DPR Financial account, of which $191,685.80 was the Taylors’ money. Prior  
to the $200,000 transfer, DPR had a balance of $68,903.57. On that same day,  
$200,000 was transferred to DPR Windsor, of which $122,782.23 was the  
Taylors’ money.  
[1580] Doug Thiel has one cashflow chart in Tab 39 of Appendix G of the  
GT Report.  
[1581]  
On May 22, 2008, Doug Thiel deposited $200,000 into the Reeve  
Hotels account, which had a previous positive balance of $38.96. On that same  
day, $200,000 was transferred to DPR Financial, of which $199,961.04 was Mr.  
Thiel’s money. DPR Financial, prior to the $200,000 transfer, had an overdraft of  
negative $60,645.94. This overdraft was paid off by the transfer with at least  
$60,606.98 of Mr. Thiel’s money. There was a deposit on that day of another  
$108.87. On that same day, there were numerous disbursements. Ten thousand  
-
436 -  
dollars was paid to Ms. Reeve, of which at least $9,852.17 was Thiel money. The  
payment to Ms. Reeve was noted in the books as a loan. Then, $102,270 was  
paid to David, with at least $102,122.17 of Mr. Thiel’s money. Ten thousand  
dollars was paid to Daniel, with at least $9,852.17 of Mr. Thiel’s money. It was  
noted in the books as a shareholder loan. Next, $23,564.57 was paid to other  
individuals with at least $23,147.83 of Mr. Thiel’s money. Mr. Boldt was one of  
the recipients; he received $5,000, of which at least $4,852.17 was Mr. Thiel’s  
money.  
[1582] The alleged victim Isaac Thiessen has one cashflow chart in Tab 40 of  
Appendix G of the GT Report.  
[1583]  
On October 31, 2008, Mr. Thiessen deposited $40,890.24 into the  
Celebrity-Jakobstettel account. Ms. Harrop also deposited $47,606.87 into the  
same account on that same day. The flow of funds is then similar to what is  
outlined in Ms. Harrop’s cashflow chart in Tab 18 of Appendix G in the GT  
Report.  
[1584] Patricia Westerhout has two cashflow charts in Tab 41 of Appendix G  
of the GT Report.  
[1585]  
Regarding the first cashflow chart, on December 4, 2007, Ms.  
Westerhout deposited $800,000 into the DPR Financial account, which had a  
previous overdraft balance of negative $29,346.55. Ms. Westerhout’s deposit  
-
437 -  
paid off all of the overdraft balance. On that same day, $500,000 was paid to Ms.  
Reeve, of which the entire $500,000 came from Ms. Westerhout’s money. This  
payment was noted in the books as a loan to Ms. Reeve. On December 4 and 5,  
2007, $248,000 was transferred to Celebrity-Jakobstettel, which had a previous  
positive balance of $62.23. The entire $248,000 was funded by Ms. Westerhout’s  
money. On December 4 and 5, 2007, $225,206.89 was paid to various  
individuals, then a further $193,385.29 was paid to other individuals. After  
accounting for subsequent deposits ($722.94) and the Celebrity-Jakobstettel  
opening balance ($62.23), $192,600.12 of payments to other individuals came  
from Ms. Westerhout’s money. The largest payment to other individuals went to  
Helene Brossard and the estate of Isabella Brossard in the amount of  
$167,006.50, of which $166,944.27 came from Ms. Westerhout’s money. The  
Brossards were paid $24,006.50, with at least $23,944.27 coming from Ms.  
Westerhout’s money. One thousand dollars was paid to Ms. Jordan, with at least  
$214.83 of Ms. Westerhout’s money. Four thousand dollars was paid to the  
Brubachers, with at least $3,164.83 of Westerhout money.  
[1586]  
Regarding the second cashflow chart, on April 11, 2008, Ms.  
Westerhout deposited $237,286.46 into the Reeve Hotels account which had a  
previous balance of $0.09. On that same day, $237,000 was transferred to DPR  
Financial of which $236,999.91 was Ms. Westerhout’s money. DPR had an  
overdraft of negative $29,376.24, of which $29,376.15 was paid off by  
-
438 -  
Westerhout money. On that same day $13,900 was transferred to Millionaire  
Executive Services and all of that $13,900 was Ms. Westerhout’s money.  
Twenty-one hundred dollars was transferred to DPR Windsor. On that same day  
$202,000 was transferred to Celebrity-Jakobstettel, which left DPR Financial in  
an overdraft of negative $10,376.24. Of the $202,000 transfer, $191,623.67 was  
Ms. Westerhout’s money. At the time of this $202,000 transfer, Celebrity-  
Jakobstettel had a previous positive balance of $174.31. There was a  
subsequent deposit of $468.68. There was then a payment of $100,000 to Grand  
River Contracting, of which $87,413.68 was Westerhout money after deducting  
for the subsequent deposit, the Reeve Hotels and Celebrity-Jakobstettel opening  
balances, and the DPR Financial overdraft. Still on April 11, Terry Kaup and  
Sherrill Martin received $82,500, of which $69,913.68 came from Ms.  
Westerhout’s money. Grand River Contracting has appeared a lot in the cashflow  
charts, but Mr. Nagel was not aware of what the company testified to, and he  
would have to interview them to know what the payments were for.  
[1587] Brad Ashman has one cashflow chart in Tab 1 of Appendix G of the  
GT Report.  
[1588]  
On March 8, 2008, Mr. Ashman deposited $150,000 into the Millionaire  
Mortgage account which had a previous overdraft balance of negative $239.20.  
Mr. Ashman’s deposit paid off all of the overdraft. That same day, $35,666 was  
paid to other individuals which was funded entirely by Mr. Ashman’s money. This  
-
439 -  
$35,666 payment includes payments of $27,000 to the Tans and $7,000 to Ms.  
Ognjanovski. On November 3 and 4, 2008, $93,883.38 of expenses were paid.  
On November 3, Direction Inc. was paid $20,876.75; this was all from Mr.  
Ashman’s money. Linzie Brown, Lee-Anne Ruggle, Barb Menard, Sarah Snow  
and Brent DeKoning were paid a total of $7,709.86, entirely from Mr. Ashman’s  
money. There were transfers to Celebrity-Jakobstettel and Millionaire Multimedia  
of $7,000 and $4,000, respectively, of which 100 percent was Mr. Ashman’s  
money. There was a subsequent deposit of $1,000 made. Of the expenses that  
were paid after the $1,000 deposit, $11,743.38 was paid to the Ritz Carleton, of  
which $10,743.38 came from Mr. Ashman’s money. A further $21,805.57 was  
paid to Midtown Business Centre, of which $20,805.57 was Mr. Ashman’s  
money. Four thousand dollars was paid off of a Reeve credit card, of which  
$3,000 was paid by Mr. Ashman’s money.  
[1589]  
Eva and Jay Bernachi have two cashflow charts in Tab 2 of Appendix  
G of the GT Report. The second cashflow chart was examined earlier in the  
cross-examination – see paragraph 1467.  
[1590]  
Regarding the first cashflow chart, on July 1, 2008 the Bernachis  
deposited $305,469.65 in two deposits into the Celebrity-Jakobstettel account  
which had a previous positive balance of $54.20. The first Bernachi deposit was  
$68,463.96. The next transaction was a $50,000 payment to Ms. Reeve of which  
$49,945.80 came from the Bernachis’ money. It is inconclusive as to how this  
-
440 -  
was noted in the books. Fifteen thousand dollars was paid to Ezra Jantzi, of  
which $14,945.80 came from the Bernachis’ money. The transaction was  
recorded in the DPR ledger as relating to Reeve Hotels. There was a $1,000  
cash withdrawal of which $945.80 was the Bernachis’ money. There was a  
$5,200 deposit into DPR and then $237,005.69 was deposited in the DPR  
account by the Bernachis. At this point there was a bank balance of $244,454.85  
of which $5,254.20 may not have been the Bernachis’ money. Further, $220,000  
was transferred to the DPR account, of which $214,745.80 was the Bernachis’  
money. DPR had, prior to the transfer, an overdraft of negative $29,906.66 which  
was paid off using $24,652.40 of the Bernachis’ money. Five thousand dollars  
was then paid to Mr. Boldt which is below the $5,254.20 threshold and thus  
cannot be attributed to Bernachi money. Ms. Westerhout received $115,000, of  
which $109,745.80 was the Bernachis’ money. Seventy-five thousand dollars  
was paid to Mr. Austin, which put the DPR Financial account into overdraft of  
negative $4,906.66. Of the $75,000 paid to Keith Austin, $64,839.14 was the  
Bernachis’ money.  
[1591]  
The Crown suggested that after reviewing 70 charts of following the  
money, certain themes developed. One of them was that a significant amount of  
the money paid to Ms. Reeve was recorded in the books as a loan and the bulk  
was not repaid. It was suggested that the loan entries were a lie due to the  
separation agreement (see Exhibits 221 – 57A and 57B at paragraphs 5.1 and  
-
441 -  
5.2) between Ms. Reeve and Daniel, dated November 26, 2007. The agreement  
required Daniel to pay both periodic and lump sum support. Mr. Nagel indicated  
that, while he had access to Crown disclosure, he did not review this agreement  
as his role was to critique the GT Report, and even at that, he went beyond the  
GT scope of review by looking at the QuickBooks and accounting records.  
[1592]  
The Crown indicated that paragraph 5.8 of the separation agreement  
required $3 million worth of lump sum payments in $500,000 instalments. The  
first $500,000 instalment was due on November 30, 2007. On December 4,  
2007, Ms. Westerhout funded a $500,000 payment to Ms. Reeve (see Chart #1  
in Tab 41 of the GT Report). It was Mr. Nagel’s opinion that the evidence  
outlined by the Crown did not contradict his conclusion that the $500,000  
payment was a loan. He just looked at the GT Report and if the separation  
agreement was significant, it should have been referred to by the GT Report. Mr.  
Nagel acknowledged that IFA standard practice guidelines 600.04 and 600.06  
(see Exhibit 259) required him to present conclusions in an objective and  
unbiased manner and to consider all relevant information that could impact his  
findings and conclusions. Mr. Nagel agreed that the separation agreement and  
amended separation agreement were relevant but were not referenced in the GT  
Report.  
[1593]  
The accounting record entries regarding the loan to Ms. Reeve were  
not inaccurate due to (1) Ms. Westerhout’s payment being five days after the  
-
442 -  
$500,000 lump sum payment was due, and (2) the majority of payments being  
recorded on the date the payment was made (the payments due to Ms. Reeve  
are not consistent with the accounting records). Paragraph 7.1 of the separation  
agreement (Exhibits 221 – 59A and 59B) required Daniel to be responsible for  
the debts and liabilities of the corporation; the separation agreement does not  
cast doubt on the ledger payments. The Crown suggested that IFA guideline  
700.01 prohibits Mr. Nagel from being an advocate for Daniel. Mr. Nagel denied  
he was acting as an advocate for Mr. Reeve contrary to Mr. Nagel’s duty as an  
expert to be independent and impartial – see R. v. D.(D.), 2000 SCC 43, at para.  
52; White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, at  
paras. 1-3.  
[1594]  
In the Nagel Report in Schedule 1A, there is a reference to monies  
going to insurance and financial companies in the amount of $240,030.12. It was  
suggested that not a lot of money went to segregated funds. Mr. Nagel could not  
comment on that.  
[1595]  
In re-examination, Mr. Nagel indicated that Schedules 3A and 3B to  
the Nagel Report pointed out 161 issues, with some categories of issues arising  
more than once. The 41 tabs and 70 charts in Appendix G of the GT Report  
only covered 14 percent of the 15,000 transactions detailed in Appendix E of  
the GT Report. There was no reference to $3 million in subsequent deposits, but  
maybe that is just a timing issue.  
-
443 -  
[1596]  
If Mr. Nagel would have done the investigation, he would have looked  
at much more material including the financial statements, accounting records,  
QuickBooks files, and electronic records to determine what happened.  
[1597]  
The GT Report writers were limited to 375 hours, while Mr. Nagel  
spent 800 hours reviewing material. Given that 15,000 transactions had to be  
reviewed dealing with 18 companies, he would not have accepted the 375-hour  
limitation for an investigation. The review of the charts done by the Crown over  
the past five days factually confirms the deposits and disbursements, but that is  
not a forensic investigation. That exercise does not deal with Appendix C Issues  
#1, #2, or #3 of Mr. Nagel’s Exhibit 3A. Appendix G poses its own series of  
issues, as outlined in Mr. Nagel’s Schedule 3B. The exercise conducted by the  
Crown in cross-examination shows how money was distributed mathematically  
speaking, but that does not change Mr. Nagel’s opinion about improper  
attributions in the GT Report or other conclusions.  
[1598]  
Mr. Nagel would also have looked beyond the 41 alleged victims to all  
investors. The spread between the return of monies and investments regarding  
the victims was much larger than the spread of return of monies and investment  
of the investors outside the 41 alleged victims category. As indicated in  
Appendix 1A of the Nagel Report, the 41 victims invested $11,933,448.67 and  
received back $2,192,620.79 for a differential of approximate $9.7 million. The  
other investors (i.e., investors not part of the group of 41 alleged victims)  
-
444 -  
invested $7,506,538.79 and received back $5,307,182.00 for a spread of  
approximate $2.2 million.  
B. DANIEL REEVE  
1. GENERAL  
[1599]  
Daniel is 56 years old. He was arrested in Collingwood on July 26,  
2012.  
[1600]  
When his companies closed, he lost everything. He looked for work  
and found employment at various locations, finally working for Home Depot in  
Collingwood until the time of his arrest.  
[1601] He married Cheryl Reeve in 1984 after graduating from Collingwood.  
He and his wife adopted Alexander Paul in 1998.  
[1602] A friend of Daniel’s got him interested in stocks. Daniel’s philosophy in  
investing is that, “What you don’t know is costing you the most.”  
[1603]  
Daniel got a number of licences including a life insurance licence and a  
mutual fund licence. He was trained at Manulife and started Daniel P. Reeve and  
Associates.  
[1604] In 1992 or 1993, the philosophy of the investment industry was to have  
clients invest in mutual funds in RRSPs. Daniel felt that mutual funds were  
 
 
-
445 -  
oversold. People were buying mutual funds and were told to buy and hold them  
over the long term.  
[1605] By 2003, Daniel had 400 clients. His approach was to go after middle-  
and lower-middle-class clients who had a little money but lots of questions.  
[1606]  
His approach was to first educate his clients regarding investing. He  
decided to put a collection of common questions and concepts in books in order  
to educate his clients. His first book, The Courage to Be Rich, contained in  
Exhibit 7, was written in 1995. This book was an explanation of investment  
concepts, i.e., the rule of 72 which states that one’s money doubles in the  
number of years that results from dividing 72 by the annual interest rate or return  
that is being earned.  
[1607]  
His second book, Millionaire in You, contained in Exhibit 7, was written  
in 1997 and advanced the theory that investors should not put money into  
RRSPs but should consider segregated funds over mutual funds.  
[1608]  
In 2003, it was Daniel’s third year of business and Daniel P. Reeve and  
Associates was housed in the King Street building in Waterloo. His investment  
philosophy involved (1) daily active management, (2) preferring non-registered  
funds over RRSPs, and (3) preferring segregated funds over mutual funds.  
[1609]  
This philosophy gained popularity and he got referrals and business  
from other advisors. Bryce Carter, a senior advisor with 20 to 25 years’  
-
446 -  
experience, asked Daniel to take over his business. Daniel inherited 2,000 clients  
from Mr. Carter with many coming from working-class backgrounds with  
mortgages, children, and some GIC and RRSP investments.  
[
1610]  
1611]  
Daniel’s philosophy was to educate clients as he got educated.  
[
His third book was The Wealth Effect, contained in Exhibit 7, which,  
for the first time, discussed “the secret of the three buckets.” This book was  
published in 2005. The Three Buckets philosophy was discussed in greater detail  
in a subsequent book, The Secret of the Three Buckets.  
[1612]  
Daniel’s fourth book was entitled The Meaningful Life and was  
published in 2005. The book is contained in Exhibit 7. It was an was an estate  
directory which included discussions regarding wills, powers of attorney, and the  
role of the Public Guardian and Trustee.  
[1613]  
Daniel’s fifth book was the Secret of the Three Buckets, contained in  
Exhibit 7, which was published in 2003 and 2006. Exhibit 281 is a PowerPoint  
presentation that outlines the Three Buckets approach. The first Bucket is  
RRSPs. RRSPs are the least preferred investment because when monies are  
withdrawn, that money is treated as income and can be taxed at the top marginal  
tax rate, which at that time was 46 percent (it is now 53 percent). The second  
Bucket is non-registered segregated funds which can be leveraged by debt, and  
interest paid on that debt is tax-deductible. Further, the monies, taxed only when  
-
447 -  
withdrawn, are taxed as capital gains at a maximum of 23 percent, or half the top  
marginal tax bracket of 46 percent. The third Bucket is a universal life insurance  
policy which provides a deferred tax shelter and a death benefit. The cash value  
of the policy can be withdrawn and it is taxed at the lower capital gains rate.  
Alternatively, the policy can be assigned to the bank as collateral and the  
investor can borrow against it and pay no tax at all (just interest on the loan). At  
death, the death benefit pays off the loan and the rest is paid to beneficiaries as  
a non-taxable benefit.  
[1614]  
The risk profile of the investments in the Three Buckets approach is,  
from least risky to most risky, universal life, segregated funds, mutual funds, then  
individual stocks.  
[1615]  
The Three Buckets approach was sent to the compliance departments  
of many organizations such as Manulife, Sun life, Canada Life and many others  
and it was considered to be a sound and unique investment approach. The  
Secret of the Three Buckets philosophy was submitted for trademark protection.  
[1616]  
Daniel wished to dot all the i’s and cross the t’s so he submitted the  
concept prepublication to a lawyer, compliance departments, accounting firms  
and a senior tax auditor, Jim McKenzie, who worked for Canada Revenue  
Agency.  
[1617]  
Mr. McKenzie determined that the Three Buckets approach complied  
-
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with the rules and he liked it so much, that he approached Daniel to become a  
client and implement the approach for Mr. McKenzie. Mr. McKenzie indicated  
that the Three Buckets approach complied with tax rules but he did not want Mr.  
Reeve to use television advertisements to publicize it.  
[1618]  
Mr. McKenzie retired from Canada Revenue Agency and worked three  
days a week as an independent financial advisor. Mr. McKenzie would advise  
Daniel’s clients on tax issues. Exhibit 282 is a series of cheques paid to Mr.  
McKenzie which indicate he worked at Daniel’s firm from at least August of 2004  
to November of 2005. Mr. McKenzie worked for two to three years and eventually  
retired and was replaced by the firm Lipton, Wiseman, Altbaum & Partners LLP  
(now Lipton LLP).  
[1619] The Exhibit 281 Three Buckets PowerPoint was given to potential  
clients and presented at group gatherings.  
[1620]  
A sixth book, The Mirrored Butterfly, contained in Exhibit 7, was  
published in July of 2007 and dealt with alternatives to GICs and utilized  
segregated funds in a conservative leverage strategy. It was based on a true  
case study. The gist of the philosophy is that, for example, one invests $100,000  
in segregated funds and then borrows three times that ($300,000) to put in  
segregated funds as well. The gains on the first $100,000 invested pay off the  
interest on the loan for the other borrowed $300,000. Variations of the philosophy  
-
449 -  
would also provide funding for a universal life insurance component as illustrated  
in Mirrored Butterfly at page 100.  
[1621]  
At page 77 of Mirrored Butterfly, the concept of the workhorse account  
is explained. For example, in a 3:1 leveraged loan situation, the workhorse  
account is invested in segregated funds and is used to pay off the interest on the  
leveraged loans. This gives the bank protection as the loans are secured by the  
underlying investments which form collateral for the bank.  
[1622]  
Daniel, using the leverage philosophies outlined in Mirrored Butterfly,  
got the idea to apply these leverage loan philosophies to mortgage situations. He  
came up with the idea for a mortgage acceleration program to pay off mortgages  
earlier and published a new book in November of 2007 entitled the Millionaire  
Mortgage.  
[1623]  
Again, in order to dot the i’s and cross the t’s, he submitted the idea to  
a law firm, compliance departments, tax firms, and accounting firms – see, for  
example, Exhibit 285 email to Erich Wachtel at IDC Financial. There were no  
issues raised either pre- or post-publication of Millionaire Mortgage. Mr. Reeve  
prepared a PowerPoint based on the Millionaire Mortgage concept that was  
made Exhibit 20 – 55A.  
[1624] Page 3 of the Millionaire Mortgage PowerPoint in Exhibit 20 – 55A  
outlines the ten-step process. The process basically involves appraising one’s  
-
450 -  
home; getting a new mortgage (based on 80 percent of the home’s value) with a  
5 to 40-year amortization period and bi-weekly payments; paying off the old  
3
mortgage; taking the difference between the higher new mortgage and the lower  
old mortgage and investing that difference in a workhorse account, which in turn  
funds a new line of credit, which is obtained from the bank; the proceeds of the  
loan are invested in segregated funds. The workhorse account pays off the  
interest on the line of credit, which is tax-deductible. Meanwhile the segregated  
funds appreciate in value and eventually pays off the mortgage in a much shorter  
time than would have otherwise been possible. Over time, the segregated funds  
continue to increase in value and can provide significant cash value once the  
mortgage is paid off. Segregated funds are selected instead of mutual funds,  
since segregated funds are an insurance product and provide guarantees and  
advantages not available with mutual funds. A list of advantages of segregated  
funds is outlined at pages 4 to 6 of the Exhibit 20 – 55A PowerPoint.  
[1625]  
One of the key components of the Millionaire Mortgage was that, while  
rates of return were not guaranteed, a number of measures were implemented to  
maximize returns: (1) daily active management of portfolios, (2) resets of  
investments after a 10 percent gain, and (3) a stop-loss once any individual fund  
suffered a 10 percent loss.  
[1626] The workhorse account had to be invested in a liquid, conservative,  
non-market vehicle. Examples include laddered GICs, money market funds,  
-
451 -  
Canadian Savings Bonds, and laddered term deposits with insurance companies.  
Daniel was not a fan of the Fidelity T-SWPs, which are a return of capital and  
interest over a set period. T-SWPs are not guaranteed and incur tax  
consequences on the interest portion earned.  
[1627]  
The workhorse account could be invested in private equity. There  
would be a conversation between the client and his or her financial advisor  
regarding the client’s options. Daniel would be called in by the financial advisor to  
discuss private equity options. In 2008, there was a severe market meltdown and  
not many people wanted to jump in. The private equity would be short-term for  
one-, two or five-year terms.  
[1628]  
Page 64 of Millionaire Mortgage compares bank mortgage insurance  
and private life insurance. Page 184 of Millionaire Mortgage indicates that the  
author is not a licensed advisor or representative.  
[1629]  
Exhibit 283A is a Millionaire Mortgage application that was prepared  
after submitting it to compliance and legal advice. Exhibit 283B is a  
questionnaire that was prepared to survey potential Millionaire Mortgage clients.  
[1630]  
Exhibit 284 is comparison sheet comparing the so-called Smith  
Manoeuver to the Millionaire Mortgage program. Fourteen items are compared,  
including the Millionaire Mortgage loan proceeds being invested in segregated  
funds with deposit and death benefit guarantees and daily active management of  
-
452 -  
portfolios that include locking in gains and stop-losses. This was a system that  
enjoyed a history of 14 years of no annual losses.  
[1631]  
Daniel himself had a few RRSPs but over time felt that they were not a  
good investment so he withdrew his RRSPs either slowly or all at once. The  
years 1994 and 1995 was the last time he had held them.  
[1632]  
Daniel obtained trademarks for his investment ideas in order to protect  
his intellectual property. The law firm Sutherland Mark helped with the trademark  
applications. Exhibits 286A, 286B, 286D, 286E, and 286I are trademark  
registrations and/or filing notices for trademarks relating to his books. Exhibits  
286C (relating to Butterfly Phenomenon), 286F (relating to Corporate Angel, a  
formalized program to reimburse his clients for referrals) and 286H (relating to  
the Wealth Institute) were other trademarks obtained and/or applied for.  
[1633]  
Daniel incorporated his companies for tax advantages and to limit his  
personal liability. Exhibits 287 to 300 contain a variety of corporate documents  
relating to:  
1.  
Daniel P. Reeve & Associates Inc., which was replaced by DPR  
Financial Inc. in September of 2006. DPR, on October 1, 2007, in turn  
absorbed Alex Realty (a real estate company operated by his wife until  
their divorce proceedings) and Emerald Met Inc. (a retail experiment at  
Stone Road Mall in Guelph).  
-
453 -  
2
.
.
Celebrity Management International Inc. (a holding company for  
Jakobstettel Inn). Jakobstettel Properties Inc. replaced Celebrity  
Management on May 5, 2008.  
3
Jakobstettel Estates Inc., which replaced Experience Restaurants Inc.  
on August 21, 2008 and bought the property at 2 Isabella Street in  
order to open a spa next to the Jakobstettel Inn.  
4
.
.
Reeve Hotels and Resorts Inc., which was a holding company.  
5
Millionaire Executive Services Inc., which on May 9, 2007 replaced  
Select Executive Services Inc. (incorporated in 2006 with Tony Herlick  
and Daniel Reeve as directors). A year later, on August 5, 2008, Mr.  
Herlick resigned as driver and director of Millionaire Executive Services  
Inc. This company was a limo service offering special deals to DPR  
clients.  
6.  
Millionaire Wheels Inc. This company provided special car purchase  
deals for DPR clients. It was not a generator of income.  
7
.
.
DPR Windsor Inc. (of which Robert Pigeon was a director).  
8
Millionaire Travel Inc. This was a travel agency, offering special deals  
to DPR clients. It operated out of DPR Windsor in Windsor.  
-
454 -  
Millionaire Shopper Inc., which would provide a smart card program in  
009 to DPR clients entitling them to special discounts from local  
merchants.  
9.  
2
1
0. Millionaire Multi Media Inc. which replaced Millionaire Media Inc. which  
had replaced Millionaire Auctions Inc.  
1
1. Eveson Travel Inc. (later changed to Millionaire Travel Inc.). Laura Ann  
Williams and Daniel Reeve were the directors in December of 2006.  
Laura Ann Williams resigned her shares and her director status on April  
11, 2008.  
1
1
1
2. DPR London Inc.  
3. DPR Waterloo Inc.  
4. Millionaire Mortgage Inc., which, on November 28, 2007, replaced  
Millionaire Mortgages Inc.  
[1634]  
The Certificate of Incorporations, including the certificates regarding  
Celebrity Management Inc., Reeve Hotels and Resorts Inc. and Millionaire  
Mortgages Inc. (later Millionaire Mortgage) were virtually identical boilerplate  
documents which, at paragraph 9, had provisions for these private companies to  
borrow money and issue debt obligations. Paragraph 5 of the certificates as well  
stipulated there were no restrictions on these corporations.  
-
455 -  
[1635]  
A number of the corporations also had a “consent to auditor”  
exemption, which indicated the shareholders were waiving the appointment of  
auditors.  
[1636]  
Daniel had a lot of advisors coming online. He changed his firm’s name  
from Daniel P. Reeve & Associates Inc. to DPR Financial Inc. (see Exhibit 287A  
change of name form dated September 28, 2006) as he decided that it was not  
about one guy anymore and he was going to retire from advising. In January,  
2007 he was no longer a financial advisor.  
[1637]  
Exhibit 301 is an organizational chart of DPR Financial. At its peak,  
there were eight locations: Windsor, London, Cambridge, Waterloo, Mississauga,  
Toronto, Aurora and Peterborough. In the last half or quarter of 2008, they closed  
offices in Windsor and London. Eventually the Waterloo office was the only office  
remaining.  
[1638]  
In October of 2008, Janice Berkin took charge of Millionaire Mortgage.  
David was Daniel’s number-one advisor, once Daniel stepped down and David  
was the acting president of DPR. The financial advisors were not employees but  
independent agents who were granted offices and use of rooms in the DPR  
offices. The financial advisors split their commissions with DPR Financial.  
-
456 -  
[1639]  
Exhibit 302 is an internal DPR document outlining its financial  
planning process and elements. Only 8 percent of Canadians have a financial  
plan so this was part of Daniel’s attempt to address this issue.  
[1640]  
Exhibit 303 is a red file that was opened for all clients. It consists of  
two sets of enclosures: the left pocket and the right pocket. Daniel prepared the  
forms to reflect the vision of the company.  
[1641]  
The left pocket of Exhibit 303 was designed to address leverage  
issues. The concern was that, in Daniel’s words, “once people hear the rate [of  
return], they become deaf to everything else.”  
[
1642]  
package indicates that, regarding professionally managed investment funds,  
statements will be forwarded semi-annually.” The investment policy statement in  
The right pocket of Exhibit 303 dealt with client expectations. The  
“
the package indicates that segregated funds are monitored on a daily basis,  
clients are contacted regarding resets when gains reach 10 percent or higher,  
clients are contacted regarding stop losses when losses reach 10 to 15 percent  
and there is no liability on DPR Financial Inc. for not processing resets or stop-  
losses.  
[1643]  
The right package of Exhibit 303 includes applications for courses  
such as “The Client Experience” and “The Wealth Institute.” The package also  
contains nine waiver forms which are signed by the clients when refusing  
-
457 -  
programs and investments. In short, there was a waiver for everything that DPR  
Financial Inc. was offering.  
[1644]  
Daniel said, “We loved our clients,” and described the red file as “a way  
to protect them.” Clients could get copies of the red file documents if they wanted  
them.  
[1645]  
From January 2007 onward, Daniel was not an active advisor. The job  
of the financial advisor was to inform the clients regarding the private equity  
investments (i.e., Jakobstettel, Millionaire Mortgage) and the risks involved. If the  
client was interested in a corporate bond, Daniel was called in to discuss that  
option. Daniel would tell the clients that he was not an advisor any longer and  
that he owned the company that was issuing the corporate bond. It was the role  
of the financial advisors to discuss all options in accordance with the clients’ risk  
tolerance. David and Steve Haney would “tee” the clients up but they had to  
discuss the various options with the clients. The decision was made with the  
financial advisor and the client after discussing the options. Daniel was not  
licenced but had a duty of care regarding private equity. Daniel set up the  
process but it was up to the financial advisor to determine whether the  
investment was appropriate. Daniel would meet the client separately when  
discussing the corporate bond investments.  
-
458 -  
[1646]  
Daniel repeated that, regarding the private equity investments, he  
made sure that the clients were aware that he was not a financial advisor and  
that he owned the companies involved in the private equity investments. Daniel  
reviewed that with all of the clients but did not put anything in writing. He and his  
legal department did not feel it was necessary to get that understanding in  
writing. Compensation to the financial advisors regarding their compensation for  
private equity investments was done on the same basis as segregated funds’  
investments so that there was no bias.  
[1647]  
Regarding private equity investments, Daniel would tell the clients why  
the company was expanding and why capital was needed, declare his interest in  
the company, and discuss the rate and return.  
[
1648] Financial plans were drawn up for clients by Mike Floyd (who had a  
CFP designation) and Barbara Menard. Examples can be seen in Exhibit 130  
Bernachis) and Exhibit 49 – 3J (Dr. Bernstein).  
(
[1649]  
Mr. Floyd was in charge of the Wealth Institute which was a university  
set up by DPR Financial Inc. to educate its clients. The tuition was initially $8,000  
per year but was reduced to $5,000 when it started. Exhibit 304 is a student loan  
application wherein the Royal Bank would lend $20,000 for the four-year Wealth  
Institute program.  
-
459 -  
[1650]  
Exhibit 305 is the Wealth Institute Modules that outline the first year  
curriculum. Exhibit 306 outlines the time schedule for the classes at DPR  
Waterloo, DPR Windsor and DPR London for the fall of 2008.  
[
1651] In 2008, investments had occurred in buildings in Waterloo (85 percent  
complete in fall of 2008) and DPR Windsor (99 percent complete in the fall of  
008). This was in accordance with plans made in 2007.  
2
[1652]  
Exhibit 307 is an email from Mr. Floyd that details the list of students  
for the Waterloo location scheduled to start in the fall of 2008. Daniel indicated  
that the classes were so good that he knew he would have to make it available to  
the general public instead of just DPR clients as originally planned.  
[1653]  
Exhibit 308 is an email from Mr. Floyd dated January 1, 2008 outlining  
the status of the Wealth Institute. Under the heading “Funds Owed,” US$1,305  
was owed to a past speaker, Brian Tracy. One hundred ninety dollars was owed  
to Artistic Photography, and PA Productions was owed $1,680. Daniel had a  
meeting with Diane Intini regarding paying these bills. The amount was not  
enormous, but DPR Financial Inc. was hemorrhaging at the time. The Wealth  
Institute needed 100 students to break even, and while they were close to that  
target, they needed more students. They could not go to DPR for a loan. It was  
decided to delay classes until April, May or June of 2008 due to financial  
concerns.  
-
460 -  
[1654]  
In April of 2009, DPR Financial Inc. became a trainwreck and it was an  
awful experience. “A bomb went off,” which resulted in all the companies closing  
down.  
[1655]  
Kevin Holt was in charge of licensing of intellectual property and a  
number of initiatives taking place at the time of the Exhibit 301 organizational  
chart (dated May 8, 2007).  
[1656]  
Regarding finance, Exhibit 301 shows that Karen Gingrich was in  
charge. Ms. Gingrich came on as a full time bookkeeper at about the time that  
the DPR Financial name change took place. Previously, Cynthia Taylor had done  
all the books. Ms. Gingrich did the day-to-day banking and the DPR Financial  
books. Ms. Taylor did the Jakobstettel and sister companies’ banking and books.  
[1657]  
Each of the 18 companies had their own bank accounts, with DPR  
Financial possibly having two bank accounts. There were no trust accounts with  
the exception of the travel company due to Travel Industry Council of Ontario  
regulations. DPR Financial Inc. did not have a trust account and there was no  
need for one. Deposits by clients for mutual funds and segregated funds were  
made out to the institution involved.  
[1658]  
The only credit card was Daniel’s personal Visa card. There had been  
a line of credit with TD Bank for DPR in the past for $20,000 to $25,000 but  
Daniel did not think they still had it in 2007 to 2008. In 2007 to 2008, DPR did not  
-
461 -  
need more than $20,000 to $25,000 overdraft protection. Daniel, in chief, testified  
at page 24 of the February 29, 2016 transcript specifically that there was no  
purpose in having a $100,000 overdraft, so he believed (regarding the years  
2007 and 2008) that DPR carried overdraft of $20,000 to $25,000. (It is to be  
noted that this evidence was contradicted in cross-examination where Daniel, in  
trying to explain the source of the $500,000 payment to Ms. Reeve from Ms.  
Westerhout, and payments to Ms. Reeve from other alleged victims, testified that  
the support/equalization payments could have been funded from a DPR  
overdraft, which from 2005 to December of 2008 was in the range of $50,000 to  
$250,000. Daniel, as would happen often throughout his evidence, had no  
documentation to support this contention and indicated that the TD Bank lost that  
information – see pages 38-39 of the July 6, 2016 transcript. Further, the very  
next day, Daniel testified that a $100,000 that mostly came from Kevin Hillman  
and that that Daniel personally transferred to Ms. Reeve from the Celebrity-  
Jakobstettel account could have come from overdraft from the Jakobstettel  
account because Daniel had overdraft protection on this account, as well, from  
$50,000 to $250,000. As will be discussed subsequently, there were no bona  
fide examples in the evidence of any overdraft over $100,000 in the DPR and  
Jakobstettel accounts). The stark contrast between his evidence in chief and his  
evidence on cross became typical; Daniel would change his testimony in order to  
provide an explanation for the differing circumstances as they were put to him.  
-
462 -  
[1659]  
Ms. Gingrich had signing authority for DPR Financial Inc. but David  
Reeve had no signing authority. Money from institutions usually came in on  
Friday. Daniel was too busy to look after the day-to-day finances so the  
bookkeepers looked after it. Out of convenience, Daniel would deposit cheques  
for private investments and then give Ms. Taylor or Ms. Gingrich the receipts. Ms.  
Taylor and Ms. Gingrich knew where the priorities lay regarding payments for  
Hydro, interest payments to clients, Canada Revenue Agency, etc. When they  
were hired, Daniel told them what the priorities were.  
[
1660]  
business, there was more than enough to pay these bills, with the exception of  
crunch time” at the tail-end of 2007 and early 2008, at which time decisions had  
to be made regarding priority of payments.  
Regarding payroll and utility payments, for most of Daniel’s history in  
“
[1661]  
In response to my question regarding what “tail-end of 2007” meant,  
there was a long explanation, but Daniel basically stated this meant October and  
November of 2007.  
[1662]  
Daniel Reeve’s explanations for the financial problems were that (1) he  
gave up his licence in January of 2007 and it took until April or May of 2008 to  
transfer his clients to DPR’s other financial advisors; (2) after his divorce, DPR  
had to move to another location; and (3) the markets got really bad in 2008.  
-
463 -  
[1663]  
Ms. Berkin, Ms. Gingrich, Ms. Ruggle and Daniel would look at all of  
the accounts and determine what was available for payments. Tough decisions  
were then made as to who or what would get paid.  
[1664]  
Clients were owed interest payments and were demanding return of  
principal amounts that had been invested. It was the decision of the bookkeepers  
as to what was available from monies coming in and intercompany transfers. The  
bookkeepers then decided who could be paid. His involvement in that process  
was virtually none. In 2008, Daniel was busy bringing in new business and doing  
new deals. Daniel did not have the ability to decide who was to be paid or in what  
order.  
[
1665]  
private equity deals to (1) facilitate the agreement for a fixed rate and fixed term;  
2) demonstrate acceptance of the agreement; and (3) expedite the transaction,  
as Daniel did not have time to wait to see if ordinary cheques would clear.  
Daniel took certified cheques, money orders and bank drafts for his  
(
[1666]  
Collins Barrow was his accounting firm. His personal accountant was  
Dave Webb whom Daniel met, on average, four times a year, but more often  
from 2005 onwards. The accountants did the tax returns, not the bookkeepers.  
Daniel had no involvement with the day-to-day entries of the company. His only  
conversation was with intercompany transfers.  
-
464 -  
[1667]  
Daniel was paid his salary either bi-weekly or monthly or quarterly.  
Daniel did not live a high lifestyle. In 2007, 2008 and maybe 2006, Daniel did not  
take a salary. He would take a shareholder loan as he would not have to pay tax  
on that. If he took a salary, he would pay 46 percent tax and it would be more  
difficult to pay loans back. He did not take dividends.  
[1668] With intercompany transfers, both companies would show the loan and  
the loan would have to be paid back by the receiving company.  
[1669]  
Loans to Ms. Reeve were done from DPR, pertaining to her company  
Alex Realty. The loans were with the expectation that they would be paid back  
with interest.  
[1670]  
As part of his divorce, Daniel talked to two lawyers and his accountant.  
It made sense to pay Ms. Reeve her support and record it as a loan and then  
later forgive the loan. After I questioned Mr. Reeve as to exactly how that would  
work, Mr. Reeve said his shareholder loans increased to pay support for Ms.  
Reeve, and there was only one separate $500,000 loan with the expectation that  
she was going to be paid back and Daniel would forgive the loan later. Daniel  
admitted this explanation was convoluted.  
[
1671]  
1672]  
Over the indictment period, Daniel took out $165,000 in payroll.  
[
Exhibit 309 is tool designed by Daniel regarding six different portfolios  
that the financial advisors at DPR Financial were to construct for their clients.  
-
465 -  
The portfolios are segregated funds that ranged from safety, safety/income,  
income/growth, growth/income, growth, and aggressive growth. The risk  
increases gradually from safety (least risk) to aggressive growth (most risk). The  
clients were matched to a portfolio in accordance with their risk tolerance as set  
out in the Investor Review in Exhibit 303.  
[1673] There was a five-step review process in selecting the funds in Exhibit  
309. The criteria were:  
1
.
.
Fund families had to be credible with a long track record;  
2
Fund history had to rank them in the top funds, as set out by rating  
agencies such as Morningstar;  
3
.
.
The management expense ratio had to be taken into account;  
4
The fund manager’s experience and reputation had to be taken into  
account; and  
5.  
The top ten holdings in a fund had to be examined to determine why  
those holdings were selected by the fund. What was in the fund  
depended on asset allocation within the fund.  
[1674]  
The last two pages of Exhibit 309 were designed for the workhorse  
account that was used for the Millionaire Mortgage strategy. Daniel did not want  
mutual funds, segregated funds or T-SWPs for the workhorse account funds and  
-
466 -  
he recommended to the financial advisors that these not be used for that  
purpose. The workhorse account was required to pay the interest on the  
leveraged loans for the Millionaire Mortgage programs. Therefore the only place  
to go was no-load money market funds as set out in the last two pages of Exhibit  
309. Daniel indicated that he wanted to temper the overall risk.  
[1675]  
The Exhibit 309 portfolios were reviewed by compliance and they  
were acceptable. Tom Handler was in charge of monitoring the portfolios and  
structuring them. Mr. Handler handled the daily active management.  
[1676]  
Private equity investments were used for the workhorse account.  
Daniel made them available to clients. The financial advisor was to determine the  
risk with the client and then phone Daniel to see what was available for private  
equity and their term and rate of return. The financial advisor would contact  
Daniel to arrange a meeting with the client and that meeting would take place  
with the client present.  
[1677]  
Daniel indicated his corporate bonds met the requirements of income  
and safety and his private equity bonds were low-risk. Daniel would tell the client  
that he was the owner of the company and that he was raising capital to  
undertake renovations.  
[1678] Regarding the Breadalbane, private equity for a Breadalbane loan was  
used for workhorse accounts. It would qualify as it was a contract with Reeve  
-
467 -  
Hotels, which would take the risk. The deal was not with the Breadalbane but  
with Reeve Hotels. Reeve Hotels would service the debt and that would lower the  
risk. The plan was to acquire the Breadalbane and do renovations with Reeve  
Hotels would taking the risk. Reeve Hotels held other properties such as the  
Jakobstettel Inn, Jakobstettel Estates, Swan Lake and the Plaza Hotel.  
[1679]  
Reeve Hotels was allowed to raise debt as long as the shareholder and  
director approved (Daniel was the only director and shareholder). The  
Breadalbane was the underlying asset. It was bricks and mortar and commercial  
real estate with a long history of business. The Breadalbane had an Inn, two  
bars, a dining room and a wedding business. It was safe. The Breadalbane  
acquisition was not yet closed and it was stupid to make payments immediately;  
payments were annual payments due one year down the road.  
[1680] If the financial advisor did not agree to a private equity investment, the  
financial advisor would not refer the client to Daniel.  
[1681]  
The workhorse account needed to receive payments from the  
investments in the workhorse account (in order to service leveraged debt), and  
that is why Daniel did not want segregated funds, GICs (the payments were too  
low). There was a need for income either monthly or annually and that discussion  
was between the financial advisor and the client. Daniel was not privy to that  
conversation.  
-
468 -  
[1682]  
Brad Ashman is an alleged victim. Mr. Ashman testified that he had  
discussed his Millionaire Mortgage application with David and that his mortgage  
funds (in the workhorse account) were to be invested in T-SWPs. Daniel testified  
that once the Millionaire Mortgage concept had been approved, there were  
training sessions with the financial advisors where Daniel told them that T-SWPs  
were inappropriate vehicles for the workhorse account. Daniel was shocked  
when he heard from Mr. Ashman that David had recommended a T-SWP. T-  
SWPs, according to Daniel, are complicated instruments that clients, including  
Mr. Ashman, do not understand.  
[1683]  
Daniel called David afterward and told David that there would be no T-  
SWPs and that David had crossed the line by recommending a T-SWP that was  
not in the client’s interest. Daniel told David to call Mr. Ashman and tell him that  
Daniel was not proceeding that way but was doing private equity. (Note: Exhibit  
3
09, regarding possible workhorse account portfolios, does not mention either T-  
SWPs or private equity. Exhibit 309 has a last revision date of October 15,  
008.)  
2
[1684]  
Daniel met with Mr. Ashman either on November 3, 2008 or a week or  
two prior and went to his house. Daniel explained that a T-SWP is treated  
generally as a return of capital, but if it pays 8 percent on $100,000 but the return  
is 4 percent, half is interest and half is return of capital, with the interest being  
taxable. If the T-SWP has a loss, as happened in 2008, but then goes up, the  
-
469 -  
adjusted cost base is lower and the largest majority of payments becomes  
interest and is taxable. When this was explained to Mr. Ashman, he agreed to go  
with the private equity option.  
[1685]  
Daniel told Mr. Ashman that Millionaire Mortgage was a new company  
which he owned. The company was operating out of the DPR building in  
Waterloo and was about to undergo a massive expansion. Daniel needed capital  
to launch the company. Daniel explained that the private equity was a fixed  
instrument and that the longer a term selected, the better the interest rate. Daniel  
indicated that this private equity investment would provide the relative safety for  
the workhorse account which Mr. Ashman wanted. Mr. Ashman wanted the  
monthly income, and this was supposed to start being paid in January.  
[1686]  
Several days after November 3, 2008, the mortgage company informed  
Mr. Ashman that he they had over-valued his property and they wanted $20,000  
returned right away. Mr. Ashman phoned in a panic wanting $20,000 back  
immediately. David had just left, taking a number of Daniel’s staff, financial  
advisors and clients with him. David was the largest producer for DPR so when  
he left, there was a substantial loss of revenue to DPR. David was frothing the  
clients into a frenzy and causing a nightmare. This, in turn, caused cashflow  
problems for DPR Financial.  
-
470 -  
[1687]  
Mr. Ashman testified that Daniel had said that it was difficult to get the  
money back since the money was in the bond market. Daniel testified that, in  
contrast, that conversation never happened. Mr. Ashman also testified that there  
was no discussion at all regarding private equity; Daniel testified that too was  
untrue. Further Mr. Ashman indicated that the meeting with Daniel was very brief.  
Daniel said that the meeting was not brief but lasted one hour to 75 minutes.  
[1688]  
When Daniel gave up his licence, Daniel moved all his clients except  
some “B” clients to David. A smaller group of “A” clients had gone to Steve  
Haney and some clients went to Paul Randall. David got the lion’s share of  
clients and it took all of 2007 to 2008 to effect the transfer of clients. David got  
greedy over some unspecified matter.  
[1689]  
There were cashflow problems in 2008 due to a number of things:  
David’s departure, the stock market in a state of free fall, and people wanting to  
undo their investments. DPR respected its clients, but things got really bad in  
October and this accelerated into December. There was one individual who was  
flaming things up. However, mortgage brokers were sending business to DPR  
Financial pursuant to the Millionaire Mortgage program.  
[1690]  
Daniel voluntarily gave up his licence in January 7, 2007 to concentrate  
on growing the business. In 2006, his career (from 1993 to 2006) had peaked  
and he had hit his personal milestones. He had done everything a financial  
-
471 -  
advisor could do and was named in the Manulife Hall of Fame. The financial  
advising business had taken a toll on his marriage and on him personally.  
[1691]  
Daniel wanted to launch the Wealth Institute and it was time for  
someone else to run DPR Financial. David took over as acting president and  
Daniel transferred his business to David, Mr. Haney and Paul Randall. David was  
to pay Daniel 1.5 to 2 times yearly earnings to Daniel. In January 2007, Ms.  
Berkin and Ms. Ruggle were aware that Daniel had given up his licence. There  
was a general staff announcement in around April to July of 2007 and David took  
a more active role in the meetings.  
[1692]  
After 2007, Daniel did not represent to clients that he was a financial  
advisor, as this would get him into trouble with regulators and could lead to his  
being sued. Daniel signed off as a financial advisor on January 7, 2007. The  
MGA regulator was aware of the change. By January 10, 2007, Daniel was not  
licenced. In 2007, there was dialogue that Daniel was not licenced. In 2008,  
when the bulk of private equity investments were made, it would not have come  
up. He told the clients he was raising capital for his companies.  
[1693] From 2007 onwards, there was disclosure both in his books and  
presentations that Daniel was not licenced.  
[1694]  
David was acting president of DPR from January 2007 until March of  
2008. In April of 2008, David became president as Daniel was satisfied with  
-
472 -  
David’s performance with Daniel’s clients. David never became president. At the  
end of 2008, David was supposed to cut Daniel a very large cheque of about  
$1.2 to $1.5 million based on 1.5 to 2 times earnings over the two years of 2007  
and 2008. Daniel was counting on that money to pay off shareholder loans and  
owe nothing. There was no paperwork to support this arrangement. It was  
planned that in 2009 that David would get shares in DPR on a 50/50 basis with  
Daniel.  
[1695] In the fall of 2007, there were cashflow problems. Renovations were  
taking place in three locations.  
[1696]  
After the divorce, a new location was found in Waterloo in 2008 as they  
could not use 46 Cambridge Street anymore (Ms. Reeve received that building  
as part of the divorce settlement). The Waterloo project was enormous as they  
wanted a quality location to make a lasting first impression. The building was  
renovated by Grand River Contracting operated by Len Brunen. Mr. Brunen had  
done some projects at the Jakobstettel. The renovation was professional but not  
ostentatious but with some luxury to impress clients.  
[1697] A significant amount of money was spent on the Waterloo project in  
2008 but Daniel could not say how much or give a ballpark figure.  
-
473 -  
[1698]  
There were renovations at the London location in the last part of 2007  
and early 2008, and the lease was signed in 2008. London was small with three  
rooms and a washroom and the renovations only cost about $80,000.  
[1699]  
Robert Pigeon, a long-time client, was a partner in the Windsor project  
where extensive renovations had to be done. Daniel built a theatre to house the  
Wealth Institute which was scheduled to go there in the spring of 2009. Robert  
Pigeon spent hundreds of thousands of dollars on the renovation and DPR  
Windsor took on debt through intercompany loans.  
[1700]  
All the renovations were completed in 2008 and all the sites were  
operational by September of that year. In retrospect, Daniel would not have done  
the renovations as he thought, when it was over, it was too much.  
[1701]  
With retrospect, the timing of the renovations was not great. However,  
in January of 2008, there was no reason to believe any difficulties were afoot.  
When Windsor opened in June or July of 2008, mortgage brokers started to go  
there and it attracted some independent financial advisors such as Chris Bendo;  
potential clients were looking for alternatives to mutual funds and RRSPs.  
[1702]  
DPR London’s renovation expenses of $80,000 were covered by DPR  
Financial. DPR Waterloo’s renovations were covered off by commissions,  
licensing arrangements and monies owed to it. Also intercompany loans and  
overdrafts were available. There were no other plans for expansion.  
-
474 -  
[1703]  
In 2008, there were difficulties paying the bills due to the stress of the  
physical moves and clients’ market concerns. There was a cash crunch starting  
in September onwards. In October, the cash crunch got worse.  
[1704]  
Regarding the Millionaire Mortgage concept, Daniel incorporated it due  
to advantages regarding liability and marketing. Daniel saw the potential in  
November of 2007. Daniel thought that Millionaire Mortgage would be bigger  
than DPR. Daniel came out with the Millionaire Mortgage book in November of  
2007.  
[1705]  
The next step was to do a beta test and try it with mortgage brokers.  
Daniel did this in the last week of November 2007, all of December and into  
January and February of 2008.  
[1706]  
Exhibit 310 is a Millionaire Mortgage Letter of Intent dated November  
30, 2007 indicating that the book version was to be released in four days. This  
particular letter was sent to Joe Sammut but a number of other brokers were  
contacted over a three-month period months who liked the idea and gave Daniel  
positive feedback.  
[1707]  
Joe Sammut phoned for an urgent meeting and met with Daniel in  
February of 2008. Mr. Sammut was a mortgage broker and thought the idea was  
great and wanted to broker a national deal with Mortgage Architects, a large  
mortgage brokerage. Daniel testified that he was “sitting on the 6-49 [lottery].”  
-
475 -  
[1708]  
Exhibit 311 is an agreement dated February 13, 2008 between  
Millionaire Mortgage and Joe Sammut. This is a licensing deal drawn up by  
Daniel’s lawyers. Article 8.3 of the deal obligated Joe Sammut to broker a  
minimum of 50 Millionaire Mortgages per quarter, or 200 per year. It would start  
with Ontario and spread out. Remuneration depended on the source of the client,  
i.e., whether the client was a DPR or mortgage broker client or from somewhere  
else.  
[1709]  
Exhibit 312 is a Millionaire Mortgage PowerPoint outlining how the  
commissions were to be split depending on the source of the client. Daniel  
Reeve estimated that the possible commissions for DPR would range from a  
minimum of $1,000 to an average $5,000 per case with 200 cases per advisor. It  
was his estimate that, within a year, 1,000 brokers would be engaged and the  
commissions realized would pay off every debt in every one of the Reeve  
companies.  
[1710]  
Mr. Sammut felt that one mortgage broker could generate 200  
Millionaire Mortgages per year and that 20 brokers would be involved at first.  
This would mean that 4,000 Millionaire Mortgages would be generated and at an  
average of $5,000 per mortgage, $20 million would be earned by Millionaire  
Mortgage. It was anticipated that, by the end of 2009, there would be 1,000  
financial advisors and 1,000 mortgage brokers involved.  
-
476 -  
[1711]  
Exhibit 313 is an email to Daniel dated March 3, 2008 sent by James  
Deakin from Sun Life Financial, indicating that he was very interested in the  
Millionaire Mortgage concept and that there was significant opportunity for  
everyone (which included Daniel, Sun Life, IDC Financial, CI Funds and B2B  
Trust). B2B Trust was interested in financing the lines of credit for the purchase  
of segregated funds. It was proposed that the workhorse account would contain  
no-load segregated funds. Millionaire Mortgage would no longer offer corporate  
bonds in the workhorse account as the segregated funds had to be the exclusive  
product.  
[1712]  
Exhibits 314 (dated March 18, 2008), 315 (March 28, 2008), 316A  
and 316B (April 14, 2008) are a series of emails involving James Deakin (Sun  
Life), David Reeve, Peter Viris (B2B Trust) and Ronald Madzia (IDC Financial)  
outlining negotiations and due diligence enquiries between the parties involved in  
the anticipated Millionaire Mortgage plans which were hoped to be rolled out in  
2009. The plans were worked on all summer of 2008. The negotiations and  
planning were ongoing until September and October of 2008.  
[1713]  
Daniel wanted all the renovations completed in order to house the  
anticipated financial advisors involved. The February 2008 deal fanned the plans  
to complete the renovations.  
-
477 -  
[1714]  
The Millionaire Mortgage plans were put on hold in October through  
December of 2008. David told Daniel at the end of September that David was  
leaving DPR. Daniel testified that David was on a search-and-destroy mission  
thereafter. David spread slander and libel about Daniel. David refused to pay for  
the clients that Daniel had transferred to him and David was now taking those  
clients to his new firm. Staff were concerned about the rumours being spread and  
there was an investigation regarding these charges in November or December of  
2008.  
[1715]  
In November 2008, Ron Madzia (of IDC Financial) phoned. Ron  
indicated that he had talked to David on David’s honeymoon cruise and that  
David had made a number of allegations that were concerning to Mr. Madzia. Mr.  
Madzia indicated that he could not process any more business with DPR. That  
move immediately put DPR out of business. DPR advisors could no longer  
receive money directly through DPR. DPR advisors had to detach from DPR and  
get paid through IDC Financial and then pay DPR. That procedure was a long  
process. At the time the offices were nearly done but DPR’s finances were  
stretched to the limit due to renovations.  
[1716]  
The departure of David and the rumours and media reports started in  
October and worsened in November. Daniel stated that once allegations were in  
the media, “you are dead in the water and no one wants to touch you.” Daniel  
tried to get another Managing General Agency the day after Mr. Madzia phoned  
-
478 -  
in November but no one wanted to be involved. Daniel was being treated like a  
leper.  
[1717]  
Clients were phoning in October and November of 2008 indicating that  
David had told them that Daniel did not own the Breadalbane and had  
misappropriated funds. Daniel testified that he never told anyone he owned the  
Breadalbane. David told clients that Daniel had lost his licence.  
[1718]  
Linzie Brown phoned CrimeStoppers. David was telling clients to break  
their contracts with Daniel, even though Daniel was making interest payments.  
Daniel was making interest payments but sometimes they were late.  
[1719]  
At its height, DPR had 14 financial advisors. In late 2008, that number  
had plummeted to three. David had taken all the clients and all that was left were  
trademarks and processes. David said that Daniel was not licenced and could  
not get his business back. In January and February of 2009, DPR had only two  
financial advisors. In April 2009, DPR folded and closed its doors.  
[1720]  
Daniel never expected to get arrested. He lost everything—his  
reputation, freedom, everything. It happened because David took everything and  
destroyed their relationship.  
[1721]  
Reeve Hotels and Resorts was incorporated in 2004 and took over  
Jakobstettel Inn. Later, Jakobstettel Inn was taken over by Jakobstettel  
Properties. The Isabella Street spa location became Jakobstettel Estates. Swan  
-
479 -  
Creek, a conference location, and the Plaza were under the Reeve Hotels and  
Resorts umbrella. Reeve Hotels and Resorts was separate from DPR Financial  
Inc.  
[1722]  
Private equity in the form of corporate bonds was used to purchase 46  
Cambridge Street through Alex Realty. The bank would not lend the money and it  
was decided to go the corporate bond route. The debt belonged to the company  
and Daniel did not have to report to anyone. A corporate bond is a contract  
between two parties. Daniel would tell the parties that he was the owner of the  
company and would say why the company was raising money.  
[1723]  
Heather Gardner bought the corporate bond from Alex Realty for the  
purchase of 46 Cambridge Street. She was paid interest at a double-digit rate in  
the 10 to 12 percent range. The interest and capital were all paid by August of  
2005 without any problems – see Exhibit 76. Another individual, Shirley  
Halfyard, also bought a corporate bond for the purchase of 46 Cambridge Street  
and she was fully paid back with capital and interest.  
[1724]  
In 2003 to 2004, the Jakobstettel Inn was purchased and Daniel was  
unable to get a commercial mortgage from the banks as the Jakobstettel had  
small profits and needed renovations. David introduced two of his clients to  
Daniel and they put up $400,000 to $700,000 in first mortgages on the  
Jakobstettel.  
-
480 -  
[1725]  
The Jakobstettel required renovations. Bonds were executed as Daniel  
needed the capital for renovations. Ms. Gardner, on December 18, 2003, entered  
into a corporate bond with Celebrity Management International Inc. for  
$138,021.90 for a ten-year term paying 15 percent annually – see Exhibit 77.  
Under that arrangement, $20,732.85 was payable annually for ten years starting  
December 19, 2004. Exhibit 77 shows that this interest was paid in 2004, 2005,  
2006, 2007 and nothing thereafter. This interest was paid out of operations from  
the Jakobstettel.  
[1726]  
Daniel was comfortable paying 15 percent as he felt he could get  
increased revenues after the renovations were completed. However, in  
December of 2008 there was no cashflow. His parent companies were stretched  
to the limit. Further, there was a decrease in room rentals and he was paying for  
two rooms to be refurbished.  
[1727] Other examples of people who were happy with their private equity  
corporate bond investments included:  
1
.
.
Lloyd Hoffman, who did a five-year corporate bond at the end of 2003;  
and  
2
The Cunningham/Hepburn couple, who invested $100,000 in  
November of 2005 with Celebrity Management and were paid back in  
April 28, 2008 with both principal and interest.  
-
481 -  
[1728]  
Reeve Hotels and Resorts was going to buy the Breadalbane Inn. The  
owner of Breadalbane approached Daniel, and he decided to do a bond issue for  
the purchase. Negotiations and agreements were ongoing from April 30, 2008 –  
see Exhibits 55, 56 and 57.  
[1729]  
There was discussion about a side rental property being purchased for  
$300,000 but that broke down – see documents filed as Exhibits 58 and 59.  
Exhibits 317 and 318 are emails from Peter Egger regarding the purchase of the  
side rental property but Daniel declined to buy the side rental property in or about  
May or June of 2008. Daniel was just happy to acquire the Breadalbane Inn.  
[1730]  
Corporate bonds were issued as negotiations were ongoing in April  
through June of 2008. The purchase price of the Inn was $1.2 to $1.4 million.  
Daniel planned to do about $1 million of renovations in 2009 with more to come.  
Negotiations stalled when it was discovered that there was an off-book debt of  
the Breadalbane in the amount of $300,000. Mr. Egger’s mother wanted that  
amount to be added to the purchase price. Daniel counter-offered to raise the  
price by $150,000 but that was not accepted. It came down to money. In October  
to December of 2008, Mr. Egger was aware of the investigation and still wanted  
to sell. The deal never died and was still being pushed forward until April of 2009.  
[1731] Exhibit 319 is an email from Mr. Egger dated January 1, 2008 outlining  
Mr. Egger’s desire to work with Daniel on the Breadalbane. Attached to the email  
-
482 -  
is a chart showing the income from the Breadalbane and the side rental property.  
The Breadalbane Inn’s income for ten years was projected to be $153,600  
annually with 2007 expenses totalling $93,040. Some of the expenses are  
attributable to the side property but the maximum net income for the Breadalbane  
would be $80,000 for the next ten years.  
[1732]  
Exhibit 320 is an email from Mr. Egger dated February 19, 2008  
wherein Mr. Egger indicates that he loves the Breadalbane and was not ready to  
part with it but “hopefully [it] will be yours one day in the future.”  
[1733]  
Daniel told investors that he was looking to purchase the Breadalbane  
Inn under his company Reeve Hotels. The purchase was highly confidential as  
Mr. Egger did not want his staff to know the Inn was for sale. Daniel explained  
that to the investors and others (e.g., Mr. Boldt). Daniel told the investors that it  
was his intention to close at the earliest opportunity and then he would do  
renovations immediately.  
[1734]  
Daniel never ever told anyone that he owned the Breadalbane because  
he did not own it. Daniel told everyone that he was trying to close but a $300,000  
off-book debt had come up. He told people that the corporate bonds were low-  
risk but he never said it was no risk.  
[1735] Daniel did a number of corporate bond agreements and he used a  
template as instructed by his lawyers. Some were witnessed and others were not  
-
483 -  
but that was not necessary once there was offer and acceptance with  
consideration.  
[1736]  
The allegations by the witnesses that the bonds were pre-witnessed is  
not true. That would be illegal and that allegation is nonsense and did not  
happen.  
[1737]  
When paperwork did not happen, that was not nefarious but due to  
mistakes in paperwork or the paperwork not being ready. It was not an issue until  
DPR closed down in April of 2009.  
[1738]  
Regarding the Breadalbane, there was no mention of a minimum bond  
amount but $100,000 or more was convenient. The bond had to be a good fit for  
the investor who was selected if suitable, and Daniel wanted the investor to know  
the pros and cons. There were one or two bond amounts that were less than  
$100,000. The length, rate and quantum of the bond were discussed with clients.  
The usual term of the bond was two to five years.  
[1739]  
When the money from the bond came in, it was an asset. It was  
intended for the stated purpose but plans can go awry. There were no restrictions  
in the bond as to how the money was to be used. A private company can use the  
money in any way once it comes in. Daniel wanted to use it for the intended  
purpose and told clients that they would grow with the company along with the  
renovation work.  
-
484 -  
[1740]  
It was important in setting the interest rate and term to look where the  
money was coming from. RRSPs were melted down and no bonds were put in  
RRSP as bonds would pay half the tax outside the RRSP. Daniel would look at  
the previous rates of return in the clients’ investments to determine the interest  
rate, For example, if the client owned the True North fund – see Exhibits 194  
and 309 – the fund had an average rate of return in 2007 of 26 percent and 12  
percent in 2004. Due to the market meltdown in 2008, clients were happy to take  
a fixed rate for a couple of years until the market settled down.  
[1741]  
Daniel felt it was realistic to enter the agreements paying the rates of  
interest which varied from 12 to 20 percent. Daniel was responsible for that loan  
and feels still that he will make good on it.  
[1742]  
Daniel felt that Reeve Hotels had other properties and could pay the  
interest until the Breadalbane was acquired. Daniel was aware of the  
Breadalbane’s earnings in 2007 to 2008 and felt that, since it was profitable, he  
could pay the interest when it was bought, and until then he could tap into the  
other properties.  
[1743] Daniel’s companies worked together and they had the legal right to do  
intercompany transfers but had to report any transfers.  
[1744] It was pointed out that Barry Cunningham and Lorna Eadie both  
testified that Daniel stated that he would put their money into a trust account.  
-
485 -  
Daniel testified that he absolutely did not tell them that. Daniel was stunned that  
Mr. Cunningham said that, as he is intelligent and one of his top-ten  
sophisticated investors. Ms. Eadie was not on that level of sophistication.  
Daniel’s companies had no trust accounts except for the travel company run by  
Ms. Laura Williams.  
[1745]  
Regarding money coming into the companies from bonds, interest has  
to be paid. That money has to make money. Daniel was precluded from investing  
in anything long-term as he thought the Breadalbane was going to close  
imminently. Meanwhile, Daniel could not sit on that money; if it could be used to  
help out, Daniel would do that.  
[1746]  
In 2008, Daniel had trouble making interest payments and eventually  
no interest was paid and Daniel was unable to pay the principal back. He  
informed the investors about the delay regarding the Breadalbane and the  
reason for it (the $300,000 off-book debt).  
[1747]  
Daniel made arrangements with a number of investors to prepare  
payment plans. This was not a ruse. It would be dishonest to prepare them and  
not pay. The bond contracts had a default clause and he never thought they  
would be defaulted en masse.  
[1748]  
Daniel’s approach was to communicate with the clients and be as  
available as possible. He would get on the phone to try to come up with workable  
-
486 -  
solutions. The payment plans were predicated on what he thought he could pay.  
Daniel really thought he could pay pursuant to the 2008 payment plans and the  
2009 revamped payment plans.  
[1749]  
The 41 alleged victims were decent people and did not yell when he  
defaulted. The clients co-operated; some were made good, others were repaid  
partially, and still others he could not pay.  
[1750]  
Daniel was still pursuing the Millionaire Mortgage deal and had two  
financial advisors still working with him. He was trying to get a new MGA.  
However, there was a concerted effort from several sources to hurt his company.  
2
. SPECIFIC INVESTORS  
BREADALBANE INN  
i. Josephine DeSalvo  
[
1751] Josephine DeSalvo testified that she was only given four days to make  
the $100,000 Breadalbane investment in Exhibit 17 – 13D, dated March 10,  
008. Daniel denied that; he testified that no timeframe was given and there was  
2
no urgency or rush as the Breadalbane was in the early stages of a deal. To  
make a proper offer, Daniel knew he needed to raise capital.  
 
 
 
-
487 -  
[1752]  
Ms. DeSalvo indicated that Daniel stole her apartment building. Daniel  
had nothing to do with her apartment building and he did not try to steal her  
apartment building.  
[1753]  
Ms. DeSalvo testified that after repeated attempts to contact him and  
get her money back, she told Daniel that she would go to the police. She testified  
that Daniel said that if she went to the police, she would never see her money  
again. Daniel indicated that he never had a conversation with Ms. DeSalvo  
regarding the police. Further, Ms. DeSalvo never told him she was going to the  
police. Daniel also testified that it was not hard to reach him as he had good  
assistants, offices and phone numbers. The only conversation regarding the  
police was with Daniel’s staff when they learned about the investigation and he  
told them to tell the police the truth.  
ii. Andrea Morgan  
[1754] Andrea Morgan invested $176,739.64 with Reeve Hotels c.o.b. as the  
Breadalbane Inn on April 9, 2008 – see Exhibit 23 – 56C.  
[1755]  
Ms. Morgan testified that Daniel told her that the deal was imminent  
and that she needed to invest. Daniel testified that never happened. The deal  
was just beginning and there was no sense of urgency and or signing under  
duress. It does not make sense, according to Daniel, why Ms. Morgan would say  
that under oath.  
 
-
488 -  
[1756]  
Ms. Morgan also testified that Daniel told her that the Breadalbane was  
not purchased due to a problem with the liquor licence. Daniel testified that he  
never had that discussion. Liquor licences are simple to transfer and he never  
had a problem with the liquor licence at the Breadalbane.  
iii. Ronald DeKoning  
[
1757] The DeKonings entered into an agreement with Reeve Hotels c.o.b. as  
Breadalbane on March 10, 2008. The agreement was for consideration of  
237,916.07 for two years paying 20 percent interest annually.  
$
[1758]  
Mr. DeKoning testified that during the negotiations, Daniel told him the  
Breadalbane was minimal risk and needed an answer immediately. Daniel  
denied saying those things. Daniel uses the term “low-risk” to describe  
investments and does not say “minimal risk.” Daniel still believes it was a low-risk  
investment as it was commercial real estate with land and buildings. Daniel never  
induced a hurry-up offer as it took a while to raise the capital he needed.  
[1759]  
Mr. DeKoning testified that Daniel said, during the meetings, that the  
money invested in the Breadalbane was going into second and third mortgages.  
Daniel testified that there was no discussion at all regarding second and third  
mortgages.  
[1760]  
Mr. DeKoning testified that Daniel told him that he could withdraw his  
RRSPs tax-free. Daniel denied saying this. There was no discussion of tax-free;  
 
-
489 -  
that does not exist. Daniel was creating a situation that was tax-neutral. Daniel  
would compensate Mr. DeKoning for his withholding taxes and deferred sales  
charges, due to concerns about churning allegations. (Churning is where a  
broker trades frequently in a client’s account to generate commissions.) In Mr.  
DeKoning’s situation, the agreement provided for compensation for withholding  
taxes and deferred sales charges, as the agreement was for compensation of  
$237,916.07 and Reeve Hotels received approximately $187,000 from Mr.  
DeKoning.  
[1761]  
The Exhibit 124 – 12G withdrawal of RRSP instructions indicate that  
the advisor (who was Steve Haney) would pick up the cheque. Usually a direct  
deposit would be made.  
[1762]  
Mr. DeKoning testified that in March of 2008, Daniel said that the deal  
regarding Breadalbane had gone through. Daniel testified that he did not say that  
as he had not even made an offer yet. Daniel had made clear to Mr. DeKoning  
that it was a confidential arrangement as Peter Egger’s staff and management  
did not know Mr. Egger was planning to sell the inn. Daniel would have had a  
wine and cheese event if the Breadalbane deal went through, such as the event  
he held for Jakobstettel’s closing deal.  
-
490 -  
[1763]  
Mr. DeKoning indicated that he was gifted $12,000 for entering the  
Breadalbane deal. Daniel denies that and indicated that he covered Mr.  
DeKoning’s deferred sales charges.  
iv. Warren Boldt  
[1764]  
Exhibit 28 – 4C is an agreement between Reeve Hotels c.o.b. as  
Breadalbane Inn and Banyan Inc. (a company operated by Warren Boldt). The  
agreement is dated March 3, 2008 for a consideration of $300,000 with a three-  
year term paying 20 percent interest with monthly payments of $5,000.  
[1765]  
Mr. Boldt testified that Daniel said he owned the Breadalbane Inn  
around March 3, 2008. Daniel denied saying that. Daniel testified that he never  
told anyone he owned the Breadalbane. Daniel told Mr. Boldt that Peter Egger  
owned the Breadalbane, and that any deal was confidential and not to talk to  
anyone about the deal.  
[1766] Rob Pigeon was married to Mr. Boldt’s sister. Mr. Pigeon held  
Jakobstettel bonds and was happy. Mr. Pigeon had referred Mr. Boldt.  
[1767] The certificate number of 08-03-200 is an internal code indicating what  
dollars are coming in and for what reason.  
 
-
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v. Brian Crozier  
[1768]  
Exhibit 43 – 10E is an agreement between Reeve Hotels and Resorts  
c.o.b. as the Breadalbane Inn and Brian Crozier, dated March 10, 2008. The  
agreement is for $166,325.09 with 20 percent annual interest.  
[1769]  
Daniel testified that Mr. Crozier’s financial advisor (Steve Haney)  
contacted Daniel indicating that Mr. Crozier was agitated regarding the market  
and wanted out of his RRSP segregated funds. Mr. Haney knew that Daniel was  
looking for capital. The Exhibit 43 – 10C withdrawal instructions are not in  
Daniel’s writing and he had no authority to fill it out given that he was no longer a  
licenced financial advisor.  
[
1770] Exhibit 43 – 10H is a confirmation that Daniel signed, on December 9,  
008, that that he would pay the deferred sales charges and withholding taxes  
totalling approximately $54,500 that were deducted from the RRSP total of  
166,325.09. This total of $166,325.09 is what appears on Mr. Crozier’s bond as  
consideration.  
2
$
[1771]  
Exhibit 43 – 10D is a confirmation of withdrawal and fails to deduct the  
withholding taxes, and so Mr. Crozier provided Celebrity Management  
International Inc. with a cheque of $159,610.95. It was made out to Celebrity as  
Reeve Hotels had not yet set up its bank account. (Note Exhibit Stick File 105  
 
-
492 -  
which shows the Reeve Hotels bank account 5127747 was in fact opened on  
August 1, 2007.) The money was later transferred to Reeve Hotels.  
vi. Dr. Ira Bernstein  
[1772]  
Exhibit 49 – 3I is an agreement between Reeve Hotels and Resorts  
and Ira Bernstein dated May 2, 2008 for consideration of $189,678.78, paying 16  
percent annually for a five-year term.  
[1773]  
Dr. Bernstein testified that Daniel told him that there was no risk – the  
deal was guaranteed. Daniel also said if there if there ever was an issue, a lien  
could be placed on the property. Daniel testified that there were no such  
discussions and it was ridiculous to suggest that such discussions occurred.  
Daniel used the term low risk for commercial property. It was bricks and mortar  
and land with an ongoing business but there was always some risk.  
[1774]  
Daniel testified that Dr. Bernstein was a sophisticated investor and one  
of the smartest men he had ever met. Dr. Bernstein became Daniel’s doctor for a  
short time. Daniel never used the word “guaranteed.” David called Daniel up and  
thought it was a good fit and set it up. Daniel testified there was no discussion  
regarding putting a lien on the property.  
[1775]  
Dr. Bernstein testified that Daniel told him that the money for the  
Breadalbane was going into first, second and third mortgages. Daniel denied this  
conversation ever took place. Daniel testified that there was no plan to hold any  
 
-
493 -  
mortgages and this discussion never took place. Daniel was raising capital for  
the purchase of the Breadalbane and capital for new management and capital for  
renovations.  
[1776]  
Dr. Bernstein testified that, during discussions regarding the  
Breadalbane Inn, Daniel told him that the Breadalbane was doing well and was  
booked well into next year, and as such, Dr. Bernstein believed that Daniel  
owned the Breadalbane Inn. Daniel testified that two out of three were right.  
Daniel testified that he had visited the Breadalbane and saw that it was busy.  
Daniel never claimed to have owned it.  
[1777]  
Daniel testified that he told Dr. Bernstein that there was a snag in  
buying it and told Dr. Bernstein that there was a $300,000 nut that was the core  
of the issue. Around November or December of 2008, Peter Egger told Daniel  
that Mr. Egger’s mother was not ready to sell the property. Mr. Egger told Daniel  
that Daniel had to sweeten the pot, which Daniel was not in a position to do.  
[1778]  
Exhibits 48 (March 27, 2008) and 49 – 3F (April 28, 2008) are  
boilerplate letters signed by Dr. Bernstein that the withdrawals from Canada Life  
and Manulife respectively were being done against the advice of Dr. Bernstein’s  
financial advisor (who was David). Daniel never saw these documents before this  
trial. These boilerplate letters were not a DPR document and were drafted by  
-
494 -  
someone outside DPR, i.e. David Reeve or Linzie Brown. They are not on DPR  
letterhead.  
[1779]  
The May 2, 2008 agreement is for consideration of $189,678.78.  
Exhibit 49 – 3G confirms that on April 28, 2008, with David as financial advisor,  
RRSPs of $281,154.54 were withdrawn; after taxes and deferred sales charges,  
$189,678.78 was left, and this $189,678.78 amount is the amount in the bond.  
Daniel had no involvement in withdrawing the RRSP funds. David facilitated this.  
[1780]  
Exhibit 49 – 3J is a financial plan for Dr. Bernstein prepared by Mike  
Floyd, a certified financial planner. Daniel was aware of this document and was  
aware of every financial that Mr. Floyd worked on. At pages 20, 62 and 65 of the  
financial plan, there is a reference to the two Reeve Hotel bonds that were sold  
to Dr. Bernstein totalling almost $800,000. Mr. Floyd could not access the Reeve  
Hotels accounts and Daniel gave him the information regarding Reeve Hotels  
and Resorts.  
[1781]  
Mr. Floyd treated these bonds as assets. Mr. Floyd knew that Daniel  
did not own the Breadalbane and listed the limited partnership Breadalbane bond  
as an asset. No one thought to put into the financial plan that Daniel did not own  
the Breadalbane.  
[1782] The Crozier and Boldt bonds had the same certificate number of 08-  
03-200. The Exhibit 49 – 3I bond has no certificate number and they stopped  
-
495 -  
using certificate numbers. The March 28, 2008 Bernstein agreement had a code  
of 02-38-74. There were three ways to cross-reference the bonds: (1) by client  
name, (2) by Inn name, i.e. Breadalbane, and (3) by certificate code. These  
records would also track interest payments due and interest payments made.  
vii. Michelle Keddie  
[1783]  
Exhibit 50 – 23J is an agreement between Reeve Hotels c.o.b. as  
st  
Breadalbane and Michelle Keddie, dated the 1 day of May, 2008, for  
consideration of $150,000 with a limited partnership and annual flow back of  
unused losses with a term to be determined later.  
[1784]  
Ms. Keddie testified that she asked Daniel what the worst-case  
scenario was, and that he stated that there was no worst case scenario—this  
would be guaranteed. Daniel testified that he did not say that. Daniel says he told  
Ms. Keddie that there would be renovations and losses for two to three years  
depending on the extent of the renovations. Ms. Keddie would get a share of the  
capital losses which she could deduct from her income tax. Once the Inn became  
profitable, the bond would switch into a fixed instrument and interest would be  
paid.  
[1785]  
Exhibit 53 is in Daniel’s writing and it is a series of calculations he did  
when he visited the Keddies at their house. Exhibit 53 indicates the Keddies had  
about $146,000 in RRSPs and after withdrawal they would have net $100,000. In  
 
-
496 -  
order to compensate them for the withholding taxes and deferred sales charges,  
Daniel would give them a limited partnership agreement for $150,000 and they  
would be able to write off tax losses for five years or whenever the renovations  
were done (the extent was not known). Thereafter the bond would be converted  
to pay them 12 to 15 percent per year.  
[1786]  
Exhibits 50 – 23E, 23F, 23G, and 23H confirm withdrawals of the  
Keddie RRSPs substantially in conformance with the Exhibit 53 calculations.  
Exhibit 23D is a cheque dated April 24, 2008 paid to Reeve Hotels and Resorts  
for $100,000, and Exhibit 23J is the bond, dated May 1, 2008 for consideration  
of $150,000 which compensated the Keddies for withholding taxes and deferred  
sales charges.  
[1787]  
Ms. Keddie testified that Daniel told her the investment was time-  
sensitive and he needed the money quickly. Daniel testified that this conversation  
did not occur. Daniel just discussed the pros and cons.  
[1788]  
Ms. Keddie testified that after speaking to Daniel she believed that the  
Breadalbane money was sitting in an account accruing 12 percent interest.  
Daniel indicated that he never had a conversation with Ms. Keddie about where  
the money was sitting or what it was earning.  
[1789]  
After Daniel failed to make payments, Ms. Keddie testified that there  
was a heated conversation and Daniel said that “there [was] not going to be a  
-
497 -  
recession.” Daniel testified that he was not heated, and that he has no crystal ball  
and did not make that statement, as he did not know if there was going to be a  
recession or not.  
[1790] The Keddie agreement was the first of these types of bonds with flow  
back of unused losses terms.  
viii. Isaac Thiel  
[1791]  
Exhibit 44 – 40E is an agreement between Reeve Hotels and Resorts  
c.o.b. as Breadalbane dated May 26, 2008 for consideration of $200,000 with the  
same term of annual flow back of unused losses as in the Keddie agreement.  
[1792]  
Mr. Thiel was also interested in tax benefits and the bond would be  
converted into an interest bond in the third year when profits appeared in the  
Breadalbane. The interest would be in the double-digit range, and upon  
expiration of the bond, the principal would be returned.  
ix. Lorna Eadie  
[1793]  
Exhibits 69 – 14G and 14H are two agreements between Reeve  
Hotels and Resorts c.o.b. as Breadalbane Inn and Lorna Eadie and David  
Hocking respectively, each dated May 12, 2008 and each for consideration of  
$150,000 with the Keddie/Thiel annual flow back of unused losses term. Exhibit  
69 – 14A is a bank draft dated April 25, 2008 for $150,000 from Lorna Eadie.  
 
 
-
498 -  
Exhibit 69 – 14B is a bank draft dated April 25, 2008 in the amount of  
94,235.49. Both agreements are in the amount of $150,000. Exhibits 69 – 14C  
$
and 14D show that the Eadies had a total of approximately $144,000 in RRSPs  
and paid together in deferred sales charges and withholding taxes approximately  
a total of just under $47,000.  
[1794]  
Daniel testified that he gave the Eadies two bonds of $150,000 each  
and received $244,000. The $56,000 difference consisted of credits for deferred  
sales charges and withholding taxes, and a bump-up of $3,000. (Note: my  
calculations are the bump-up is an additional $6,000 for a total bump-up of  
$9,000).  
x. Mark McGuire  
[1795]  
Exhibit 73 – 28F is an agreement between Reeve Hotels and Resorts  
c.o.b. as Breadalbane Inn and Mark McGuire dated April 3, 2008 for  
consideration of $169,590.39 with the Keddie/Thiel/Eadie/Hocking annual flow  
back of unused losses term. Exhibit 73 – 28E is a bond in the same amount with  
the same date with the same parties but provides for 18 percent interest annually  
over five years.  
[1796]  
Mr. McGuire testified that Daniel told him that Daniel would cover his  
income taxes when withdrawing his RRSPs. Daniel denied that, saying he only  
 
-
499 -  
offered to pay the withholding tax. Paying the withholding tax was Daniel’s  
standard offer.  
xi. Patricia Westerhout  
[1797]  
Exhibit 78 – 42D is an agreement between Reeve Hotels and Resorts  
and Pat Westerhout dated April 11, 2008 in the amount of $237,286.46 with  
interest to be paid annually at a rate of 20 percent.  
[1798]  
Ms. Westerhout testified that Daniel said he owned the Breadalbane  
Inn. Daniel denied that he said he owned the Breadalbane Inn.  
xii. Heather Gardner  
[
1799] Exhibit 75 – 17N is an agreement between Reeve Hotels and Resorts  
and Heather Gardner dated June 27, 2008 for consideration of $375,000 paying  
2 percent annually for a five-year term.  
1
[1800]  
Daniel testified that this was a good fit for Ms. Gardner as her husband  
had just passed away. Ms. Gardner had done a bond in the Jakobstettel and he  
told her he had plans to buy the Breadalbane.  
[1801]  
Ms. Gardner testified that Daniel told her he owned the Breadalbane,  
but Daniel testified that he never told her that and it made no sense to lie. At that  
time there were ongoing negotiations between the lawyers regarding the  
Breadalbane.  
 
 
-
500 -  
N.Y. PARK PLAZA  
i. Background  
[1802] Exhibit 132 – 300A is a pamphlet regarding the N.Y. Plaza Hotel. The  
Plaza is an iconic building and Daniel felt it was a good fit for Reeve Hotels.  
[1803]  
Daniel took a tour of the condo units that were under construction. The  
units had lots of rules regarding noise, renovation restrictions and furniture  
restrictions. Daniel retained a U.S. attorney to look after his rights pre- and post-  
construction.  
[1804]  
Daniel would own the condo as sole shareholder and director of Reeve  
Hotels.  
[1805]  
Exhibit 132 – 300D is the original agreement dated August 22, 2007  
with a purchase price of US$2,635,000 and a deposit of 10 percent, or  
US$263,500. Daniel’s cheque of August 19, 2007 for the deposit was returned  
NSF. Daniel testified that when he wrote the cheque the money was there.  
Afterward, the cheque did not clear because the amount in the account was just  
below the cheque amount. The bank would not clear it anyway because the  
cheque was not certified.  
[1806] On January 16, 2008 a bank draft was forwarded for the deposit  
amount of US$263,500.  
 
 
-
501 -  
[1807]  
Exhibit 133, dated February 29, 2008, indicates the closing date was  
April 8, 2008. Due to the crisis happening on Wall Street, Daniel was unable to  
get mortgage financing as financing in the U.S. dried up. Daniel tried to get  
financing in Canada but was unable to do so.  
[1808]  
Daniel got a month extension to May but was unable to get financing.  
His monster deal regarding Millionaire Mortgage and Mortgage Architects was  
still months away although the “horses were at the gate.” Exhibit 134 shows that  
the “drop dead date” for closing was May 19, 2008. On May 23, 2008, his deposit  
was forfeited – see Exhibit 135. He tried to secure financing afterward feeling  
that if he got something within 90 days, the Plaza would be open to renegotiation.  
He failed to do so.  
[1809] Daniel decided who the appropriate clients to invest in the Plaza were  
and wanted five investors rather than ten.  
ii. Heather Gardner  
[
1810]  
and Heather Gardner dated July 12, 2007 for the Wellington Suite in the Plaza.  
Note: the Reeve contract was for the Edwardian Suite and there is no Wellington  
Exhibit 75 – 17E is an agreement between Reeve Hotels and Resorts  
(
Suite in the Plaza.) The consideration was for $100,000 with annual interest of 18  
percent.  
 
-
502 -  
[1811]  
Ms. Gardner testified that she understood that Daniel had purchased  
the Plaza suite and he wanted more people to get shares. Daniel denied ever  
saying that, indicating instead that Ms. Gardner was confused; there were no  
shares or prospectus. The Plaza was one of the diamond hotels in the world. He  
called the suite “Wellington” although it was called something else.  
[1812]  
Ms. Gardner testified that Daniel told her he was remodelling the suite.  
Daniel testified that he said it was being remodelled.  
iii. Laura Kerr  
[1813]  
Exhibit 85 – 24C is an agreement between Reeve Hotels and Resorts  
and Laura Kerr dated September 14, 2007 regarding joint ownership of the  
Wellington Suite in the N. Y. Plaza. The consideration was $100,000 for 18  
percent annual interest payments.  
[1814]  
Ms. Kerr testified that she could tolerate zero risk and Daniel  
responded by saying, “What could be safer than the Plaza?” Daniel testified, in  
contrast, that there was no statement that there was no risk in this investment. In  
fact, the risk for this investment is higher because it is in a foreign country.  
[1815]  
Ms. Kerr’s comments regarding what could be safer than the Plaza  
were taken out of context. Before making any such statement, Daniel told her  
that the Plaza was a highly regarded “blue chip” hotel with all the prestige you  
could want.  
 
-
503 -  
Exhibit 85 – 24B is a certified cheque from Ms. Kerr, dated September  
, 2007. The source of the money was, Daniel thinks, a segregated fund, which  
was a higher-risk investment.  
[1816]  
9
iv. Anne Colquhoun  
[1817]  
Exhibit 87 – 9E is a Manulife withdrawal of unregistered segregated  
funds by Anne Colquhoun, dated September 19, 2007. David Reeve was her  
advisor. Exhibit 87 – 9I is her agreement to invest $200,000 in the Plaza, dated  
September 20, 2007. Anne testified that she was not advised of the capital gain  
consequences of cashing in her segregated funds. Daniel disagrees, as her  
David would have had to advise her of the consequences of withdrawal of  
unregistered segregated funds. Daniel was her initial financial advisor, in 2005 to  
2007, and he would have told her about the tax consequences when he put her  
funds into the segregated funds account. Ms. Colquhoun was a sophisticated  
investor and never made any complaint to Daniel or the regulators.  
[1818]  
Exhibit 87 – 9K is a $200,000 agreement between Ms. Colquhoun and  
Reeve Hotels and Resorts dated July 30, 2008. Ms. Colquhoun testified that  
Daniel told her he needed money by July 31, 2008 to buy the Bayfield Inn. Daniel  
Reeve testified that there was no conversation with Ms. Colquhoun regarding any  
Bayfield property. Exhibit 87 – 9K makes no reference to any Bayfield property;  
Daniel indicated that it was clear that this agreement was in reference to the  
 
-
504 -  
Breadalbane Inn. Ms. Colquhoun testified that this document was dropped off at  
her place and was supposed to be a limited partnership and not a bond. Daniel  
testified that it was always going to be a bond. Daniel would have gotten a call  
from her attorney if that was the case and it never happened. Ms. Colquhoun  
testified that Daniel told her that there was a problem with the liquor licence and  
that it would be changed to a limited partnership, but Daniel denied ever  
speaking to her about a limited partnership.  
[1819]  
Exhibit 220 is an agreement of purchase and sale dated June 30,  
2008 among Henry Israel, Daniel Reeve and Annie Smith for a Tuyll Street  
property in Bayfield. The purchase price was $1 million with a $10,000 deposit.  
Daniel only mentioned this transaction to David and never mentioned it to clients  
as it was private. Bayfield was always private and there were no corporate bonds  
issued with reference to it and it was never going to be part of Reeve Hotels.  
Accordingly, the Exhibit 88 document prepared by Ms. Colquhoun is inaccurate  
with reference to the Bayfield property. The Bayfield property purchase did not  
close on December 1, 2008 due to the events in the market and DPR Financial.  
v. Amos and Dorothy Lichty  
[1820]  
Exhibit 86 – 25B is a joint ownership agreement between Reeve  
Hotels and Resorts and Amos and Dorothy Lichty, dated September 5, 2007 for  
consideration of $100,000 at 18 percent annual interest. Paragraph 3 of the  
 
-
505 -  
document provided the Lichtys with a monthly payment of $1,500 which they  
needed.  
[1821]  
Steve Haney was the financial advisor. He would pre-qualify the clients  
for suitability regarding these private investments. Daniel would not know the  
private details. The financial advisors would get the same commission on private  
investments as other investments. Mr. Haney was a man of great integrity who  
put clients first.  
[1822]  
Mr. Lichty testified that there was no discussion regarding risk in this  
investment regarding the Plaza. Daniel “100 percent” disagreed with that  
testimony. Daniel discussed the risks. Daniel showed them the Jakobstettel and  
told them that the risk for the Plaza investment would be similar to the  
Jakobstettel investment. Daniel told them it was low-risk commercial real estate  
and that the Plaza was an iconic location, better than the Jakobstettel.  
[1823]  
The Lichtys received $22,500 in interest payments but their payments  
stopped in 2008. Exhibit 86 – 25C is a letter dated March 20, 2009, promising to  
pay the Lichtys $5,000 per month starting April 3, 2009. Daniel felt he had a  
reasonable prospect to pay them back due to the biggest deal of his life being on  
hold but it was pending. Daniel still had his trademarks and processes and the  
Millionaire Mortgage had a $20 million potential. The letter to the Lichtys was not  
-
506 -  
a ruse pretending to attempt to pay them back. He wanted to help his clients as  
they were his friends; he trusted them and they trusted him.  
vi. Glen Brubacher  
[1824]  
Exhibit 89 – 6E is a joint ownership agreement regarding the Plaza  
between Reeve Hotels and Resorts Inc. and Glen and Sandra Brubacher and is  
in regard to the Wellington Suite. It is dated September 1, 2007 and is in the  
amount of $360,000 paying annual interest of 18 percent.  
[1825]  
Mr. Brubacher testified that he spoke to Daniel. Mr. Brubacher  
understood that Daniel was a shareholder in the Plaza. Daniel testified that they  
never had those conversations.  
[1826]  
Mr. Brubacher testified that he understood that Daniel owned the Plaza  
Suite. Daniel testified that he never told Mr. Brubacher that he owned the Plaza  
Suite. Daniel testified that, a few times, investors had testified that Daniel said  
that he owned the Plaza suite but Daniel never told them that. Daniel told them  
that he was in the throes of purchasing it.  
[1827]  
Mr. Brubacher came to Daniel, not the reverse. Mr. Brubacher’s  
financial advisor, Steve Haney, and/or David would set it up because the  
financial advisor thought the investment would be a good fit. Mr. Brubacher  
testified that in August of 2007 Daniel advised him to pull out his segregated  
 
-
507 -  
funds and put them into the Plaza. Daniel denied that, testifying that he only had  
a general conversation with Mr. Brubacher about that.  
[1828]  
Exhibit 89 – 6D is confirmation of withdrawal of $193,704.05 in non-  
registered funds by Mr. Brubacher on August 15, 2007. Mr. Haney is listed as the  
financial advisor.  
vii. Claudette Taylor  
[1829]  
Exhibit 94 – 39D is a joint ownership agreement regarding the Plaza  
Wellington Suite dated November 1, 2007 between Reeve Hotels and Resorts  
Inc. and David and Claudette Taylor. It is for $400,000 consideration paying 18  
percent annually. Paragraph 3 provides for monthly payments of $6,000.  
[1830]  
Steve Haney referred the Taylors to Daniel. The agreement was really  
a corporate bond but Daniel’s lawyers advised him to use the term “joint  
ownership agreement.”  
[1831]  
Ms. Taylor testified that Daniel said there was no risk. Daniel totally  
disagreed with that and indicated that a few clients made this claim after-the-fact.  
Mr. Haney would have spoken to them about risk as part of his due diligence.  
Daniel testified that he told the clients that the investment was low-risk  
commercial real estate. Daniel indicated that the Plaza was a blue-chip, world-  
class hotel with a wealthy owner and solid management.  
 
-
508 -  
[1832]  
Ms. Taylor testified that she was told by Daniel that her money would  
be used for renovations. Daniel testified that he did not say that because the  
Plaza would not permit him to do renovations anyway. Daniel told investors that  
the purpose of the money was to purchase the suite.  
[1833]  
Ms. Taylor testified that she asked how Daniel could pay 18 percent  
interest. Daniel told her that lots of companies need loans for a short period of  
time. Daniel testified that he never told that to her, as it does not make sense. He  
told her that the revenues earned would be more than enough to pay for the  
interest payments.  
[1834]  
Exhibit 95B is Ms. Taylor’s record that interest was paid between  
January 2008 and August of 2008, but after that, no more payments were made.  
Daniel testified that he lost the bid to close the Plaza purchase as he was unable  
to obtain financing in New York in March to May of 2008 due to the financial  
crisis.  
viii. Peter Steenbergen  
[
1835] Exhibit 96 – 36H is an agreement between Reeve Hotels and Resorts  
Inc. and Janice and Peter Steenbergen dated June 27, 2008 for consideration of  
50,000 for 15 percent annual interest.  
$
 
-
509 -  
[1836]  
Mr. Steenbergen testified that this June 27, 2008 agreement related to  
the Plaza and that he had difficulty getting the paperwork. Daniel Reeve denied  
that, testifying that the June 27 agreement related to the Jakobstettel.  
[1837]  
The Steenbergens also invested $250,000, $100,000, $100,000, and  
$
2
3
249,437.90 with agreements relating to Millionaire Mortgage on January 8,  
008. These investments paid a 25 percent annual rate – see Exhibits 96 – 36B,  
6C, 36D, and 36F. Daniel testified that there were no private equity agreements  
with Mr. Steenbergen regarding the Plaza. The bottom line is that if Mr.  
Steenbergen was investing in the Plaza there would be documentation to reflect  
that. The documents would say it was an investment in the Plaza. There are no  
such documents.  
[1838]  
Further Mr. Steenbergen testified that Daniel said he owned the Plaza.  
While it was possible that Daniel spoke about the Plaza as an option, Daniel says  
he never told Mr. Steenbergen or any client that he owned the Plaza or the  
Breadalbane, as he never owned those properties.  
ix. Chin Tan  
[1839]  
Exhibit 102 – 38D is a joint ownership agreement regarding the Plaza  
Wellington Suite between Reeve Hotels and Resorts dated September 14, 2007  
for consideration of $200,000 for interest payments at 18 percent. Paragraph 3 of  
 
-
510 -  
the document provides for interest payments of $36,000 per year. The cheque  
was mistakenly made out to Celebrity Management but that was fixed.  
[1840]  
Mr. Tan testified that Daniel told him that there were only a couple of  
suites left. Daniel testified that he never said that, but did say that he had put in  
an offer and would like to have more.  
[1841]  
Mr. Tan testified that Daniel told him that the Plaza was profitable.  
Daniel testified that he never told Mr. Tan what the profits were, but did tell him  
that he believed the Plaza was profitable.  
[1842]  
Mr. Tan testified that Daniel told him that there was no risk. Daniel  
testified that he never told any of his clients that there was no risk.  
x. Rene Brossard  
[1843] Exhibit 109 – 5K is a notepad on Plaza letterhead in Daniel Reeve’s  
writing indicating that $500,000 could be invested at 15 percent.  
[1844]  
Mr. Brossard testified that Daniel told him that here was zero risk in  
investing in real estate. Daniel testified that he never said that as Mr. Brossard  
was a sophisticated investor and he would have lost all credibility with that  
statement.  
[1845]  
Mr. Brossard testified that he told Daniel that 18 percent was too high  
and that Daniel had told him that 18 percent was nothing and that Daniel makes  
 
-
511 -  
5 percent. Daniel testified that he never had that conversation with Mr.  
Brossard.  
2
[
1846]  
on August 20, 21, and 30, 2007 in the amounts of $400,000, $100,000, and  
100,000 respectively. Mr. Brossard testified that it was his understanding that  
Exhibits 109 – 5F, 5H, and 5J form a series of loan documents made  
$
this money was for the Plaza. Daniel testified that if the investment was for the  
Plaza, then there would have been the standard contracts as there were for the  
others. (Note that there is no such document for Peter Steenbergen whose  
money was ultimately applied for the Plaza deposit.) Further, Karen Gingrich  
signed these documents and she would not sign off on Plaza contracts.  
[1847]  
Exhibit 109 – 5B is an RRSP withdrawal instruction form, on which Mr.  
Brossard testified his forged signature appeared. Daniel testified that he never  
forged anything on behalf of Mr. Brossard or any of his other clients. It was  
permissible to fax documents back and forth and sign the document after the  
client signed it. Mr. Brossard never indicated there were any issues regarding  
signing this document.  
[1848]  
Mr. Brossard testified that Daniel told him that the Plaza was a safe  
investment because it involved Jewish money. Daniel testified that he did not  
make this religious comment and just talked about the low risk of the investment.  
-
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GENERAL COMMENTS ABOUT THE PLAZA INVESTMENT  
[1849]  
Daniel confirmed that he raised money to purchase the Plaza suite.  
The money was not raised at one time but over many months. The money was  
not put in one account. The reality was that, when his sister companies had  
cashflow issues, it was appropriate to make temporary intercompany loans.  
Daniel did not know that a forthcoming stock market crash would devastate his  
company.  
[1850]  
Financial advisors cannot use trust accounts. Both the market  
meltdown and his bigger producers leaving put tremendous pressure on Daniel’s  
companies. Daniel had a big deal in the offing and needed money as a short-  
term loan as his companies had big cashflow problems.  
[1851]  
Investors did receive interest payments. Daniel had to resort to  
temporary loans to survive, with the expectation that deals he was working on  
would come to fruition.  
[1852]  
Daniel could not close the Plaza deal in May 2008 as the market was  
melting down and he could not get U.S. or Canadian financing. His lawyer Mr.  
Lee felt that if Daniel could close within 90 days of May 2008 (that is, by no later  
than August of 2008) the deal could still work. However, Daniel was unable to  
raise the money.  
 
-
513 -  
Daniel’s hope was that the Millionaire Mortgage deal would pay all his  
debts and provide cash for the Plaza. In August 2007, David owed Daniel $1.2 to  
1.6 million but had two years to pay. However in April of 2008, the due date for  
[1853]  
$
those funds was shortened to December of 2008.  
JAKOBSTETTEL INN  
i. Background  
[1854]  
In the beginning, Daniel raised money in the form of mortgages to  
purchase the Jakobstettel Inn. Once that was done, multiple bonds were issued  
to raise money for renovations for a tired building.  
[1855]  
Investors were provided with the specific projects to which their money  
would be put in building and renovating the Jakobstettel. They were given as  
many details as possible.  
[1856]  
The investors were told it was a low-risk investment, not that it was a  
no-risk investment. The investors were told that the Jakobstettel was commercial  
real estate with multiple streams of revenue. Many of the corporate bonds were  
long-term deals in the five- to ten-year range and the interest rate was based on  
what they could afford.  
 
 
-
514 -  
ii. Nancy Herlick  
[1857]  
Nancy Herlick was the wife of Tony Herlick, Daniel’s driver. Mr. Herlick  
took over Select Executive Services which is a limousine service. Mr. Herlick did  
the schedules and took care of the vehicles.  
[1858]  
Exhibit 22 – 54A indicates that Ms. Herlick invested $100,000 in the  
Jakobstettel Inn on May 5, 2007. She got her money back in July of 2008. Nancy  
had difficulties in getting paid and there was one cheque that was marked NSF.  
[1859]  
Ms. Herlick testified that Daniel said his money was tied up for eight  
years and that Daniel said that he didn’t have money as he had not invested it  
where it was supposed to go. Daniel testified that this conversation did not  
happen.  
[1860]  
When Daniel’s cheque to Ms. Herlick was returned NSF, Daniel told  
her about the cash crunch he was in. Ms. Herlick testified that she told Daniel  
that she was going to the police. In response, Daniel said if that happened, Mr.  
Herlick would not be able to work with Daniel anymore. Daniel testified that this  
conversation did not happen and at no time did Mr. or Ms. Herlick mention they  
were going to the police. Daniel did not say if Mr. Herlick went to the police he  
would lose his job.  
[1861] Mr. Herlick left his job in November or December of 2008 at a time  
when he was owed one or two pay cheques.  
 
-
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iii. Barry Cunningham  
[1862]  
Barry Cunningham invested in the Jakobstettel in 2005 and then again  
in January 2008. He was paid back on all these investments with interest as high  
as 25 percent.  
[1863]  
Mr. Cunningham testified that investors in the Jakobstettel were  
holding a mortgage and there were no other mortgages. Daniel testified that he  
does not know why Mr. Cunningham said that, as there were no dialogues like  
that with him.  
[
1864]  
Management International Inc. and Sharon Hepburn and Barry Cunningham for  
200,000 at 18 percent interest, dated June 1, 2007. This agreement was  
Exhibit 39 – 11G is a joint ownership agreement between Celebrity  
$
renewed in June 1, 2008 for $236,000 at 18 percent. Ms. Hepburn and Mr.  
Cunningham were sophisticated investors.  
[1865]  
Daniel testified that given that he was both a financial advisor and  
owner of investment properties, he wore two hats. To avoid conflict, he testified,  
you have to be open about the companies and properties and what you are going  
to do with the money that is raised. A financial advisor has a fiduciary duty to the  
investors, as well as a duty to ensure the investors make intelligent decisions and  
not in a rush. However, Daniel did not feel it was necessary to disclose the  
details of the private companies. Daniel was open as to who owned the property  
 
-
516 -  
and how the money was to be used. The clients of DPR had to make sure their  
investment made sense and that they were aware that Daniel was the owner of  
the property.  
[1866]  
Exhibits 39 – 11M, 39 – 11O, 39 – 11P, and 39 – 11R, are a series of  
repayment schedules with Mr. Cunningham and Ms. Hepburn, all prepared at the  
same time. Exhibit 39 – 11R is dated November 21, 2008. David had scared the  
Cunninghams with information about Daniel, and they wanted their money back.  
They were entitled to call the loans in if at least one payment was late. Daniel  
gave them his personal guarantee that they would be paid.  
[1867]  
Exhibit 39 – 11S is an email dated December 18, 2008 which contains  
another repayment schedule with payments starting in December 31, 2008 in  
weekly $25,000 installments. This letter is dated December 17, 2008. Daniel  
thought he could pay as some $500,000 was coming in from institutions, David  
owed Daniel $1.6 million, and the Millionaire Mortgage had good prospects as  
well as licencing income. Daniel testified that he made four $25,000 payments on  
this document and possibly another $50,000. Appendix C of the GT Report at  
page 5 shows a total repayment of $53,000, with only one payment being made  
after December 30, 2008.  
-
517 -  
iv. Claudette Taylor  
[1868]  
Exhibit 94 – 39C is an agreement dated November 1, 2007 wherein  
the Jakobstettel Inn would pay Claudette Taylor $4,500 monthly, based on an 18  
percent interest rate. Exhibit 94 – 39D is a similar agreement regarding the  
Plaza for an 18 percent annual rate, dated November 1, 2007.  
[1869]  
Ms. Taylor testified that she asked how Daniel could pay 18 percent  
and that Daniel said that lots of companies need loans for short periods of time.  
Daniel denied making that comment. Daniel felt that with the revenue from the  
Jakobstettel and the later modest revenue from the Plaza, Daniel would be able  
to make these interest payments.  
[1870]  
Ms. Taylor also testified that Daniel said that there was no risk with the  
Jakobstettel investment. Daniel denies saying that and testified that in a meeting  
with her, both Steve Haney and Daniel told her that the investment was low-risk.  
v. Marina Ognjanovski  
[1871]  
Exhibit 99 is a joint ownership agreement dated March 4, 2008  
between Celebrity Management International Inc. and Marina Ognjanovski in the  
amount of $400,000 at an interest rate payable at 16 percent with monthly  
payments of $7,000.  
 
 
-
518 -  
[1872]  
Exhibit 98 – 31D is a letter dated February 17, 2009 wherein Ms.  
Ognjanovski asked for the return of $368,333.30. In the letter Ms. Ognjanovski  
indicated that Daniel said that he owned $10 million in real estate and had only  
$2 million in debt. Ms. Ognjanovski testified that Daniel told her the Jakobstettel  
Inn was worth $10 million. Daniel testified that he never told her about any values  
for the Jakobstettel and she never asked him. Her financial advisor, Chris Bendo,  
was there and he knew that statements about values were never made. (It is to  
be noted that Exhibit 100 – 21C is an ownership agreement between Celebrity  
Management and Wilma Jordan for $100,000 entitling her to a one-tenth  
ownership of one suite in the Jakobstettel Inn. This would value one suite at $1  
million and the total of ten suites would add up to approximately $10 million.)  
Daniel testified that he told Ms. Taylor that he owned the Jakobstettel and that it  
was successfully run and the “picture” was getting better and better. In 2007, the  
Jakobstettel showed a loss but with all the renovations and improvements, the  
picture would change by the end of 2008.  
[1873]  
Daniel says he never told Ms. Ognjanovski that her investment was  
risk-free. He told her it was low-risk. He never told her that the investment was  
guaranteed. Daniel denied ever saying anything about a guarantee.  
[1874]  
Daniel testified that payments to Ms. Ognjanovski were late and it was  
his fault. Eleven interest payments were made, and not ten. (Appendix C of the  
GT Report, at page 10, indicates that $85,000 was repaid. The Exhibit 98 – 31D  
-
519 -  
letter indicates ten interest payments plus $15,000 of the principal was repaid.  
This would total $85,000.) Daniel testified that he was not in a position to pay the  
principal back.  
vi. Theresa Kaup  
[
1875]  
Properties Inc. and Theresa Kaup dated July 14, 2008, for consideration of  
100,000, with interest payable at 18 percent annually with a maturity date of  
July 14, 2013.  
Exhibit 104 – 22D is a corporate bond between Jakobstettel  
$
[1876]  
Ms. Kaup testified that Daniel told her that he was investing on behalf  
of trustees and the trustees owned the building. Daniel testified that he never  
mentioned anything regarding trustees. Ms. Kaup was told that Daniel was the  
sole shareholder and owner. In contrast, Ms. Kaup testified that she asked Daniel  
who the owner was and Daniel could not tell her due to it being a breach of  
confidentiality. Daniel testified that he told Ms. Kaup he was the owner and that  
he could not divulge the identity of the celebrities who were staying at the Inn.  
[1877]  
Exhibit 108 – 22B are the withdrawal instructions of her RRSP dated  
July 10, 2008. It was not Daniel’s idea although he knew it was happening. It had  
to be done through her financial advisor who was David. Ms. Kaup testified that  
she never spoke to David about the Jakobstettel investment. Daniel testified that  
David told him that she wanted a fixed instrument and that David had  
 
-
520 -  
recommended doing a private investment with Daniel. Daniel testified that David  
and Barb Menard discussed withdrawing the RRSP with Theresa Kaup – see  
Exhibit 107, Barb Menard’s note dated June 18, 2008. Daniel, in response to a  
question about RRSPs from Ms. Kaup, indicated he was not a fan of RRSPs and  
had written a book about it.  
vii. Eva Bernachi  
[1878]  
Exhibit 127 – 2G is a corporate bond in the amount of $305,469.65  
between Jakobstettel Properties Inc. and Eva Bernachi, paying a 16 percent  
interest rate and is dated July 21, 2008 with a maturity date of July 21, 2011. The  
document provides that upon the maturity date the principal, accrued interest,  
penalties and pre-paid taxes are due and payable. It was agreed that the  
deferred sales charges and pre-paid taxes were agreed to be paid in order to  
avoid churning as Ms. Bernachi had invested less than a year earlier. This  
provision was an enormous expense to the company and was done in good faith  
although Daniel could not afford to do it for everyone. Daniel’s lawyer said it was  
okay as it was done to avoid an allegation of churning.  
[1879]  
Ms. Bernachi testified that Daniel told her that he always had that kind  
of cash at DPR. Daniel testified that he did not say that, as DPR is a separate  
company.  
 
-
521 -  
[1880]  
According to Daniel, this was not a money grab. Daniel believed and  
projected that the Inn, with only two more rooms to be renovated, would then  
have ten rooms rentable at $1,000 per week for a total of $500,000 per year.  
With liquor, spa, bar, wedding and conference income, the prospects for the Inn  
were good.  
[1881]  
Ms. Bernachi testified that there was no discussion regarding risk.  
Daniel testified that this was not true; Daniel always indicated that there was  
some element of risk and told clients that if they wanted to sleep on it they could.  
viii. Gary Raycroft  
[
1882] Exhibit 175 – 32D is a corporate bond between Celebrity Management  
International Inc. and Gary and Deborah Raycroft in the amount of $100,000 for  
0 percent with a five-year maturity date.  
2
[1883]  
Mr. Raycroft testified that Daniel told him that this was a low-risk, high-  
end real estate investment. Daniel testified that he just said it was a low-risk  
investment as the Inn was not high-end. Mr. Raycroft also testified that it was a  
secured investment, and the interest and principal were protected. Daniel  
testified that this conversation did not happen. Mr. Raycroft testified that Daniel  
told him this was real estate with first and second mortgages, and it was bricks  
and mortar. Daniel testified that this conversation did not happen and he never  
spoke about private mortgages.  
 
-
522 -  
Exhibit 175 – 32J is a corporate bond dated August 18, 2008 between  
Jakobstettel Properties Inc. and Gary and Deborah Raycroft in the amount of  
[1884]  
$
100,000 with a 16 percent interest rate and a five-year maturity date. Paragraph  
of the document indicates that on the maturity date, $100,000 would be  
1
returned plus accrued interest plus penalties of $5,437.76 plus prepaid taxes of  
$39.059.05. As can be seen from Exhibits 175 – 32F and 32G most of the  
$100,000 came from the withdrawal of the Raycrofts’ RRSPs.  
[1885]  
Mr. Raycroft testified that Daniel told him to cash in all his RRSPs and  
that his financial advisor, Steve Haney, was not present at that meeting. Daniel  
denied this, testifying that withdrawing the Raycrofts’ RRSPs was not his idea,  
and that Mr. Haney told him that he (Mr. Haney) had a client who was a fit for this  
investment. Mr. Raycroft also testified that Daniel told him that he (Daniel) would  
cover Mr. Raycroft’s income taxes. Daniel denied this, testifying that he only told  
people he would cover the withholding tax when withdrawing the RRSPs.  
ix. Wilma Jordan  
[1886]  
Exhibit 100 – 21C is a Jakobstettel Inn joint ownership agreement  
dated February 2, 2007, between Celebrity Management Inc. and Wilma Jordan,  
in the amount of $100,000, giving Ms. Jordan a one-tenth ownership of one of  
the Jakobstettel suites. Paragraph 34 of the document outlines interest payments  
of 12 percent to be paid in $1,000 monthly deposits.  
 
-
523 -  
[1887]  
Exhibits 100 – 21A and 21B establish that Ms. Jordan gave two  
cheques totalling $96,000 but that Daniel bumped up the bond to $100,000 to  
reimburse her for her deferred sales charges.  
[1888]  
Ms. Jordan testified that there was no discussion of risk regarding this  
investment. Daniel testified that he went through risk with her in many meetings  
and he never told her there was no risk. He told her he was the owner and it was  
low-risk.  
[1889]  
Daniel acknowledges Ms. Jordan got $23,000 back, the last payment  
was made in January of 2009, and Ms. Jordan did not get her principal back. Ms.  
Jordan’s daughter was Karen Gingrich who worked for DPR and, accordingly,  
Ms. Jordan was “in the know” regarding what was going on.  
x. Kevin Hillman  
[1890]  
Kevin Hillman invested $144,360.44 in Jakobstettel Properties on  
August 8, 2008 – see Exhibit 19E and 19F. Mr. Hillman raised the money by  
remortgaging his house – see Exhibits 171, 172 and 173.  
[1891]  
Mr. Hillman testified that remortgaging the Hillman home was Daniel’s  
idea and Daniel told him to invest the proceeds. Daniel denies telling Mr. Hillman  
those things. That conversation would have taken place with Alison White (the  
mortgage broker) and David.  
 
-
524 -  
[1892]  
Mr. Hillman testified that Daniel told him to take the equity out of his  
house and the money would be made in stocks. Daniel denied telling him that.  
DPR does not offer stocks. Daniel was not brought in until Daniel was told that  
Mr. Hillman wanted to do a corporate bond.  
[1893]  
Mr. Hillman testified that he had never heard of the Jakobstettel  
property. Mr. Hillman understood that he was going to invest in real estate as  
part of a stock market investment. Mr. Hillman testified that he did not know that  
Daniel owned anything other than DPR. Daniel disagreed with this testimony  
“100 percent.” In a meeting with David present, Daniel told Mr. Hillman that  
Daniel owned a number of companies and explained what the Jakobstettel was  
and the number of rooms and its location and business.  
[1894]  
Mr. Hillman testified that he never got any documents regarding his  
$144,000 investment in the Jakobstettel Inn. Daniel testified that he gave Mr.  
Hillman a copy of the corporate bond investment at the Windsor office. Daniel  
could not produce his copy. His copy would have gone to the bookkeeper and  
been kept in a big binder under lock and key. The accountant normally would  
take a photocopy.  
[1895] Mr. Hillman testified that he thought that Daniel was a financial advisor.  
Daniel testified that it is no secret that he was not a financial advisor; it was  
-
525 -  
stated in the back of the Millionaire Mortgage book that Daniel was not a financial  
advisor.  
[1896]  
Mr. Hillman testified that he phoned Daniel concerned that DPR was  
closing down, as the fountains at DPR Windsor were being removed. Daniel told  
him that they were winterizing and everything was fine. Daniel testified that he  
himself had phoned DPR Windsor and spoke to Rob Pigeon who told him that  
everything was fine: Windsor was fully staffed and the fountains were coming  
down for winter.  
[
1897] Daniel initially testified this conversation took place in the fall of 2008,  
before October, around when David told him David was leaving in September  
008. Mr. Hillman testified that, a short while after this fountain conversation,  
2
DPR Windsor closed. Daniel testified initially that it was three months later that  
DPR Windsor closed; it definitely wasn’t one or two weeks later and it probably  
was not a month later either. That evidence was marginally inconsistent with  
Daniel’s later evidence that David gave notice in September 30, and sometime in  
October Windsor closed. Daniel testified that Windsor closed “two to three  
months later,” “sixty-ish days later,” or “several weeks” after Daniel spoke to Mr.  
Pigeon.  
[1898]  
Daniel had no idea in the fall of 2008 (specifically on September 21,  
2008) that DPR Windsor was going to close. They had signed a ten-year lease  
-
526 -  
and had every intention of being there for ten years. The Hillman conversation  
regarding closing took place between September 21 and September 30, 2008  
when David said he was leaving as Daniel’s primary financial advisor.  
xi. Wayne Schroeder  
[1899]  
Exhibit 179 – 34A is a bank draft dated August 22, 2008 in the amount  
of $59,524.74 payable by Wayne Schroeder to Jakobstettel Properties Inc.  
Exhibits 179 – 34C and 34D are a Manulife statement and withdrawal  
instructions, respectively, dated August 18, 2008, indicating that Mr. Schroeder  
withdrew $85,882.27 from his RRSPs on August 18, 2008 after taking about a  
$6,000 loss on his investments in less than two months’ time. The standard letter  
of direction, dated August 18, 2008, signed by Mr. Schroeder, indicating that he  
was withdrawing the RRSPs against his financial advisor’s advice, is included in  
the withdrawal instructions.  
[1900]  
Mr. Schroeder testified that Daniel contacted him but left out the  
previous discussions between Mr. Schroeder and his financial advisor, David  
Reeve, where Mr. Schroeder told David that he wanted out of the market. Daniel  
testified that markets were dropping in 2008 and people were panicking.  
[1901] Mr. Schroeder testified that, at an August 2008 meeting at the  
Jakobstettel, Daniel discussed the RRSPs and the fact of the market dropping.  
 
-
527 -  
Daniel testified that he just repeated what David had already said and discussed  
the corporate bond option.  
[1902]  
Daniel agreed with Mr. Schroeder’s testimony that Daniel told Mr.  
Schroeder that the money would be invested elsewhere, where there was no  
market influence and where there was less risk. He also agreed that there was  
no discussion that his money would go to pay the expenses of the Reeve  
companies. Daniel testified that he told Mr. Schroeder that the money was going  
into his company and the intention was to do a capital raise for renovations at the  
Jakobstettel regarding a couple of rooms, pool, tennis court and sodium lights.  
(
Mr. Schroder’s money was in fact used to pay the DPR overdraft and expenses,  
and a little went to Ms. Reeve – see Tab 33 of Appendix G of the GT Report  
and my Schedule G.)  
[1903]  
Mr. Schroeder testified that he did not know anything about  
Jakobstettel. Daniel testified that the Jakobstettel investment was explained and  
Daniel even took him to look at the pool.  
[1904]  
Mr. Schroeder testified that he never received any documentation.  
Daniel denied this, indicating that Mr. Schroeder got a copy of the bank draft and  
Daniel knows that that, at the second meeting at Jakobstettel, Daniel provided  
him with a copy of the bond. Annie Smith was a witness to the bond. Daniel has  
no copy of that bond to tender. The copies are in his old filing cabinets with other  
-
528 -  
copies in the possession of Diane Intini, Dave Webb, his accountants, his  
landlord, and Karen Gingrich.  
[1905]  
Approximately $60,000 of Mr. Schroeder money went into the  
Jakobstettel account and the bookkeepers would determine where it should go. I  
asked Daniel if that money went into renovations and Daniel indicated he could  
not answer whether it went to renovations. Daniel never told the investors that  
the money would go into an account to be disbursed as a pool of money to pay  
bills for the Reeve companies. It was the role of the bookkeeper to disburse the  
money within a week or month to pay bills including salary (the GT Report shows  
that usually money was disbursed in a day or two). Most of the time the money  
would go where it was intended (in this case, it would appear that none of Mr.  
Schroeder’s money was used to do renovations at the Jakobstettel).  
xii. Craig Mason  
[
1906]  
between Jakobstettel Properties Inc. and Craig Mason in the amount of  
143,378.58 paying 16 percent annually. Exhibit 118, dated September 2, 2013,  
Exhibit 113 – 27G, dated September 2, 2008 is an agreement  
$
confirms that Mr. Mason withdrew $143,378.58 from his RRSPs with deferred  
sales charges of $5,800 and withholding tax of $41,273 deducted, for a net of  
$93,304.74 available for further investment.  
 
-
529 -  
Exhibit 113 – 27E is a bank receipt confirming that Mr. Mason topped  
up the RRSP withdrawal and paid $100,000 to Jakobstettel Properties.  
[1907]  
[1908]  
Mr. Mason testified that Daniel contacted him to introduce this  
transaction to Mr. Mason. Daniel denies this, indicating that Mr. Mason’s broker  
had conversation with Mr. Mason first. In the fall of 2008, many clients had issues  
regarding what was going on in the markets.  
[1909]  
Mr. Mason testified that Daniel told him that this investment was bricks  
and mortar and a good way to grow faster. Mr. Mason thought it was a  
construction company. Daniel testified that he never held out that he owned a  
construction company.  
[1910]  
Mr. Mason testified that there was no discussion of risk. Daniel  
disagreed, saying that he talked about the marketplace and the benefits of  
corporate bonds and where bonds were on the risk scale. Daniel testified that he  
told Mr. Mason the investment was low-risk.  
[1911]  
Mr. Mason testified that there was no discussion regarding what the  
money was to be used for or who owned the company. Mr. Mason thought that  
Daniel was a financial advisor. Daniel denied all of this testifying that the money  
was to be used to improve the grounds and update a number of the suites. There  
was no question of who the owner was or what the money was to be used for.  
Daniel asked, “Why would anyone write a cheque and not know anything?”  
-
530 -  
[1912]  
Although Mr. Mason only provided $100,000 to Jakobstettel Properties  
Inc., the bond amount was for $143,378.58, which was the total of Mr. Mason’s  
RRSP before deductions for deferred sales charges and taxes. This meant that  
for years 1 through 4 of the bond, the actual interest rate on the $100,000  
invested was 23 percent. In year 5, with the return of deferred sales charges,  
taxes and interest, the rate of return would be 66 percent. The practical effect is  
that over the life of the bond, Mr. Mason would receive something in between two  
to three times his original investment. Daniel conceded that this was a very  
expensive bond. It was done to avoid a churning situation by David. (It is to be  
noted that approximately $75,000 of Mr. Mason’s money went to Grand River  
Contracting – see Tab 26 of Appendix G of the GT Report and my Schedule  
G.)  
MILLIONAIRE MORTGAGE  
i. Background  
[1913]  
Millionaire Mortgage Inc. issued corporate bonds in 2008 and 2009.  
The purpose of these bonds was to raise capital for the company as it was a  
start-up. For start-ups, it was standard to issue corporate bonds as it can be  
difficult to get bank financing.  
[1914] Daniel told the investors that Millionaire Mortgage Inc. was a new  
company and capital was needed to scale up their operations for expenses  
 
 
-
531 -  
involving office, employees and marketing. Daniel told investors that the risk  
factor was low and Millionaire Mortgage was a proven concept, about which he  
had written books.  
ii. Michelle Keddie  
[1915]  
Exhibit 50 – 23C is an agreement between Millionaire Mortgage Inc.  
and Michelle Keddie, dated February 5, 2008, in the amount of $97,691.65 with a  
two-year maturation, paying 20 percent. Ms. Keddie cashed in her mother’s  
segregated funds to come up with the $90,000 cheque she provided to Daniel –  
see Exhibits 52 and 50 – 23B.  
[1916]  
Ms. Keddie testified that Daniel told her to cash in her mother’s  
segregated funds and do a bond with him. Ms. Keddie testified that the  
investment in segregated funds had done fine but was losing a little bit of money  
now; Daniel advised her to put it into the Millionaire Mortgage bond. Daniel  
testified that this did not happen. It was Steve Haney who had discussions with  
Ms. Keddie to withdraw the money, and it was Mr. Haney who initiated the  
withdrawal of funds and looking for alternatives. It was Mr. Haney who contacted  
Daniel about this transaction.  
[1917]  
Ms. Keddie testified that she would not risk her mother’s money and  
that Daniel had said that the investment in Millionaire Mortgage was guaranteed.  
Daniel testified that he did not say this and he could not have guaranteed  
 
-
532 -  
something like that. Daniel suggested that Ms. Keddie was confused, but she  
was in GIFs before which use the term “guaranteed.”  
[1918]  
The reason that Daniel topped up the investment was to avoid any  
potential for churning, as Mr. Haney would get commissions for both the  
segregated funds and the bond. Daniel testified that the interest rate, given the  
topping up, would be around 22 percent the first year and around 30 percent the  
second year. Daniel felt he could afford this as they were 100 percent convinced  
of what they were working on and “all boats were sailing.”  
[1919]  
Ms. Keddie testified that a one-year term was discussed but she got a  
two-year term instead. She testified that she complained to Daniel and he told  
her she could get out after one year. Daniel testified that he does not remember  
but what was agreed upon was in the document.  
iii. Mark McGuire  
[1920]  
Exhibit 73 – 28M is an agreement dated October 14, 2008 between  
Millionaire Mortgage Inc. and Mark McGuire for $173,736.85, for a one-year term  
at interest of 18 percent. Exhibit 73 – 28N is a statement dated March 15, 2009  
indicating the monies that were owing at that time and confirming a maturity date  
of October 14, 2009. Exhibit 73 – 28L is a cheque made out to Millionaire  
Mortgage Inc. in the amount of $173,736.85, dated October 15, 2008.  
 
-
533 -  
[1921]  
Mr. McGuire testified that three options were discussed regarding the  
Millionaire Mortgage with David Reeve and they were private equity, T-SWP and  
a laddered GIC. Mr. McGuire advised David he wanted the T-SWP, but the  
money never ended up in a T-SWP and Daniel was involved in what happened.  
[1922]  
Daniel testified that he does not believe in T-SWPs and made it clear  
that they did not do T-SWPs at Millionaire Mortgage and DPR Financial. Daniel  
told David (who recommended the T-SWP) that they did not do those, especially  
in October of 2008 with everything that was happening. Daniel instructed David  
to go back to the client and drop the T-SWP.  
[1923]  
Daniel got involved with the client 60 days before October 15, 2008. A  
meeting was set up by his staff with Mr. McGuire. Daniel “walked” Mr. McGuire  
through the corporate bond for start-ups concept.  
[1924]  
Daniel testified that Mr. McGuire was told that the intention was to use  
the corporate bond money for operations. Daniel testified that the market was  
tanking in 2008 but he knew that Millionaire Mortgage Inc. would be flush with  
cash in 2009. Daniel never discussed T-SWPs with Mr. McGuire.  
[1925]  
Mr. McGuire testified that he advised Daniel that his money should go  
to T-SWP, but his money was intercepted and put in the Millionaire Mortgage  
bond instead. Daniel denied this ever happened and testified that the first time he  
heard of this allegation was at trial. Daniel testified that he could not physically  
-
534 -  
intercept an intended T-SWP investment and their firm had no paperwork to  
process a T-SWP.  
[1926] At the time of this transaction, David had just left. There were lots of  
issues before David left.  
iv. Pat Westerhout  
[1927]  
Exhibit 78 – 42B is an agreement dated March 4, 2008 between  
Millionaire Mortgage Inc. and Pat Westerhout for $700,000, paying 25 percent  
interest with a maturity date of June 1, 2008. Exhibit 84 is memo dated  
December 4, 2007 acknowledging a $700,000 loan maturing in three months on  
March 1, 2008 for $700,000 with interest to be paid at a rate of 25 percent.  
[1928]  
The Exhibit 84 loan to Millionaire Mortgage Inc. resulted from a need  
to raise capital for a number of initiatives including operation, marketing,  
accounting fees, contracts for independent financial advisors and mortgage  
brokers, furniture, and a separate business location. Daniel testified that he  
absolutely told Ms. Westerhout what the money was for and that they had very  
frank discussions at a conference table at the Jakobstettel. Daniel needed this  
dollar amount and he was able to make good on the interest payments and  
fulfilled his obligation. Accordingly, the $700,000 was rolled into another three-  
month agreement as outlined in Exhibit 78 – 42B. (Note: this was the money  
 
-
535 -  
that funded the $500,000 first spousal/equalization support payment to Ms.  
Reeve.)  
[1929]  
Exhibit 78 – 42G is a repayment schedule dated September 5, 2008  
indicating that the $700,000 would be paid in September and October of 2008.  
Daniel, after talking to his lawyer and bookkeepers, felt he could make his  
payments. He could not.  
[1930] Hence there were two other payment schedules dated October 16,  
2008 and January 8, 2009 – see Exhibits 78 – 42H and 42I respectively.  
October 16, 2008 was two days after the Mark McGuire Millionaire Mortgage  
investment, which largely funded a $4,000 payment to Ms. Westerhout. Daniel  
testified that in the middle of November of 2008, David had advised he was not  
going to pay the $1.6 million he had promised to pay Daniel for the transfer of  
client accounts. (Note the prior testimony of Daniel regarding Mr. Cunningham,  
where Daniel indicated that, regarding the Exhibit 39 – 11S December 18, 2008  
email schedule of payments starting December 31, 2008, Daniel knew he could  
pay as he was expecting $1.6 million from David.)  
[1931]  
Regarding the January 8, 2009 repayment schedule extending into  
August 2009, Daniel testified that he felt he could pay based on deals already  
done and thought the Millionaire Mortgage deal would be inked in January or  
February of 2009.  
-
536 -  
[1932]  
The purpose of the three schedules was to pay Ms. Westerhout. Daniel  
testified that he still owes this obligation and will make good on it at the earliest  
possibility.  
[1933]  
Ms. Westerhout testified that in the throes of these repayment  
schedules, Daniel told her that he was selling the Millionaire Mortgage Inc. patent  
to RE/MAX and it was almost a done deal. Daniel testified that these details are  
close but far apart. He was not selling the patent but was licensing it. There is no  
patent and it is a trademark and he knows the difference. Daniel does not know  
where she got RE/MAX from. Daniel did say once that it was “almost a done  
deal.”  
[1934]  
Daniel testified that he thought on two occasions that the deal was  
there. In February 2009, Daniel knew there would be a delay. In March 2009,  
Daniel knew the deal would not be done until his criminal investigation was  
resolved.  
v. Eva Bernachi  
[
1935] Exhibit 127 – 2K is an agreement between Millionaire Mortgage Inc.  
and Eva Bernachi dated September 12, 2008 in the amount of $300,000. Exhibit  
27 – 2I is cheque dated September 12, 2008 in the amount of $300,000.  
Exhibit 127 – 2J is a cheque dated September 11, 2008 in the amount of  
454,000 to Investia in trust, though it was not cashed but voided.  
1
$
 
-
537 -  
[1936]  
Ms. Bernachi testified that, regarding the workhorse account, $450,000  
was to be invested with Fidelity but that Daniel told her that was risky and she  
should take off $300,000 and instead invest it with Daniel. Daniel testified that it  
did happen but not the way Ms. Bernachi laid it out. Daniel found out that Josh  
(
who was working with David) was going to do a T-SWP without the knowledge  
of Millionaire Mortgage Inc. and the MGA. David was structuring the transaction  
in such a way that DPR and Millionaire Mortgage Inc. would be cut out of  
revenues. Daniel told Ms. Bernachi that they did not do T-SWPs. Daniel testified  
further that, when he spoke to her, it was obvious she did not understand it and  
he discussed other options as a T-SWP could not be done. Daniel had spoken to  
Josh and David about the T-SWP before talking to Ms. Bernachi.  
[1937]  
Ms. Bernachi testified that Daniel called during David’s wedding on  
September 12, 2008 to tell her that David was fine with everything. David had  
agreed to no T-SWPs and the private agreement and was present for this call.  
[1938]  
However, Exhibit 127 – 2M was created on October 24, 2008. It is a  
letter from DPR Financial wherein Daniel signs that DPR Financial will guarantee  
Reeve Hotels and Resorts Inc. and Millionaire Mortgage Inc. investments in the  
event of a default or bankruptcy. Ms. Bernachi wanted this security because  
David had made her nervous. Daniel testified that, pursuant to this document, he  
could always do an intercompany loan to bail out one of his companies.  
-
538 -  
vi. Peter Steenbergen  
[1939]  
Peter Steenbergen and family members on January 8, 2008 signed a  
variety of agreements with Millionaire Mortgage Inc. in the total amount of  
450,000 – see Exhibits 96 – 36B, 36C, and 36D. Exhibit 97 indicates that Mr.  
$
Steenbergen cashed in his non-registered investments from Canada Life to net  
the Exhibit 102 – 36E bank draft of $249,437.39, dated January 16, 2008. This  
money was provided to Millionaire Mortgage Inc. and another agreement was  
drawn up with Mr. Steenbergen only in the amount of $249,437.39 back-dated to  
January 8, 3008 – see Exhibit 102 – 36F. All these agreements provided for an  
interest rate of 25 percent and were short-term investments.  
[1940]  
Mr. Steenbergen testified that Daniel called him in January of 2008 and  
told him that he had a good opportunity, a new building, and needed short-term  
cash. Mr. Steenbergen testified that Daniel told him there was a new building in  
Waterloo and the money would be used to get Millionaire Mortgage Inc.  
established. Daniel testified that he agreed with Mr. Steenbergen’s testimony  
with the caveat that Mr. Steenbergen’s financial advisor had advised Daniel that  
Mr. Steenbergen was looking for this type of investment and might be interested  
in what Daniel was offering.  
[1941]  
When Daniel and Mr. Steenbergen met, Daniel testified that he told Mr.  
Steenbergen that Daniel was working on something and needed a new building  
 
-
539 -  
and was going to operate in the Toronto-to-Windsor corridor. Daniel gave Mr.  
Steenbergen an overview of the deal as it was closing imminently. Daniel needed  
to be fully operational immediately. Mr. Steenbergen agreed that it was a big deal  
and no one else was doing this.  
[1942]  
Mr. Steenbergen testified that there was no discussion of risk. Daniel  
testified that he told Mr. Steenbergen about the set-up, that Daniel was the sole  
owner, that it was a unique trademark, and what the anticipated revenues were.  
[1943]  
Mr. Steenbergen was told that there would be two outposts in Toronto  
and Windsor and that money would be needed for expensive marketing  
campaigns that would include magazines.  
[1944]  
Mr. Steenbergen testified that the reason for the 25 percent interest  
agreements was due to Mr. Steenbergen incurring financial penalties to withdraw  
funds – see the deferred sales charges of $10,526.29 on an investment of close  
to $260,000. Mr. Steenbergen wanted short-term investments as he needed the  
money to do something. It took a few weeks to craft the agreements due to  
scheduling problems with the children.  
vii. Jeannette Harrop  
[1945]  
Exhibit 137 – 18C is an agreement dated October 31, 2008 between  
Millionaire Mortgage Inc. and Jeannette Harrop in the amount of $62,714.24  
providing 12 percent interest. Ms. Harrop cashed in her RRSPs to come up with  
 
-
540 -  
the investment money – see Exhibits 137 – 18A and 137 – 18B bank drafts  
made out to Jakobstettel.  
[1946]  
Ms. Harrop testified that she never wanted to redeem the RRSPs and  
wanted them to be transferred. Daniel testified that this was not true and the  
documents signed by her confirm her desire to withdraw the RRSPs. Ms. Harrop  
testified that her signature was forged and Daniel disagreed with this testimony.  
[1947]  
Daniel testified that Ms. Harrop was nervous about the market and he  
visited her in the first week of October of 2008. Ms. Harrop had been a client of  
his for 13 years. Ms. Harrop had trouble with her memory and his staff at DPR  
knew this so they documented everything.  
[1948]  
Ms. Harrop testified that she told Daniel that she did not want to  
withdraw her RRSP funds. Daniel testified that this did not happen. Ms. Harrop  
did attend at the teller and was confused so Daniel and Janice Berkin went to the  
teller. The bank manager got involved and after a few minutes it was all sorted  
out.  
[1949]  
Ms. Harrop testified that she did not get any documents until February  
of 2009 and did not know anything about Millionaire Mortgage Inc. Daniel  
testified that is not correct. In November of 2008, he was told there could be no  
more bonds in Jakobstettel and he contacted her and told her he could do  
-
541 -  
another bond in another company and the Jakobstettel funds would go to  
Millionaire Mortgage Inc.  
viii. Gary Raycroft  
[
1950]  
Millionaire Mortgage Inc. and Gary and Deborah Raycroft in the amount of  
250,000 at 15 percent interest with monthly payments of $3,125 commencing  
February 10, 2009.  
Exhibit 175 – 3L is an agreement, dated January 10, 2009 between  
$
[1951]  
Mr. Raycroft testified that Daniel told him that he needed the money by  
December 31, 2008 but did not tell him why. Exhibit 175 – 32K is a bank draft  
dated December 31, 2008 from Mr. Raycroft. Daniel testified that he needed the  
money by December 31, 2008 as it was the end of the calendar year.  
[1952]  
Daniel testified that Mr. Raycroft wanted another investment with  
Jakobstettel but there was no longer room to do that. Daniel suggested  
Millionaire Mortgage Inc. as he needed capital for that and Mr. Raycroft agreed.  
[1953]  
Exhibit 175 – 32M is an email dated April 14, 2009 which confirms a  
payment schedule for missed interest payments and future anticipated interest  
payments on the Jakobstettel properties. Daniel testified that he had some  
Millionaire Mortgage Inc. receivables and would be able to meet the $3,125  
interest payments; $20,000 and $16,000 were due on other Jakobstettel  
investments on April 28 and August 18, 2009 respectively. Daniel testified that he  
 
-
542 -  
anticipated making the April 28 payment because he expected to complete the  
Millionaire Mortgage Inc. deal and would get money up-front. (Note that Daniel  
was in default at that time on many repayment plans – see for example, the  
Cunninghams and Pat Westerhout, as outlined above. Other clients were not  
being paid as well – see, for example, Ms. Caiger [whom Daniel knew was in the  
process of losing her job], who never received a single payment on monthly  
payments of $1,333 which were to begin in January of 2009. Another example is  
Carin Smith who gave a $70,000 cheque to Millionaire Mortgage Inc. in  
November of 2008 and never received any payments or papers. When Ms. Smith  
asked for her money back in February or March of 2009; Daniel testified that he  
could not have paid the $70,000 back and would have had to set up a payment  
schedule. No money or payments were ever paid to Ms. Smith. Further, the  
Nagel Report indicates that, in 2009, revenues for the Reeve corporations were  
approximately $30,000 with payroll and office expenses alone totalling almost  
$100,000. Not surprisingly, the Jakobstettel payments due on April 28 and  
August 18, 2009 were not paid.) The Millionaire Mortgage deal was stalled at that  
time with regard to Mortgage Architects, due to the criminal investigation, but  
Daniel had other parties who wanted to go that route. However, once they  
learned about his criminal investigation, he was out of business.  
[1954]  
Mr. Raycroft testified that Daniel told him in April of 2009 that  
everything was fine and the money was doing well invested in low-risk, high-end  
-
543 -  
real estate. Daniel testified that he did not say that, as it would be a lie. DPR, at  
that time, was closed except by appointment.  
ix. Isaac Thiessen  
[1955]  
Exhibit 205 – 41D is a bond agreement, dated October 31, 2008, in  
the amount of $50,000 for 12 percent interest. Mr. Thiessen withdrew his non-  
registered investments with Manulife and netted $40,890.24 – see Exhibit 205 –  
41A.  
[1956]  
Mr. Thiessen testified that Daniel approached him and told him that  
Steve Haney was no longer with them and Daniel was taking over as  
administrator of record. Daniel testified that he did not say that, as he was no  
longer a financial advisor.  
[1957]  
Mr. Thiessen testified that Daniel told him that the money would go into  
another account where it would not lose money and that Daniel never informed  
him that the money was leaving Manulife. Daniel denied that, indicating that there  
are processes, and everything was explained to Mr. Thiessen.  
[
1958]  
10,000 to the bond to make it $50,000, and it would be free money. Daniel  
testified that he agreed to compensate for the deferred sales charges which were  
9,000 plus change, and never said it was “free money.” Exhibit 205 – 41C is a  
Manulife statement which indicates the withdrawal fees were $779.69. Daniel  
Mr. Thiessen testified that Daniel told him that he would add $9,000 to  
$
$
 
-
544 -  
testified that they were more than that, as deferred sales charges start at 6  
percent. (Later in chief, Daniel testified that deferred sales charges were 6 or 7  
percent, and would go down over time. When I asked him about this testimony,  
he indicated he misspoke – see summary regarding Andrew Eplen which follows  
at paragraph 1973. In cross-examination, Daniel testified that the extra amount  
was given due to a missed reset by DPRs.)  
x. Lloyd and Ruth Hoffman  
[
1959]  
Millionaire Mortgage Inc. and Lloyd and Ruth Hoffman for consideration of  
260,000 with interest payable at 16 percent annually with a maturity date of  
Exhibit 228 is an agreement, dated September 15, 2008, between  
$
September 15, 2008. Exhibit 227 is a cheque in the amount of $260,000 payable  
to Jakobstettel Properties Inc.  
[1960]  
Daniel testified that he thought the bond would belong to Jakobstettel  
but when he got back to the office, the reviewing financial team indicated that  
there was no room for more Jakobstettel bonds. Daniel then contacted Hoffman  
who was okay with the change to Millionaire Mortgage Inc.  
[1961]  
Exhibit 229 is an agreement between Millionaire Mortgage Inc. and  
Lloyd and Ruth Hoffman, dated October 7, 2008, in the amount of $256,000  
paying interest at 16 percent. The maturity date is October 7, 2013. Exhibit 230  
 
-
545 -  
contains two cheques dated October 3 and October 7, 2008 in the amount of a  
total of $248,000 made out to Millionaire Mortgage Inc.  
[1962]  
Mr. Hoffman testified that it was Daniel who suggested that he invest in  
Millionaire Mortgage Inc., and further testified that Daniel came to the Hoffmans  
and told them the market was going down and his investment would be safer in  
Millionaire Mortgage Inc. Daniel testified that this did not happen and denied  
approaching them. It was not Daniel’s suggestion to get out of the market; this  
suggestion came from Mr. Hoffman’s financial advisor.  
[1963]  
Daniel testified that Daniel and David went to the Hoffmans’ house.  
There David suggested that the Hoffmans had an awful lot invested in the  
market. Daniel talked to them about private equity.  
[1964]  
With the first private equity investment, the intention was to put the  
funds into Jakobstettel, but after Daniel got the cheque and was processing the  
paperwork, Daniel was told that he had topped out the ten suites in the  
Jakobstettel and he could not use any other suites. This happened between  
receiving the cheque and doing the first Millionaire Mortgage instrument on  
September 15, 2008. Daniel went to the Hoffmans and got them to switch to the  
Millionaire Mortgage investment.  
[1965]  
Regarding the first investment, Mr. Hoffman testified that he took a  
significant hit in taxes. Daniel did not talk taxes with Mr. Hoffman as Mr. Hoffman  
-
546 -  
was a sophisticated investor who was not totally sold on RRSPs and David would  
have talked to Mr. Hoffman about taxes. Mr. Hoffman testified that Daniel offered  
to help them out at tax time when he handed over the first cheque. Daniel  
admitted that he may have said that but does not recall. It was not outrageous  
and it should be reflected in the document.  
[1966]  
Mr. Hoffman testified that it was Daniel’s idea to do the second  
Millionaire Mortgage investment. Daniel testified that he agreed, although when  
he met with Mr. Hoffman, it was not with the intent to do another one. It came up  
in the conversation.  
[1967]  
Mr. Hoffman testified that Daniel never advised him it was a loan to  
Daniel’s company. Daniel agreed that he did not do that, although he does not  
recall.  
xi. Kevin Hillman  
[1968]  
Exhibit 164 – 19A is a bank draft made out to Millionaire Mortgage  
Inc. dated July 9, 2008 in the amount of $41,031.00. Exhibit 164 – 19B is the  
RRSP withdrawal instructions and Exhibit 164 – 19C is a T4RSP indicating that  
RSPs in the amount of $72,902.55 were withdrawn and income tax of $21,870.77  
was paid.  
[1969]  
Exhibit 164 – 19D is an agreement, dated July 7, 2008, between  
Millionaire Mortgage Inc. and Mr. Hillman, for consideration of $51,031.78 for  
 
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interest of 16 percent annually. The bond matured in July 11, 2011, at which time  
the deposit, interest, penalties of $4,445.11 and withholding tax of $21,870.77  
were payable. This meant that, in the final year, Mr. Hillman would receive  
$51,031.78 plus interest of about $8,000 plus penalties and withholding tax of  
about $26,000 for a total of about $85,000 on an investment of about $41,000  
made three years earlier. The interest rate in the final year would be about 85  
percent with all these payments. Daniel testified that he could not explain why  
Mr. Hillman got that extra $10,000 over and above his cheque amount. Daniel  
said it was expensive but he could do it.  
[1970]  
Mr. Hillman testified that he had mutual funds of $80,000 and David  
and Daniel said they would put these funds into stocks. Daniel testified that this  
was not said as DPR does not invest in stocks and was not licenced to do that.  
[1971]  
Mr. Hillman testified that he does not know why he was invested in  
Millionaire Mortgage Inc. as he thought his money was going into the stock  
market. Daniel testified that Mr. Hillman went into the Millionaire Mortgage with  
full knowledge as Daniel had those discussions with him in Kitchener.  
xii. Andrew Eplen  
[1972] Exhibit 180 – 15E is an agreement, dated August 27, 2008, between  
Millionaire Mortgage Inc. and Margaret Eplen and Andrew Eplen for  
 
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consideration of $111,978.01 with payments of 16 percent annually with a  
maturity date of August 27, 2013.  
[1973]  
Exhibit 180 – 15B is a Manulife statement for the period of July to  
December 2008. It indicated that there was a loss of some $12,000 in six weeks  
and that Mr. Eplen withdrew $111,978.01 in RRSPs with no fees being charged.  
There is also a letter of direction signed by Mr. Eplen that this money was being  
withdrawn against the advice of David, his financial advisor. It also indicated that  
Mr. Eplen could be charged with deferred sales charges of up to 6 percent.  
Daniel indicated that most of the deferred sales charges in the first year are 6  
percent (though could be as high as 7 percent), and then they go down over the  
years. When I asked Daniel about his prior testimony that deferred sales charges  
start at 6 percent and go up, Daniel indicated that he misspoke.  
[1974]  
The T4RSP slip shows that RRSPs of $111,978.00 were withdrawn  
with tax deducted of $33,593.40 and Exhibit 15A shows a bank draft payable to  
Jakobstettel Properties in the amount of $78,460.00 dated August 27, 2008.  
Again, Daniel wanted to do a Jakobstettel agreement but when he went to paper  
it, there were too many transactions on Jakobstettel. He says he talked to Mr.  
Eplen about it and the agreement was switched to Millionaire Mortgage Inc.  
(Note Daniel’s previous testimony that he tried to do deals with Jakobstettel in  
September and November 2008, and it was in those months that he was told that  
Jakobstettel was topped out.)  
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[1975]  
Mr. Eplen testified that Daniel told him that his investment was for the  
construction and growth of a property in Costa Rica. Daniel testified that this did  
not happen as Daniel has no investments in Costa Rica and has “no idea” where  
Mr. Eplen got that from, although at one point Daniel did say, “wait a minute  
now.” They just talked about Jakobstettel. It was Mr. Eplen who was nervous  
about the markets, and it was David who told Daniel that Mr. Eplen might be  
interested in a private equity bond.  
[1976]  
Daniel Eplen testified that there was no discussion regarding the tax  
consequences of redeeming RRSPs. Daniel testified that the bond in the maturity  
date section referred to the original deposit of $111,978.01  
[1977]  
Mr. Eplen testified that before he did the deal, he asked if he should  
ask David; Daniel told him that, as president, Daniel could do all transactions.  
Daniel denied saying that as he was not president and was not a financial  
advisor.  
[1978]  
In the last year of this bond, 2013, Millionaire Mortgage Inc. was  
obligated to pay $50,000 in interest and related payments on an original $78,000  
receipt in 2008. This was a payment of some 60 percent in the last year. Daniel  
testified that this was expensive but felt he could do it considering the opportunity  
costs for the use of this money. He could not get financing anywhere else and  
there was a financial meltdown occurring at the time. Further, he was putting in  
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all these commitments because he felt that he was going to get $20 million a  
year from Millionaire Mortgage Inc. It was good business and it got him out of a  
potential churning situation. He believed that in August of 2008 and believed that  
into January or February of 2009.  
3. INDIVIDUALS INVOLVED IN MILLIONAIRE MORTGAGE PROGRAM  
[1979]  
Regarding the workhorse account, the purpose of the private equity  
bonds with Daniel was to facilitate the interest payments on the lines of credit or  
pay the double digit credit card debt. Re-financing for higher amounts with longer  
amortization periods was designed to increase cashflow to pay the mortgage and  
lines of credit interest payments.  
[1980]  
Private equity bonds could also be invested outside the workhorse  
account. The debt incurred by the Reeve companies was Daniel’s debt, and he  
incurred the debt to create a more-than-viable corporation that was validated and  
ongoing. Lots of money was going back and forth between the sister companies  
and there was lots of pooling monies.  
[1981]  
Daniel was working on a beta test with Millionaire Mortgage Inc. and  
Mortgage Architects which involved only 20 mortgage brokers. Daniel estimated  
this initiative would bring in $20 million just with those brokers, and much more  
would come in with 1,200 mortgage brokers. The only reason that it did not  
happen was there was public knowledge of his criminal investigation, starting  
 
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with his staff being interviewed by the police in October 2008. Daniel testified that  
he knew at that time it was out. The MGA had heard about the investigation in  
November 2008, and it had also reached the ears of Mortgage Architects in the  
last part of February or March 2009.  
i. BARRY CUNNINGHAM  
[1982]  
Daniel testified that he agreed with Mr. Cunningham’s testimony that  
Mr. Cunningham participated in the Millionaire Mortgage program, and his money  
regarding the workhorse account was invested in the Breadalbane.  
[1983]  
Mr. Cunningham and Sharon Hepburn met with Daniel and David  
Reeve. Mr. Cunningham wanted to remortgage for $1 million but did not want to  
invest in segregated funds. Daniel was there to talk about a corporate bond  
regarding an investment in an inn in Fergus. Mr. Cunningham decided to do the  
Breadalbane corporate bond, and Daniel was not involved in the other aspects  
such as segregated funds. There was no reason for this bond to be in the  
workhorse account.  
[1984]  
Mr. Cunningham testified that the money was to be used for the  
purchase and renovation of the Breadalbane and Daniel could pay 18 percent.  
Daniel testified that he did say those things.  
[1985]  
Mr. Cunningham further testified that Daniel told him the Breadalbane  
deal would close in June of 2008. Daniel testified that he did not say that. Daniel  
 
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said that it was going to close “soon.” There was a snag about a Breadalbane  
debt of $300,000 that was off-book and Daniel did not want to pay that.  
[1986]  
Mr. Cunningham further testified that Daniel said that there was no risk  
and that Daniel gave his personal guarantee. Daniel testified that they always  
talked about risk. Daniel did formalize a guarantee that went beyond the bond  
agreement and this was the only client for whom Daniel did that.  
[1987]  
Exhibit 39 – 11K is a joint partnership agreement (that was not a  
bond) dated June 2, 2008 between Reeve Hotels and Resorts Inc. c.o.b. as  
Breadalbane Inn for consideration of $500,000, entitling Mr. Cunningham to a  
receipt for losses that he could write off against his taxes. This agreement was  
not for use for a workhorse account given these terms with no financial payout.  
Exhibit 39 – 11I is a bank draft dated June 2, 2008 made out to Reeve Hotels  
and Resorts Inc.  
ii. CARIN SMITH  
[1988]  
John Cavan introduced Carin Smith to Daniel. Mr. Cavan filled out  
Exhibit 119 – 35A which is the standard form that Millionaire Mortgage Inc. used  
for its mortgage applications.  
[1989]  
Ms. Smith testified that her workhorse account was to pay for her  
interest payments and she was to have access to it. Daniel agrees with this  
testimony.  
 
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[1990]  
Ms. Smith remortgaged her home and she handed a $70,000 cheque  
dated November 14, 2008 to Daniel – see Exhibit 119 – 35B. This money was to  
go to Millionaire Mortgage Inc. as a bond and she would get payments.  
[1991]  
Ms. Smith testified that she thought Daniel was a financial advisor.  
Daniel indicated that Mr. Cavan told her that Daniel owned Millionaire Mortgage  
Inc. and Daniel would bring a financial advisor.  
[1992]  
Ms. Smith testified that the workhorse account was supposed to pay  
interest on the line of credit which was $415 per month. Daniel disagreed with  
this testimony indicating that the corporate bond was not set up due to the  
couple’s disagreements and it was on hold. They separated and that stopped the  
dialogue.  
[1993]  
Ms. Smith testified that there was a meeting at Starbucks in February  
of 2009 and Daniel brought some life insurance papers and told her the account  
would get set up. Daniel agreed with this testimony in part. The meeting did not  
take place in February but happened before the Christmas break. Daniel was  
asked by financial advisor Jasbir Sraon to drop off the insurance papers. Daniel  
did not tell her the account would be set up.  
[1994]  
Ms. Smith testified that she met with Daniel in March and as she had  
not received any payments, she wanted her money back and Daniel told her that  
was no trouble but he would need 30 days. Daniel testified that this meeting took  
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place in February or March of 2009 and Daniel could not pay her that money  
back. He told her they would have to set up a payment schedule. No money was  
ever paid back and it, according to Daniel, is still outstanding.  
[1995]  
Ms. Smith testified that there was no discussion of the $70,000 going  
to Daniel’s companies. Daniel denied this and testified that he talked to Ms.  
Smith about raising capital through his corporations and doing corporate bonds  
with interest rate terms.  
[1996]  
Ms. Smith never received any paperwork due to her hold position.  
iii. SHERRILL (MARTIN) STEVENSON  
[1997]  
Sherrill Stevenson testified that she arranged with David to remortgage  
her home and that the money for her workhorse account was going to a trust  
fund, Investia. David had told her that the money was going to Manulife and there  
was no discussion of her workhorse account being invested with DPR or any of  
Daniel’s companies. Ms. Stevenson testified that Daniel called her on the phone  
out of the blue and told her that she was getting money on her mortgage. Daniel  
agreed that his first involvement was the phone call that Ms. Stevenson  
described. He learned of the deal from Dan Balch and he learned that David was  
going to do a T-SWP and he was going to put it through Investia. Daniel told  
David that they were not doing a T-SWP and to tell the client this.  
 
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[1998]  
Daniel told Ms. Stevenson that the T-SWP was not an option. Ms.  
Stevenson testified that Daniel told her he needed a cheque for $75,000 even  
though David had told her to pay only $67,000. Daniel spoke to David who  
agreed that all the $75,000 should be invested in the workhorse account.  
[1999]  
Ms. Stevenson testified that she understood that the $75,000 was to go  
to Manulife for 8 percent and Investia in trust. Instead, Daniel told her to make a  
cheque out to the Wealth Institute and she would get 12 percent. Daniel testified  
that this was not accurate as DPR had no affiliation with Investia. Further, as  
Investia is a mutual fund and Manulife is an insurance company, her evidence  
cannot be correct. Daniel testified that Ms. Stevenson’s evidence is not correct  
and she is confused.  
[2000]  
Exhibit 120 – 37D is a bank draft dated November 10, 2008 in the  
amount of $75,000 payable to the Wealth Institute. Ms. Stevenson testified that  
Daniel told her that she would get 12 percent interest on her workhorse account  
and to make the cheque out to the Wealth Institute.  
[2001]  
Ms. Stevenson testified that there was no discussion regarding the  
Wealth Institute. Daniel testified that this was not true and he talked to her about  
all his corporate bond investments regarding his companies when he escorted  
her and her husband to the bank in his corporate vehicle. The corporate bond  
was to take the place of the T-SWP in the workhorse account, and it was made  
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out to the Wealth Institute as there was a problem with the Millionaire Mortgage  
Inc. account placing holds on cheques for a week. The adjustments would be  
fixed later.  
[2002]  
Ms. Stevenson testified that she did not receive any documents and  
received no payments. Daniel testified that he could not comment about this  
testimony but then added that he has no memory of her getting documents. She  
got no payments.  
[2003]  
Ms. Stevenson testified that she tried to get a hold of Daniel but he was  
hard to reach in February or March of 2009. Daniel testified that he was not trying  
to avoid anyone and he was open as long as possible. Daniel denied that his cell  
phone got disconnected as she alleged.  
iv. BRAD ASHMAN  
[2004]  
Brad Ashman testified that he spoke to David about doing a Millionaire  
Mortgage program and that David told him that the workhorse account would be  
in a T-SWP.  
[2005]  
Daniel agrees with Mr. Ashman’s testimony that Daniel phoned him in  
November of 2008 that the financing for his mortgage had been granted and that  
this was the first contact between Mr. Ashman and Daniel. Daniel wanted to set  
up a time to get the cheque.  
 
-
557 -  
[2006]  
Daniel got involved due to the T-SWP issue which would mean that  
DPR and Millionaire Mortgage Inc. would be cut out of any fees. Daniel testified  
that he talked to Mr. Ashman about the nuances of T-SWPs and Mr. Ashman  
confided that it had not been fully explained to him. Daniel talked to Mr. Ashman  
about the corporate bond alternative which could pay weekly or monthly.  
[2007]  
Exhibit 126 – 1A is a certified cheque payable to Millionaire Mortgage  
Inc. in the amount of $150,000 dated November 3, 2008. Mr. Ashman testified  
that the cheque was picked up by Daniel who told him to make it out to  
Millionaire Mortgage Inc. but Daniel did not explain where it was supposed to go.  
Mr. Ashman thought it was going into a T-SWP. Daniel testified that this  
testimony is not accurate as Daniel clearly explained the T-SWP. It was Mr.  
Ashman who was not comfortable with the T-SWP.  
[2008]  
Later, Mr. Ashman contacted Daniel to get $20,000 back as the house  
had been over-appraised. Mr. Ashman testified that Daniel told him that the  
money was already invested and was in the bond market and it would take 30  
days to get it back. Daniel testified that this was not true. The money was never  
in the bond market and the money was deployed and not sitting there. Daniel  
testified that he “moved mountains” and got Mr. Ashman $20,000 back.  
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[2009]  
Later, Mr. Ashman wanted all his money back after speaking to David.  
Daniel testified that he could not pay it back as there was a run on the company.  
Mr. Ashman never got any documentation regarding the $150,000.  
[2010]  
When I asked Daniel what mountains he had to move to pay Mr.  
Ashman, Daniel indicated that that he looked at all sources possible such as  
revenue, fees, commissions and amounts from sister companies and this  
$
20,000 request was a curveball. In the Nagel Report in Schedule 1A, the  
sources of funds chart indicates that the income for the entire 2009 year was  
30,023.91 and intercompany transfers were $25,075.07. The uses of funds  
$
chart in Schedule 1A of the Nagel Report indicates that, for all of 2009, payroll  
was $76,413.85, office expenses were $33,574.82, and rent for 2009 was  
$50,000 (Daniel testified that the rent for his companies was $25,000 per month  
which he was unable to pay in March and April; the landlord closed him down in  
April 2009). Accordingly, in 2009, basic business expenses paid were triple the  
income. It is obvious that Mr. Ashman could only be paid if basic business  
expenses were ignored.  
[2011]  
The reality is that corporate income was not used to pay Mr. Ashman  
at all. Tab 32 of Appendix G of the GT Report and page 1 of Appendix C of  
the GT Report indicates that Lisa Schnarr invested $75,000 in Millionaire  
Mortgage on December 31, 2008 and on January 5-6, 2009, $29,000 was paid to  
the alleged victims Wilma Jordan ($2,000), Brad Ashman ($20,000), Pilita  
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Galano ($2,100), and Warren Boldt ($5,000). These amounts were paid with at  
least $27,304.27 of Schnarr money. Accordingly, no mountains or even pebbles  
were moved at all. Ms. Schnarr’s investment was used to pay back the bulk of  
Mr. Boldt’s repayment of $20,000 in classic Ponzi scheme fashion.  
v. LYNETTE CAIGER  
[
2012]  
2013]  
David introduced Lynette Caiger to Daniel.  
[
Ms. Caiger testified that Daniel told her that the $100,000 paid to  
Reeve Hotels and Resorts Inc. would be invested in insurance companies.  
Daniel disagreed with this testimony indicating that Daniel did not bring that up  
and that discussion would have been with David.  
[2014] Exhibit 182 – 7D is a TD receipt dated May 30, 2008 for $100,000  
paid by Ms. Caiger to Reeve Hotels and Resorts.  
[2015]  
Ms. Caiger testified that there was no paperwork given to her, but  
Daniel testified there was no way paperwork would not be provided. She also  
testified that she was to receive $1,300 per month at a 16 percent return which  
would be in the workhorse account.  
[2016]  
Exhibit 187 – 7E is an agreement dated June 1, 2008 between  
Millionaire Mortgage Inc. and Ms. Caiger for consideration of $100,000 with  
interest at 16 percent with monthly instalments starting January 1, 2009 for  
 
-
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$1,333.34. This document was signed in November of 2008 but was backdated  
to June 1, 2008. The agreement was in the name of Millionaire Mortgage Inc.  
instead of Reeve Hotels and Resorts Inc., either because Reeve Hotels and  
Resorts was topped out in November or the original agreement in June was for  
the Plaza and that was not available in November of 2008.  
[2017]  
Ms. Caiger was losing her job and she wanted her money back. She  
testified that in November of 2008 she wanted her money back but Daniel told  
her he could not do that but would guarantee monthly income for her. Daniel  
disagreed with this testimony, testifying that the money was already invested and  
deployed and put to work. (Note the GT Report at page 3 of Schedule C and  
Mr. Nagel’s evidence indicate that $20,00 to $25,000 of Ms. Caiger’s money was  
paid to Cheryl Reeve on May 30, 2008 and was put in the accounting records as  
a loan.)  
[2018]  
Daniel testified that he took the Exhibit 187 – 7E agreement to the  
meeting with Ms. Caiger in November and at the meeting, she told him that she  
wanted her money back. Daniel testified that “we” could honour monthly  
payments.  
[2019]  
Daniel testified that Ms. Caiger did receive monthly payments. She  
received a few until January to March of 2009. Daniel could not provide details  
but a couple payments were made – one, two or three. (It is to be noted that  
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561 -  
Schedule C of the GT Report at page 3 indicates that the Caigers received zero  
payments on their $100,000 investment with Daniel.)  
vi. PILITA GALANO  
[
2020]  
payable to Canada Life to Steve Haney. Mr. Haney left in August or September,  
008 and left the cheque in his desk. Ms. Galano received no documents and  
Pilita Galano provided a cheque on August 19, 2008 for $74,000  
2
contacted Daniel. Daniel searched and found the cheque and no corresponding  
application.  
[2021] Daniel contacted Mr. Haney who told him the intention had been to  
open an account with Canada Life.  
[2022]  
Exhibit 191 – 16B is a cheque dated September 6, 2008 in the amount  
of $74,000 payable by Ms. Galano to Millionaire Mortgage Inc. (Millionaire  
Mortgage Inc.). Ms. Galano testified that Daniel told her to change the cheque to  
Millionaire Mortgage Inc. and she would get 8 percent in her workhorse account.  
Daniel disagreed with that testimony, testifying that Ms. Galano got everything  
wrong. Daniel visited her at her home and told her about corporate bonds and  
how to do the cheque once she decided to go with the corporate bond. Daniel  
told her that the corporate bond was not part of the workhorse account process.  
[2023] Ms. Galano testified that she thought her money was going to Canada  
Life and Daniel never said anything different. Daniel testified that he never told  
 
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her that the money was going to Canada Life segregated funds but told her she  
had to get a new financial advisor.  
[2024]  
Ms. Galano testified that there was no discussion of risk and no  
discussion of his company. Daniel denied that and discussed his companies and  
how they made money and that it was low-risk and the reasons why.  
[2025]  
Ms. Galano testified that she received no paperwork but Daniel  
remembers that Jeff May had the documentation with him and was told to bring  
it.  
[2026]  
Ms. Galano testified that she wanted her money back but instead  
Daniel told her she could enrol in Wealth Institute for free. Daniel testified that did  
not happen. In February of 2009, Daniel could not pay the corporate bond out. It  
was a three-year bond with annual interest payouts. It was not a workhorse  
account investment but a standalone investment. Daniel testified that the capital  
goes to work right away and has to be deployed right away.  
[2027]  
Again Daniel could not produce a copy of the corporate bond. After  
DPR closed down, he could not gain access to his files and Diane Intini, the last  
bookkeeper, had a few and the rest were in file cabinets under lock and key.  
Further, Karen Gingrich had some, Canada Revenue Agency had some, and  
Waterloo Regional Police had some.  
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vii. LINDA CHAFFE  
[2028]  
Linda Chaffe testified that in January 2009, her friend Penny Chmilar, a  
mortgage broker, referred her to Daniel. Ms. Chmilar was affiliated with Mortgage  
Architects. Ms. Chaffe owned a $300,000 home and was advised to raise her  
mortgage to $240,000 from $100,000. Daniel agreed that he told her to use  
$30,000 to pay off loans and credit card debt, and also $5,000 for a trip to Disney  
World, then to invest the rest.  
[2029]  
Exhibit 197 – 8A is a bank draft in the amount of $64,996.70 payable  
to Millionaire Mortgage Inc. Ms. Chaffe testified that it was to be invested in the  
Millionaire Mortgage plan and Daniel agreed.  
[2030]  
Ms. Chaffe testified that there was no discussion of putting money in  
Daniel’s companies and she was told to make the cheque out to Millionaire  
Mortgage Inc. Daniel disagreed indicating he discussed a number of options  
including the corporate bond option with his company.  
[2031]  
Ms. Chaffe testified that she believed the money was going to an  
insurance company and was going into her workhorse account. Daniel testified  
that there was no such discussion. Ms. Chaffe tested that Daniel told her to make  
the bank draft to Millionaire Mortgage Inc. but she had no idea she was investing  
in Daniel’s companies. Daniel testified that was not true as Ms. Chmilar and Jeff  
May were in the room, and it would be “game over” right there.  
 
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[2032]  
Ms. Chaffe got no segregated funds, no interest payments and no  
money back. Daniel testified that he agrees indicating she agreed to the bond  
and he still owes her the money. She says she had no copy of the bond but  
Daniel says she got a copy, while his copy is in the same place as the others and  
he cannot access it. She wanted her money back in February but he could not do  
it. Five weeks later the landlord closed DPR’s doors.  
viii. PAUL MELEG  
[2033]  
Paul and Elizabeth Meleg entered into a $200,000 corporate bond with  
Reeve Hotels and Resorts Inc. c.o.b. as Breadalbane on May 23, 2008 for 16  
percent interest for a three-year term – see Exhibit 198 – 30E dated May 23,  
2008. Exhibit 198 – 30C is a cheque made to Celebrity Management  
International from the Melegs in the amount of $200,000 dated May 23, 2008.  
[2034]  
Mr. Meleg testified that Daniel told him that Celebrity Management  
International had resorts and timeshares all over the world. Daniel testified that  
timeshares never came up but they discussed a corporate bond. Mr. Meleg  
testified that he asked who owned Celebrity Management and Daniel said he  
could not say as it was confidential. Daniel disagreed testifying that he could not  
say who the celebrities and his clients were.  
 
-
565 -  
[2035]  
Mr. Meleg testified that he never heard of Reeve Hotels and Resorts or  
the Breadalbane and was not told anything. Daniel disagreed testifying that  
Daniel told him that Daniel did not own the Breadalbane.  
[2036] Daniel testified that he had no involvement in the letter of disclaimer  
dated June 26, 2008 regarding Mr. Meleg withdrawing his RRSPs.  
[2037]  
Exhibit 198 – 30J is an agreement, dated July 7, 2008, between  
Millionaire Mortgage Inc. and Ms. Meleg for consideration of $68,676.44 for 16  
percent interest for three years, and on the third year, the deposit and interest  
and deferred sales charges of $4,169.97 and the withholding tax of $29,676.14  
would be paid. Accordingly in the third year, the interest, deferred sales charges,  
and tax payment would be equivalent to a payment of a 60 percent interest rate.  
Daniel explained that both David and Daniel would benefit. David would avoid a  
churning situation as David had earned a 3 percent commission on the RRSP  
investment and now another 3 percent on the corporate bond investment.  
[2038]  
Mr. Meleg testified that he had no idea what this $68,000 was being  
invested in. Daniel testified that this was not true and was told that Daniel owned  
Millionaire Mortgage Inc. and Daniel told Mr. Meleg that he was ramping the  
Millionaire Mortgage company up and needed capital for marketing,  
infrastructure, accountant and lawyer fees, software and rent at the King Street  
location, The rent for the three companies at King Street was $25,000 per month,  
-
566 -  
or $300,000 per year, and Millionaire Mortgage Inc.’s share was $100,000 per  
year.  
ix. PAUL AND LISA SCHNARR  
[2039]  
Exhibit 201 – 33B is an agreement between Millionaire Mortgage Inc.  
and Lisa Schnarr for $74,000 for 12 percent interest to be paid monthly starting  
January 31, 2009.  
[2040]  
Ms. Schnarr testified that $75,000 was to be invested in segregated  
funds with a monthly return to her account. She testified that Daniel talked about  
trust funds, secured mutual funds and segregated funds. Daniel testified that he  
disagreed with everything Ms. Schnarr testified. There was no discussion about  
trust accounts or segregated funds. A $75,000 corporate bond was discussed.  
Daniel told her that they were ramping up Millionaire Mortgage Inc. and that the  
money was going to marketing, infrastructure and training of employees. They  
had to be ready in a tough market and had a commitment to mortgage brokers.  
[2041]  
Ms. Schnarr testified that she got no documentation regarding  
segregated funds, but Daniel testified he had nothing to do with that. Jeff May  
had left leaving everything up in the air.  
[2042]  
Ms. Schnarr testified she got no payments on interest or principal.  
Daniel testified that he knows the principal is outstanding and would have to be  
returned, but thinks she got one or two payments though it is quite possible there  
 
-
567 -  
were no payments in January or February. (The accounting evidence indicates  
no payments were ever received on interest or principal – see page 11 of  
Appendix C in the GT Report.)  
x. CHERRIN MELEG  
[2043]  
Exhibit 202 – 29B is an agreement dated July 7, 2008 between  
Millionaire Mortgage Inc. and Cherrin Meleg for $43,337.03 at 18 percent interest  
maturing in July 11, 2011. On the maturity date, in addition to principal and  
interest, deferred sales charges of $2,619, and withholding taxes of $18,573.02.  
In the third and final year, all of these payments would result in an effective 65  
percent interest rate. The bank rate at the time was 4 to 4.5 percent with a five-  
year corporate rate of 6 to 7 percent.  
[2044]  
Daniel testified that he was willing to pay these rates as there was  
going to be a $20 million payoff, considering that in the fall of 2008, the beta test  
with 20 mortgage brokers was going to be played out. The high interest rate was  
his obligation and the purpose of the capital was as described previously with no  
restriction on how the money was to be used.  
[2045]  
Ms. Meleg testified that she was contacted by Allison Briand from DPR  
and was told that employees were approaching anyone who had $60,000 or  
more in RRSPs. Daniel denied that happened as he did not instruct anyone to  
call anyone with those directives and Ms. Briand would not have done that. The  
 
-
568 -  
financial advisor would be the one to deal with the clients and the preferred  
clients would be $100,000 or more.  
[2046]  
At that time, funds were dropping and people were nervous. Daniel  
agreed that Daniel told Ms. Meleg that he would reimburse her for her taxes as  
long as it would be done in a little bit.  
[2047]  
Ms. Meleg testified that Daniel told her that her investment was a  
promissory note and would be a mortgage on seven Inns, like the Jakobstettel, in  
the area. Daniel testified that he did not do that; he never talked about a  
mortgage and told everyone that he was raising capital for his Millionaire  
Mortgage Inc. company.  
[2048]  
Ms. Meleg received no interest and no principal. Daniel testified that  
the interest was not due and, when it was, he was out of business.  
xi. STEVE MANUEL  
[2049]  
Exhibit 203 – 26A is an agreement between Millionaire Mortgage Inc.  
and Steve Manuel, dated January 19, 2009 paying 12 percent annual interest  
with monthly payments commencing February 19, 2009.  
[2050]  
Mr. Manuel’s son-in-law is Jeff May who was a financial advisor with  
DPR. Mr. Manuel testified that, if he remortgaged, $50,000 could be invested in  
segregated funds and that he could get a line of credit and create more  
 
-
569 -  
segregated funds. Daniel denied that the $50,000 was to be put in segregated  
funds.  
[2051]  
Mr. Manuel testified that Daniel proposed the Millionaire Mortgage Inc.  
agreement for 12 percent, but he was never told that the money was to be used  
for the company’s expenses. Daniel testified that was not true and Daniel gave  
the usual explanation that he owned the company and the purpose of raising  
capital. He also talked about risk.  
xii. DOUG THIEL  
[2052]  
Exhibit 44 – 40E is an agreement, dated May 26, 2008, between  
Reeve Hotels c.o.b. as Breadalbane and Doug Thiel for $200,000 with a term  
that it was a limited partnership agreement with annual flow back of unused  
losses. (This agreement was discussed earlier in my review of Mr. Thiel’s  
examination-in-chief.)  
[2053]  
Mr. Thiel testified that Daniel was looking to buy the Breadalbane and  
fix it up. Daniel agrees that he told him this and gave more details regarding the  
specifics.  
[2054] Mr. Thiel was a sophisticated, high net worth investor and was tax-  
driven and aware of the tax consequences of withdrawing RRSPs.  
 
-
570 -  
[2055]  
Mr. Thiel testified that Daniel told him that Daniel needed the money  
quickly in order to close. Daniel testified that he never used the term “quickly” as  
there was no need to rush and no urgency as negotiations with the Breadalbane  
were ongoing into the summer and early fall of 2008.  
[2056]  
Exhibit 44 – 40B is the withdrawal instructions that have David  
Reeve’s handwriting indicating, “Please rush.” Daniel testified that funds were  
plummeting every week in May of 2008 and people wanted out of the market  
quickly.  
[2057]  
Mr. Thiel testified that he thought that he would get his money back if  
the Breadalbane did not go through, and Daniel testified that this belief was  
reasonable. After November 17, 2008, Mr. Thiel phoned Daniel and asked about  
the Breadalbane and Daniel told him there were issues regarding a $300,000 off-  
book debt, but Daniel was still trying to buy it.  
[2058]  
Mr. Thiel had been told by David to get out and wanted his money  
back. Mr. Thiel testified he asked Daniel for his money back but Daniel told him  
the money was not in the bank but in guaranteed investments. Daniel testified  
that he did not say this. Daniel testified that the deal was not yet dead and Daniel  
was not in a position to return the money. Daniel wanted to buy the Breadalbane  
and Peter wanted to sell it.  
-
571 -  
[2059]  
Daniel testified that the $200,000 was deployed. When I asked him  
where the $200,000 was deployed, Daniel could not remember but it would be in  
journal entries. (It is to be noted as per Tab 39 of Appendix G of the GT Report  
and my Schedule G, except for a $200 amount to be deducted per the Nagel  
approach, this Thiel money was distributed approximately as follows: $60,000 to  
DPR overdraft, $100,000 to David Reeve, $10,000 to Daniel shareholder loan,  
$
10,000 to Ms. Cheryl Reeve documented in accounting records as a loan, and  
23,000 to alleged victims and other individuals. None of the money went to the  
$
Breadalbane or any other real estate investment.)  
4. MARKET CRISIS – 2008  
[2060]  
Regarding the market situation, the subprime crisis started to appear  
by way of rumour in November 2007. In March 2008, the crisis was starting to  
grow and stocks started going down until the crisis really hit in October 2008 with  
stocks going down about 40 to 50 percent year over year. It was the biggest  
market crash since 1929.  
5. SWAN CREEK  
[2061]  
In 2005, Daniel purchased as an investment a property called Swan  
Creek, which was ten minutes away from the matrimonial home. After separating  
from Ms. Reeve in 2006, Daniel lived at Swan Creek and the Jakobstettel.  
 
 
-
572 -  
[2062]  
Daniel lost Swan Creek in May or June of 2009 due to a bank  
foreclosure. He had moved in with his girlfriend Annie Smith. In the amended  
separation agreement, Daniel had given Ms. Reeve a $1 million lien on Swan  
Creek but this was wiped out by the bank foreclosure.  
[2063]  
Construction was done by Howard Southwood and Len Brunen (Grand  
River Construction) at Swan Creek. The thought was to convert Swan Creek into  
three suites and operate it as an inn, although no private equity was taken out.  
There were renovations done at Swan Creek in 2008. At the end of 2008, the  
Jakobstettel could carry no more debt, the Breadalbane was still ongoing, and  
the Plaza was dead. Daniel required capital to make the Breadalbane purchase.  
[2064]  
In 2008, they had just finished DPR Windsor and were counting on  
revenues in 2008 from DPR Windsor, DPR London and the Millionaire Mortgage  
Inc. project.  
6. CHERYL REEVE – SEPARATION AGREEMENT  
[2065]  
Exhibit 221 – 57A is the separation agreement between Daniel and  
Cheryl Reeve dated November 26, 2007. Exhibit 221 – 57B is the amending  
agreement dated January 15, 2009 dealing with the $1 million still owing.  
 
-
573 -  
[2066]  
Basically, Daniel got Swan Creek, the corporations, and Alex Realty.  
Ms. Reeve got the matrimonial home, contents, child support and spousal  
support based on the value of his companies.  
[2067]  
Daniel’s experts told him that his companies were valued at $5.87  
million. There was no formal valuation. The valuation was rounded off to $6  
million and Ms. Reeve agreed with this value.  
[
2068]  
in 2007 to 2008 as follows: November 30, 2007; January 31, 2008; April 30,  
008; June 15, 2008; June 30, 2008; and August 1, 2008.  
Based on this valuation, Daniel agreed to make six $500,000 payments  
2
[2069]  
Daniel based the payments on expected capital returns and wanted $2  
million paid down as soon as possible due to that $2 million payment providing  
relief for spousal support. Daniel expected to get $1.6 million from David Reeve  
and tried to get David to agree to a contract so that Daniel could borrow the first  
million from the TD Bank. This $1 million would cover the first two payments. The  
third $500,000 would come from residuals and the last $1.5 million would come  
from Millionaire Mortgage Inc. and contemplated revenues from DPR.  
[
2070]  
DPR Windsor would provide $600,000 from the summer to the end of  
008 and DPR Aurora, with two financial advisors, was expected to generate  
250,000 to $300,000. On June 30, 2008 small residuals were going to come in  
2
$
to help with the fifth $500,000 payment.  
-
574 -  
After signing the separation agreement, David did not sign a contract  
for the $1.6 million repayment. David did not want to pay 2 percent as opposed to  
.5 percent. This had been expected to be done by December 3, 2007 and now  
Daniel was late.  
[2071]  
1
[2072]  
Accordingly, Daniel talked to his lawyer Ron Mark and took out a  
shareholder loan to Daniel and paid Ms. Reeve the $500,000 for the amount that  
was due on November 30, 2007 (the first payment). Daniel explained it to Karen  
Gingrich that he could be late. (Note: This version of events testified to by Daniel  
is not true. Tab 41 of Appendix G of the GT Report and my Schedule F clearly  
show that the $500,000 paid to Ms. Reeve on December 4, 2007 came from an  
$800,000 deposit by Pat Westerhout for a Millionaire Mortgage Inc. investment.  
Further the $500,000 loan was marked in the books dishonestly as a loan to Ms.  
Reeve and was recorded as an asset which it clearly was not – see Exhibit 278).  
[
2073]  
approximately $47,000 on the second lump payment that was due on January  
1, 2008. Daniel was taking for himself as little as he could from the company.  
Daniel testified that he was not late on any other payment. He paid  
3
[2074]  
Daniel made payments on April 30, 2008 and June 15, 2008 but it was  
not for the full amount. Daniel could not say how much he paid on those two  
dates. By August 1, 2008 Daniel had paid $1.5 million of the $3 million that was  
due by that date.  
-
575 -  
[2075]  
Daniel paid $2 million by the end of December 2008 through  
contributing $500,000 from the sister companies as a shareholder loan. His  
lawyers said this could be done.  
[2076]  
In 2008, Daniel got $750,000 to $950,000 in shareholder loans to pay  
to Cheryl. (It is to be noted that Schedule 1A of the Nagel Report shows that  
Daniel did take out shareholder loans of over $1 million in 2008, but there was  
another $846,000 in shareholder loans to Ms. Reeve in 2008 along with at least  
$500,000 in 2007. Ms. Reeve was only paid $2 million and not $2.3 million, which  
would be the case if Daniel indeed paid her $950,000 from shareholder loans as  
he testified he did.) Ms. Gingrich knew and Daniel and his lawyers knew about  
these payments.  
[2077]  
Daniel testified that he made payments on the dates as required but  
not in the full amounts. Daniel could not be more precise as Maplehurst had not  
given him the time to review the banking and accounting records. (This testimony  
occurred on June 10, 2016, a full year after the trial started and there had been  
no complaints before regarding access to disclosure documents. Accordingly, the  
trial was postponed to July 4, 2016, and arrangements were made by the Crown  
in order to give the accused the opportunity and time to review the banking and  
accounting records. When the trial resumed on July 4, 2016, Daniel indicated  
that he was given sufficient opportunity to review the disclosure and was ready to  
proceed further. I asked Daniel if he wished to change any of his previous  
-
576 -  
testimony now that he had reviewed the disclosure fully. Daniel testified that he  
did not wish to change any of his prior testimony.)  
[2078]  
Grand River Construction is operated by Len Brunen. The “Rule of 72”  
indicates that you take 72 and divide it by the compound interest rate to  
determine when your money will double.  
[2079]  
Returning to Daniel’s testimony regarding the payments to Ms. Reeve,  
paragraph 5.8 of the separation agreement requires that $3 million (in  
equalization and spousal support payments) be paid to Ms. Reeve in six  
$500,000 installments from November 30, 2007 to August 1, 2008.  
[2080]  
The first $500,000 came out of the DPR Financial account on  
December 4, 2007 and was four days late. All of the equalization and spousal  
support payments were either posted as a shareholder loan by Daniel or a loan  
to Ms. Reeve. Daniel took no issue with the Nagel Report indicating that the  
equalization and support payments to Ms. Reeve were posted as loans and were  
considered assets on the books. Of the $2 million paid to Ms. Reeve in 2007 to  
2008, $1.5 million was posted as a loan to Ms. Reeve (see Schedule 1A of the  
Nagel Report) and the other $500,000 was posted as a shareholder loan to  
Daniel. Accordingly, 75 percent of the payments were posted as loans to Ms.  
Reeve, with the other 25 percent posted as shareholder loans to Daniel.  
-
577 -  
[2081]  
The original plan was to have the payments come out of the DPR  
Financial account as DPR was the core company. Sometimes, DPR Financial did  
not have the money in its account and some of the sister companies paid  
instead.  
[2082]  
Daniel agreed to the $3 million schedule to be paid over 8 months as  
he expected to have David commit in writing to a payment of $1.2 to $1.6 million  
by December 31, 2008. On the strength of that contract, Daniel was going to get  
a loan from the TD Bank. However, David told Daniel in December of 2007 that  
David was not going to do it until April when David was the president.  
[2083]  
Daniel testified that this was the beginning of his frustration and he  
realized he could not make the first $500,000 payment in time. Daniel was  
behind in his payments. By December 21, 2007, it was beginning to look like  
Daniel could not adhere to the arranged lump sum payments as required by the  
separation agreement. Daniel confided in Ms. Gingrich as to what was going on  
regarding the divorce so Ms. Gingrich would know the payments to Ms. Reeve  
would be placed in the books as either loans to Ms. Reeve or shareholder loans  
to Daniel. Daniel would make the decision as to how the payment would be  
recorded and advise Ms. Gingrich, Cynthia Taylor, Kim Kroeker, and Sarah Snow  
accordingly.  
-
578 -  
[2084]  
By the end of January 2008, Daniel was about $450,000 behind in  
payments. The situation progressively worsened and Daniel was engaged in  
dialogue with Ms. Reeve about the progress of the payments. Daniel testified that  
he could not pay the lump sums as they came due and he paid as he could and  
tried to make the payments owing as best as he could. Daniel says he consulted  
with his lawyer and accountant regarding these payments. Daniel’s  
understanding with Ms. Reeve was that he would do what he could as quickly as  
he could.  
[2085] The following payments were made on the following dates by the  
companies and parties noted:  
1.  
2.  
3.  
4.  
5.  
6.  
7.  
December 4, 2007: $500,000 by DPR Financial (single transfer);  
December 17, 2007: $6,500 by DPR Financial (single transfer);  
December 21, 2007: $5,000 by DPR Financial (single transfer);  
January 2, 2008: total $7,000 by DPR Financial (two transfers);  
January 14, 2008: $6,500 by DPR Financial (single transfer);  
January 21, 2008: $15,000 by DPR Financial (single transfer);  
January 30, 2008: $11,500 by DPR Financial (single transfer);  
-
579 -  
8.  
February 5, 2008: $90,000 by Millionaire Mortgage Inc. (cheque  
signed by Daniel Reeve and Karen Gingrich);  
9
1
1
1
1
1
1
1
.
February 7, 2008: $12,000 by DPR Financial (single transfer);  
0. February 14, 2008: $6,500 by DPR Financial (single transfer);  
1. February 20, 2008: $3,000 by Daniel Reeve (single transfer);  
2. March 3, 2008: $6,500 by DPR Financial (single transfer);  
3. March 17, 2008: $5,000 by DPR Financial (single transfer);  
4. March 25, 2008: $3,500 by DPR Financial (single transfer);  
5. April 15, 2008: $6,500 by Celebrity Management (single transfer);  
6. April 1, 2008: $5,775 by DPR Financial (cheque to Ms. Reeve’s  
company per her request);  
17. April 25, 2008: $100,000 by DPR Financial (single transfer);  
18. April 28, 2008: $100,000 by Reeve Hotels (single transfer);  
19. May 1, 2008: $11,500 by DPR Financial (single transfer);  
20. May 2, 2008: $200,000 by DPR Financial (single transfer);  
21. May 20, 2008: $69,000 by DPR Financial (single transfer);  
-
580 -  
2
2
2
2
2. May 22, 2008: $10,000 by DPR Financial (single transfer);  
3. May 23, 2008: $21,000 by DPR Financial (single transfer);  
4. May 30, 2008: $25,000 by DPR Financial (single transfer);  
5. June 20, 2008: $50,000 by Millionaire Mortgage Inc. (single  
transfer);  
2
2
2
6. June 27, 2008: $100,000 by Daniel Reeve (bank draft);  
7. July 4, 2008: $100,000 by Jakobstettel (single transfer);  
8. July 19, 2008: $50,000 by Jakobstettel (single transfer and shown as  
intercompany loan);  
29. August 1, 2008: $7,500 by DPR Financial (single transfer);  
3
0. August 8, 2008: $100,000 by Jakobstettel (single transfer signed by  
Daniel Reeve);  
31. August 19, 2008: $15,000 by Jakobstettel (single transfer);  
3
2. August 23, 2008: $3,007.50 by Jakobstettel (bank draft); Daniel says  
things were tight as they had just completed DPR Windsor, therefore  
it was possible that there were a significant number of bounced  
cheques;  
-
581 -  
33. September 6, 2008: $100,000 by Jakobstettel (single transfer);  
3
4. September 12, 2008: $100,000 by Millionaire Mortgage Inc. (single  
transfer);  
3
5. September 27, 2008: $36,000 by Jakobstettel (single transfer signed  
by Daniel Reeve per advice of lawyer and accountant);  
3
6. October 3, 2008: $20,000 by Millionaire Mortgage Inc. (two bank  
drafts);  
37. October 21, 2008: $30,000 by Millionaire Mortgage Inc. (bank draft);  
3
8. November 8, 2008: $75,000 by Wealth Institute (Royal Bank draft, as  
Daniel was extremely cash-strapped and did not want a bounced  
cheque);  
3
9. November 14, 2008: $25,000 by Millionaire Mortgage Inc. (bank  
draft); Daniel crossed the $2 million mark in November 2008 which  
freed him of the obligation to make monthly spousal support  
payments of $13,500 – see separation agreement at paragraph 5.2;  
the $13,500 amount was not part of the $2 million;  
40. December 9, 2008: $2,007.50 by DPR Financial (bank draft);  
-
582 -  
4
1. December 31, 2008: $5,000 by Millionaire Mortgage Inc. (bank  
draft);  
4
2. January 2, 2009: $15,000 by Millionaire Mortgage (cheque); the  
amended separation agreement was signed on January 15, 2009  
and confirmed that $1 million was still owing; Daniel testified he  
wanted to get that last million off his back and it would be good to  
have it all paid up; Daniel was owed trailer fees and David’s money  
and felt that by May of 2009, $50,000 per month was capable of  
being paid;  
4
3. January 17, 2009: $5,007.50 by Millionaire Mortgage (bank draft);  
and  
4
4. February 6, 2009: $5,000 by Millionaire Mortgage (bank draft); this  
was the last payment.  
[2086]  
There were three other payments to Ms. Reeve. On December 8 2007,  
$2,000 was paid to Ms. Reeve for services rendered by Celebrity Management.  
Daniel could not find the invoice. On August 18, 2008, Millionaire Media paid  
500 to Ms. Reeve’s company CG Developments, which was not part of the  
separation agreement. Finally, on June 2, 2008, DPR Financial paid Ms. Reeve  
108,000 in repayment of a short term loan to Daniel by Ms. Reeve of $100,000,  
$
$
-
583 -  
plus $8,000 interest. This was put in the books likely as a shareholder loan to  
Daniel.  
[2087]  
On September 30, 2008, David told Daniel that he was leaving. This  
conversation took place at the Jakobstettel and was short. There was no formal  
meeting as indicated in the minutes sent to him by Linzie Brown – see Exhibits  
243 – 51A and 249. Daniel just read the first two paragraphs of the minutes and  
concluded it was nonsense and gave the minutes back to Lee-Anne Ruggle.  
[2088]  
Daniel testified that he gave David two weeks to wrap up the files and  
wanted a clean break and there would be no support from DPR Financial for  
David. Daniel reminded David about the monies that were due by the end of the  
year.  
[2089] Daniel testified that many of the issues addressed in these minutes  
were never discussed.  
[2090]  
Exhibit 243 – 51B is a set of minutes sent to Daniel regarding a  
second meeting on Tuesday, October 21, 2008. Daniel testified that this meeting  
never took place and Daniel never attended at a meeting with David Reeve,  
Linzie Brown and Barb Menard on that date. This meeting did not take place at  
all. Again Daniel testified that many of the issues noted in the minutes were  
never addressed. Daniel took the position that it was going to be a clean break  
after David left.  
-
584 -  
[2091]  
Regarding the private equity issue addressed in the October minutes,  
Daniel had that conversation with David in April of 2008 and told David in April  
that once the beta test with Millionaire Mortgage Inc. was done, Daniel was going  
to pay off all the private equity by the end of the year.  
[2092]  
Daniel testified that David’s leaving and taking his clients was a death  
blow and if that had not happened, Daniel would have been able to weather the  
storm.  
[2093]  
Daniel testified that he had a meeting with David Webb and Diane Intini  
and a bankruptcy option was discussed. Daniel decided not to declare  
bankruptcy for a number of reasons: it would be a death blow to DPR forever, it  
would send the wrong message to clients who would get 10 cents on the dollar,  
and bankruptcy is expensive. Accordingly, it was decided that Daniel would dig in  
his heels and close what he could. This meeting took place in March of 2009.  
[2094]  
The Millionaire Mortgage and Mortgage Architects deal was on hold in  
January of 2009 as Mortgage Architects wanted Daniel to resolve the criminal  
investigation. Daniel testified that here was the deal that could solve his problems  
and but it was on hold due to an investigation of undetermined length.  
[2095]  
Daniel started to renegotiate with other mortgage companies in April  
through June of 2009. By that time, his only assets were a leased car and the  
Swan Lake property.  
-
585 -  
[2096]  
After the Millionaire Mortgage deal was put on hold, the Financial  
Services Commission of Ontario (FISCO) served him, DPR and Millionaire  
Mortgage with a Notice of Proposed Cease and Desist Order on May 13, 2009 –  
see Exhibit 236 – 400B. FISCO was concerned that Daniel was an unlicensed  
operation procuring mortgages and operating as a loan company. On August 28,  
2012, Daniel was served with a certified copy of a Cease and Desist Order by  
FISCO, which made a May 29, 2009 order permanent – see Exhibit 236 – 400A.  
[2097]  
Daniel had two meetings with FISCO on May 27, 2009 and June 10,  
2009. The outcome of the meetings was that Daniel advised that DPR and  
Millionaire Mortgage Inc. had closed down and were not going to reopen.  
Daniel’s only remaining assets at this time were his registered trademarks.  
[2098]  
Daniel, in April through June of 2009, consulted his lawyers and  
accountant and came up with the MyPerfectMortgage concept which was a  
simplified reworking of the Millionaire Mortgage concept. The mortgage  
amortization period was reduced and the workhorse account just used one option  
using term deposits.  
[2099]  
Daniel created a DVD as to how it would operate and would have it  
distributed to a neighborhood while Lisa, his part-time assistant, would set up  
appointments for interested parties.  
-
586 -  
[2100]  
Daniel testified that Mark Jackson contacted Lisa to say he was  
interested. Daniel understood that Daniel and Mr. Jackson were working with  
equity of $45,000 to $50,000 and not the $10,000 equity which was the figure  
that was finalized.  
[2101]  
Daniel gave Mr. Jackson a PowerPoint presentation but disagreed with  
Mr. Jackson’s testimony that Daniel talked about mutual funds and that $5,000  
would be split into mutual funds and segregated funds. Daniel testified that he  
told Mr. Jackson there would be a $5,000 fee once the MyPerfectMortgage  
concept was completed.  
[2102]  
Daniel testified that he did tell Mr. Jackson that Daniel’s name was  
Daniel Keller. Daniel used this false name twice as his real name was mud and  
he needed a “marketing nuance” to get in front of people.  
[2103]  
Once Mr. Jackson discovered that Daniel was using a false name, Mr.  
Jackson testified that he wanted the $600 back which he had paid for the  
combined costs of material and training. Daniel denies refusing to pay the $500  
for materials back, testifying that he told Mr. Jackson that he would refund the  
money if Mr. Jackson returned the kit he was given. However, Mr. Jackson said  
he did not have the material any longer. Daniel refused to refund the other $100  
as Daniel had provided the training as agreed to.  
-
587 -  
[2104]  
In September 2009, Daniel again met with FISCO with an attorney as  
FISCO was alleging that MyPerfectMortgage concept was a breach of the cease  
and desist order. The Daniel Keller matter was brought up and Daniel promised  
to not use that name again. MyPerfectMortgage was allowed to continue – see  
Exhibit 237 undertaking to FISCO. However, shortly after, the police confiscated  
his materials and Daniel was then forced to seek alternate employment and was  
ultimately arrested while working at the Home Depot.  
[2105]  
Daniel first found out about the police investigation in December of  
2008 from his staff who were being approached by the police. He also read about  
the investigation in the Kitchener papers from about December 2008 onwards.  
From April 2009 to when Daniel was arrested in July 2012, Daniel lived in the  
Fergus and Collingwood regions. He never left the jurisdiction as he felt that he  
had broken no laws and had done nothing wrong.  
C. DANIEL REEVE – CROSS-EXAMINATION  
[2106]  
Daniel testified that he was life insurance-licenced and mutual fund-  
licenced. Daniel understood simple fundamental tax concepts (treatment of  
capital gains, dividends, marginal rates) and understood how RRSPs worked  
(deductions against tax for contributions and payment of taxes upon withdrawal  
including paying withholding taxes).  
 
-
588 -  
[2107]  
Daniel understood the financial concepts he talked about and carved  
out a niche with emerging middle-class individuals. Pat Westerhout was an  
exception, as she was a wealthy individual who had access to her own experts  
such as accountants and lawyers.  
[2108] Clients who had $100,000 and more to invest usually had access to a  
lawyer or someone with whom they could consult.  
[2109]  
Canadians need more money at retirement—not less—due to the  
increases in the cost of living and inflation. Daniel taught his clients that  
segregated funds were excellent investment products.  
[2110]  
In Exhibit 7 is a book titled The Millionaire in You. At page 17 there is  
a priority pyramid. At the top of the pyramid are the riskiest investments such as  
precious metals. Near the bottom are the safest investments. Canada Savings  
Bonds, term deposits, strip bonds and Daniel’s corporate bonds would be near  
the bottom in terms of risk and would be categorized as safer than segregated  
funds and mutual funds. Daniel believed in this pyramid in the time period of  
2008 and 2009.  
[2111]  
Daniel never said there was “no risk” with his investors. He told the  
investors that his corporate bonds were low risk and explained to them why he  
was raising capital and that it was bricks and mortar and real estate was  
-
589 -  
involved. Given the market volatility at the time, his corporate bonds were less  
risky than segregated funds.  
[2112]  
Daniel told his financial advisors that the corporate bonds were low  
risk. The financial advisors had a fiduciary duty to the clients to explain their  
investments. Daniel indicated that he knew what was happening in his  
companies and was intimately aware of the details; it was his name and  
experience backing the companies.  
[
2113]  
would put the risk level in with Canada Savings Bonds and segregated funds,  
even though backed by insurance companies), were riskier than his corporate  
Daniel testified that his corporate bonds were less risky than GIFs. He  
(
bonds. GICs had the possibility of a bank failure and Daniel testified that in  
November and December of 2008, his corporate bonds had marginally more risk  
than bank GICs. His corporate bonds’ risk was somewhere between a GIC and a  
segregated fund. Daniel testified that, in November and December of 2008, he  
believed that his corporate bonds had less risk that a segregated fund but were  
riskier than a GIC. Daniel agreed later in cross-examination that segregated  
funds had guarantees of 75 percent to 100 percent on maturity of the investment  
amount – see page 6 of the July 7 transcript.  
[2114]  
Daniel did not have these risk discussions with his clients regarding  
GICs, segregated funds, etc., but Daniel would explain the intent of the capital  
-
590 -  
raise and why he was borrowing money. Daniel testified that he believed in real  
estate as it was a tangible, physical asset, but could not recall if he advocated  
real estate as a general statement.  
[2115]  
Regarding the 41 core investors, the alleged victims, Daniel did not tell  
them his businesses were failing. He said this was because the businesses were  
not failing and the 2007 loss was intentional due to the companies’ retooling.  
[
2116] Daniel testified that he did not tell the investors that their money was  
going to Daniel’s divorce settlement. He did not tell Ms. Westerhout that her  
500,000 was going to Ms. Reeve as he did not know that until after-the-fact.  
$
The Crown suggested that Ms. Westerhout’s money went into and out of the  
DPR account on the same day.  
[
2117] Exhibit Stick File 103 at page 2007 is a cheque from Pat Westerhout  
for $700,000 dated November 28, 2007, which was cashed on December 4,  
007. Daniel testified that he told Ms. Westerhout this money was for  
2
infrastructure for DPR and its operations. DPR was expanding and adding a new  
location with additional equipment and staff. He never told Ms. Westerhout that  
her money was going to his ex-wife or a divorce settlement.  
[2118]  
Exhibit Stick File 103 at page 2008 on the exhibit stick is another  
cheque from Ms. Westerhout for $100,000 dated November 28, 2007 and  
cashed on December 4, 2007. Accordingly $800,000 in total was deposited in the  
-
591 -  
DPR account which, at that time, had an overdraft balance of negative  
29,346.55. On December 4, 2007, there was a transfer of $500,000 from DPR  
$
to Ms. Reeve which was signed by Daniel. This was the largest transfer ever. It  
came immediately after Ms. Westerhout’s deposit of $800,000. The Crown  
suggested that Daniel used Ms. Westerhout’s money to pay Ms. Reeve, but  
Daniel testified that it was possible but not conclusive. Daniel indicated that a  
portion of the money could have come from the DPR overdraft which stood at  
$50,000 to $250,000. (Note that, in chief, Daniel testified the overdraft was  
$20,000 to $25,000 and there was no purpose to a $100,000 overdraft – see  
paragraph 1658.) Daniel did not tell Ms. Westerhout that her money was going to  
Ms. Reeve, because he did not know that was the case when he made his  
agreement with her.  
[2119]  
Exhibit 221 – 57A is the separation agreement between Cheryl and  
Daniel Reeve. It shows that Ms. Reeve signed it on November 26, 2007 and  
Daniel signed it three days later on November 29, 2007. It is to be noted that Ms.  
Westerhout’s cheques are dated November 28, 2007, two days after Cheryl  
signed the agreement, but the day before Daniel signed it. The cheques were  
cashed shortly after both parties signed the agreement. Paragraph 5.8 of the  
agreement required the first $500,000 to be paid on November 30, 2007.  
[2120]  
Daniel anticipated that his brother David would sign an agreement that  
he owed over a $1 million to Daniel. Daniel had talked with the TD Bank, his  
-
592 -  
lawyer and accountant about getting a loan from TD Bank to cover the first two  
support and equalization payments. Daniel testified that the next payment was in  
April, but the agreement says the next payment was due on January 31, 2008.  
After Daniel signed the agreement on November 29, 2007, the first payment was  
due the next day, but Daniel thought that his brother would sign the agreement  
and the bank would give the money right away.  
[2121]  
Daniel testified that David owed him anywhere from $1.2 to $1.6 million  
but they had not settled on the exact figure. There is a formula in the industry to  
assist in arriving at the exact amount. David was supposed to pay Daniel by  
December of 2008.  
[2122]  
On September 30, 2008, David said he was leaving. David was  
Daniel’s top performer in 2008. Steve Haney had left in August of 2008 and he  
had been Daniel’s second-best performer. All the while, Daniel continued to take  
on debt obligations.  
[2123]  
Daniel testified that the non-payment by David and the hold on the  
agreement from Mortgage Architects was what prevented Daniel from paying the  
debt. The Mortgage Architects deal alone would have paid off the debts.  
[2124]  
David told Daniel that he would sign the agreement with Daniel in April  
after the separation agreement was signed. That meant that Daniel could not get  
a bank loan and would not be able to make the planned payments of $1 million  
-
593 -  
from the $500,000 due on each of November 30, 2007 and January 31, 2008. It  
never occurred to Daniel that David would back out of his deal with Daniel.  
Further, Daniel was expecting 2007 trailer fees of about $330,000 in the first few  
months of 2008.  
[2125]  
There was nothing in writing with David and no emails or letters to  
confirm their oral agreement. In April, David still refused to sign a written  
agreement. Daniel denied that there was nothing in writing because there was no  
agreement. Daniel had told David that he had to pay Ms. Reeve $3 million over  
eight months. Daniel did not get a nickel from David pursuant to the oral  
agreement to pay Daniel over $1 million.  
[2126] Mr. Haney does not owe Daniel any money. Mr. Haney paid Daniel  
$100,000 but there is no invoice or documentation.  
[2127]  
Exhibit 311 is an agreement between Millionaire Mortgage Inc. and  
Joe Sammut, dated February 13, 2008. Daniel testified that it was the second  
contract and that it is possible an earlier one was signed in November 2007.  
Exhibit 311 provided that Mr. Sammut would agree to provide 50 deals per  
quarter for a total of 200 per year. This would generate revenues for Millionaire  
Mortgage Inc. of 50 contracts times $5,000 or $250,000 per quarter, or $1 million  
per year.  
-
594 -  
[2128]  
The original plan for Millionaire Mortgage provided $5,000 for every  
mortgage involved. It was anticipated that there would be 200 mortgage deals  
per broker so that every broker involved would generate $1 million. There was a  
beta test originally with a planned 20 brokers in 2008. Mr. Sammut was one of  
the nine brokers that ended up being a part of the beta test. Don Stoddert and  
Brian Mason were also part of the nine brokers.  
[2129]  
The Crown asked how many deals were completed pursuant to the  
contract in Exhibit 311 and Daniel testified he could not say. He believes that  
more than five but not more than 100 were done, and does not know if more than  
50 were done. Daniel testified that he was not worried about the numbers. Daniel  
agreed that it was an important project as his two biggest producers had left and  
the Plaza and Breadalbane were still a go in 2008.  
[2130]  
Paragraph 5.2 of Exhibit 311 allowed the broker to get out of the  
agreement on 30 days’ notice. Daniel agreed that he was taking on a lot of debt  
based on this agreement. Even though Joe Sammut was not living up to the  
terms of the agreement, Daniel was thinking long term.  
[
2131]  
seven were from other affiliates. A total of 12 agreements like the one in Exhibit  
11 were signed.  
Only two brokers from Mortgage Architects were involved and the other  
3
-
595 -  
[2132]  
Mr. Sammut and five other brokers signed the Exhibit 311 version.  
Other brokers involved were John Cavan, Dan Balch, Alison White, and two  
ladies from Cambridge.  
[2133] Daniel admitted that the anticipated $20 million in revenue did not pan  
out. Daniel testified that not even a $100,000 in revenue was generated.  
[2134] By the end of 2008, Daniel definitely did not get $1 million and did not  
get even 5 percent of the anticipated revenues of $20 million by the end of 2008.  
[2135]  
David in March or April of 2008 knew of the extent of the revenues  
anticipated from Millionaire Mortgage and the 20 broker beta test. Mortgage  
Architects had 1,200 brokers and, at 200 deals per year per broker times $5,000  
to Millionaire Mortgage, the potential was for a $1.2 billion revenue stream.  
[2136]  
Daniel testified that he was in negotiations with banks, insurance  
companies and financial institutions but no emails were provided in evidence.  
Daniel denied the Crown’s suggestion that those emails do not exist and that  
nothing more than preliminary negotiations took place.  
[2137]  
Daniel had testified that he gave up his licence as he wanted to focus  
on other things amongst a number of issues. Daniel admitted that he had a claim  
against him which was resolved on a no-prejudice basis; his error and omissions  
provider did not want to renew his coverage. Daniel was able to obtain another  
insurer but at triple the premium cost. Daniel said that he was near the end of his  
-
596 -  
financial advisor career and wanted to do other things. Daniel had been among  
the top financial advisors for the past three years in a row.  
[2138]  
Daniel could not say whether his clients saw him as an expert. His  
books such as The Secret of the Three Buckets listed Daniel as the author with  
the description, “Canada’s most powerful way to build sequential wealth.”  
[2139]  
Exhibit 174 is an edition of the magazine Exchange Magazine that  
was on display at Daniel’s office and featured a special “Millionaire Edition” on  
Daniel and DPR Financial. Daniel paid for it. The magazine described Daniel as  
an author, educator and entrepreneur, who had built one of Canada’s most  
successful firms.  
[2140]  
Daniel testified that he was very forthcoming about no longer being a  
financial advisor and that fact was in the disclosure page at the end of his  
presentations and books. Daniel denied that his no longer being a financial  
advisor was buried in the fine print.  
[2141]  
The Mirrored Butterfly was printed in July of 2007, after Daniel had  
given up his licence. The third paragraph at page 16 indicates that, “it is  
important that we, as advisers, understand the complexities…” Daniel denied that  
this would mislead people into thinking he was a financial advisor and indicated  
that compliance said it was an acceptable statement.  
-
597 -  
[2142]  
Daniel got advice from his lawyers, mainly Ron Mark, and his  
accountant David Webb about the shareholder loan procedure, corporate bonds,  
his books and licencing issues. The corporate bond originals that were used,  
regarding Alex Realty, Celebrity Management, Breadalbane and the Plaza, had  
been designed by Ron Mark and some junior lawyers.  
[2143]  
Daniel, in 2007 to 2008, was driven in the stretch limo two or three  
times a week. The stretch limo was a business tool and was not used for his ego.  
The stretch limo and the driver were paid for by the companies.  
[2144] The limo was a 2007 BMW 740 which was leased and deductible; it  
cost about $100,000 in 2007.  
[2145]  
There were also two Escalades, a Land Rover and a Porsche Boxer  
among other cars. A helicopter was used once to escort his lawyer and a guest  
to Windsor and Daniel disagreed that was an expensive extravagance as one  
must look at use and functionality.  
[2146]  
The Crown suggested that Daniel, in 2007 to 2008, projected an image  
of wealth and that clients could be wealthy like him. Daniel responded by saying  
that his companies offered financial solutions.  
[2147]  
Daniel denied that he used his companies to finance renovations at his  
personal home on South Street and indicated that could have been done in lieu  
of pay.  
-
598 -  
[2148]  
It was suggested that Howie Southwood did the renovations at South  
Street, at the cost of $50,000 to $80,000. Daniel indicated that he needed to see  
the documents and would have to look at his tax returns which he does not have.  
[2149]  
It was suggested that Daniel bought Swan Creek for himself and not  
for his companies. Exhibit Stick File 600, E shows the land registry abstract for  
Swan Lake and Daniel’s companies are not on the abstract.  
[2150]  
Daniel testified that Swan Creek was being renovated to convert it into  
a rental property and denied that he was building a mansion. The six-car garage  
and gym were being done for a ten- to 12-room rental. There was an opulent  
renovation in the bathroom that included the installation of marble. The reason  
for not putting Swan Lake into the company’s name was that the plan was to sell  
it to the companies once the premises were presentable.  
[2151]  
It was suggested that Daniel was pumping company monies into Swan  
Lake and then was going to sell it to the companies after a market value  
assessment. Daniel testified that he consulted his lawyer and accountant about  
it.  
[2152] His girlfriend Annie Smith, Lawrence Forsyth and Steve Bull stayed at  
Swan Creek and were not charged any monies.  
[2153]  
Daniel separated from Ms. Reeve in December of 2006 and had  
previously testified that, after the separation, he stayed at Jakobstettel Inn and  
-
599 -  
Swan Lake and with friends. When asked by the Crown who these friends were,  
Daniel refused to answer. When instructed to answer the question, Daniel  
changed his testimony and indicated that he stayed after separation at  
Jakobstettel and Swan Lake and not with friends. Daniel indicated that his earlier  
answer that he stayed with friends was untrue.  
[2154] Renovations at Swan Creek were logged in the books as a shareholder  
loan or in lieu of pay.  
[2155]  
The balance of payments to Ms. Reeve were a loan that she had to  
pay back. Daniel has an independent recollection of this. Daniel would have to  
talk to his accountant. The $500,000 payment to Ms. Reeve on December 4,  
2007 was logged in the books as a shareholder loan to him. I pointed out that his  
accountant Mr. Nagel testified that the $500,000 payment to Ms. Reeve on  
December 4, 2007 was put on the books as a loan to Ms. Reeve.  
[2156]  
On February 5, 2008 (see Exhibit Stick File 128 at page 54) there  
was a $90,000 cheque issued, payable to Ms. Reeve. This was a payment  
pursuant to the separation agreement and Daniel could not say whether it was  
logged in the books as a shareholder loan to Daniel or a loan to Ms. Reeve.  
[2157] The loans made to Ms. Reeve in 2008 were not interest-free but Daniel  
does not remember the discussions he had with Ms. Reeve or what the interest  
-
600 -  
rate was. Daniel needed to refer to the accounting records and accounting  
evidence.  
[2158]  
The GT Report indicates that the total loan to Ms. Reeve was  
$1,619,622 and the Nagel Report indicates that the loans to Ms. Reeve on the  
books were about $1.5 million. Daniel confirmed that these were loans to Ms.  
Reeve and knows that he did discuss the interest rate on those loans with her.  
Daniel thinks the agreed upon rate was 8 percent but he is not sure. Daniel has  
no documentation to support this contention.  
[2159]  
On loans of $1,539,231.14 per the Nagel Report, Ms. Reeve, at an  
interest rate of 8 percent, would owe Daniel about $123,120 interest per year.  
Daniel thought that the loan agreements were committed to writing and his  
lawyer and accountant were aware of them; the loan documents would be with  
the lawyer. Daniel agreed that he was loaning Ms. Reeve a lot of money at a time  
when he owed he a lot of money. Daniel indicated he relied on his lawyer and  
accountant.  
[2160]  
Daniel testified that he had discussions with his lawyer and accountant  
as to whether payments to Ms. Reeve were to be put in the books as shareholder  
loans or loans to Ms. Reeve to be re-categorized later.  
[2161]  
The Crown suggested that Daniel was having significant cashflow  
problems in 2008, and asked accordingly why Daniel would loan money to his  
-
601 -  
ex-wife. Daniel’s response was these payments to Ms. Reeve were bona fide  
loans and could be re-categorized later. He relied on the advice of his  
accountant.  
[2162] Regarding Swan Lake, Daniel understood that when it was purchased  
in June of 2005, he bought it together with Ms. Reeve.  
[2163]  
The Crown suggested that Daniel in owning South Street, Swan Lake,  
and numerous expensive cars, Daniel was using investors’ money to finance his  
opulent lifestyle. Daniel denied this suggestion.  
[2164]  
Exhibit 281 is a presentation done by DPR at wine and cheese events.  
Daniel was a proponent of leveraging in the right circumstances. Leveraging  
enhances gains and magnifies losses.  
[2165]  
Exhibit 281 assumes a 10 percent growth rate and is not outrageous  
as until 2007, the growth rates of DPR investments did really well. Daniel also  
used 6 and 8 percent growth rates. Daniel denied overstating returns.  
[2166]  
Daniel testified that Exhibit 281 has pages missing and no date. The  
Crown pointed out, in cross-examination, that Daniel had walked through that  
exhibit earlier and had said nothing about the missing pages.  
[2167] Exhibit 194 lists returns of Canada Life products. Fidelity True North  
has a Management Expense Ratio of 3.21 percent, and the fund would need to  
-
602 -  
earn 13.21 percent to earn a return of 10 percent. If a line of credit cost is 3  
percent, the cost of that is 1.5 percent at the top tax bracket which was then 46  
percent for income over $70,000.  
[2168]  
Daniel testified that there were no additional costs for death benefits  
but the Canada Life Generations II products at pages 31 to 32 of Exhibit 194  
charged for death benefits. Daniel indicated that DPR did not sell Generation II  
products.  
[2169]  
It was suggested that Daniel consistently overestimated the upside and  
understated the downside of investments. Daniel disagreed, stating that his  
regulators had no problems and he followed the reviews done by his lawyer,  
MGA, Manulife and Sun Life.  
[2170]  
It was suggested that Daniel lied when he testified that the Three  
Buckets approach was run by the Canada Revenue Agency (CRA). Daniel  
testified that he believed Jim McKenzie was still in the employ of Canada  
Revenue Agency, and if Mr. McKenzie was working at the CRA, Daniel could rely  
on his advice.  
[2171]  
Mr. McKenzie told Daniel over the phone that the Three Buckets  
approach played by the rules, but the CRA did not want TV commercials. Mr.  
McKenzie wanted an appointment to do the Three Buckets investment approach.  
-
603 -  
Daniel indicated that he was not giving the impression that the CRA  
was signing off.  
[2172]  
[2173]  
Regarding the Millionaire Mortgage statement that if you took a typical  
25-year mortgage and paid it off bi-weekly it would take nine years to pay off the  
mortgage, Daniel testified that statement is taken out of context. He said that  
there would be savings but he would have to do calculations by “looking at the  
whole thing.”  
[
2174]  
alleged victims. Daniel did not deny he took on another $7 million in debt paying  
2 to 16 to 18 percent interest.  
In 2007 to 2009, there were other investors other than the 41 core  
1
[2175]  
For example, on March 31, 2007, there was a joint agreement between  
Lynne Hoffman and the Jakobstettel for $100,000, paying 15 percent annual  
interest – see Exhibit 321. Paragraph 34 of the document is titled, “Return on  
Investment.”  
[2176]  
It was suggested that Ms. Hoffman was not paid the $15,000 interest  
she was owed on March 31, 2008. Daniel responded that he had no way of  
knowing and has no recollection of what payments were made to Ms. Hoffman  
despite reading through the GT Report.  
-
604 -  
Page 17 of 254 in Appendix E of the GT Report demonstrates that  
Ms. Hoffman was owed a total of $284,000 for investments made on March 31,  
007; December 20 and 21, 2007; and October 10 and 17, 2008.  
[2177]  
2
[2178]  
Exhibit 322 is a corporate bond dated March 31, 2008 paying 15  
percent annually and maturing March 31, 2011. No interest payments were ever  
made on this bond and no mortgages were ever registered on the Jakobstettel  
property. Daniel told people they were not going on title but still would get the  
benefits of a brick and mortar investment.  
[2179]  
Daniel testified that Jakobstettel Properties and Celebrity Management  
were the same and were under Reeve Hotels and Resorts which was the holding  
company. Daniel agreed that each of these entities were corporations that stood  
alone and the holder of debt of one of the companies had no remedy against the  
other company.  
[2180]  
Exhibit Stick File 600, A is the property abstract for the Jakobstettel  
Inn. It shows that on December 19, 2003, Celebrity Management bought  
Jakobstettel Inn for $675,000 with a $400,000 mortgage. On June 26, 2008,  
Celebrity Management transferred its interest to Jakobstettel Properties. The  
following day, a charge of $655,462 was put on the property to Brunen Holdings  
Inc. On April 29, 2009, a lien was put onto the property by the CRA. There were  
no mortgages registered in the favour of the alleged 41 victims on the property.  
-
605 -  
[2181]  
Daniel agreed that investors, who had an obligation from company A,  
would have no rights against company B, C, D. Nonetheless, Daniel indicated  
that there was nothing wrong with intercompany loans and it was legitimate to  
take money invested in one company and move it into another company.  
[2182]  
Daniel agreed that no money ever went into the Breadalbane and no  
money went to the Plaza, save for a $247,000 deposit. Daniel testified it was  
legal to move Breadalbane money to other companies and he still had the  
intention to buy the Breadalbane when he was raising money for it.  
[2183]  
Daniel denied that he was taking on more debt that he could handle  
and Daniel stated that he had an expectation to pay. It was suggested that  
Daniel’s team of experts were not as involved as Daniel says, but Daniel testified  
that his lawyers, accountants and bookkeepers advised him as he went along.  
[2184]  
Exhibit 323 is a three-year corporate bond between Millionaire  
Mortgage Inc. and Lynne Hoffman for $85,543.24 for 15 percent annual interest,  
maturing on October 15, 2011. The document indicates that on maturity,  
Millionaire Mortgage is to pay the principal, interest and a refund of $36,232.81.  
This meant that in the final year, $50,000 was payable, or 60 percent, on a low-  
risk investment. Daniel indicated this was done to avoid churning. It was his  
understanding, as well, that $1.6 million was coming to him and he was going to  
get year-end trailer fees of $300,000.  
-
606 -  
[2185]  
Whenever Daniel paid the withholding taxes with the 41 core investors,  
he did that to avoid churning situations. Daniel was asked why he would not just  
pay the 3 percent commission, which, in Ms. Hoffman’s case regarding Exhibit  
3
23, would pay $3,000 to $3,600, as opposed to the $36,232.81 which is 42  
percent of $84,543.24 or about 30 percent of the original total investment of  
120,000. Daniel’s explanation was that the intent to compensate the client for  
withholding taxes was just good business.  
$
[
2186] Regarding the Crozier investment at Exhibit Stick File 10, the  
investment on the corporate bond agreement was for $161,325.09, dated March  
0, 2008, despite Daniel only receiving $159,601.95 on March 6, 2008. It  
1
appears that Canada Life neglected to deduct the withholding taxes when  
cashing in the RRSP. Further, on December 9, 2008, Daniel signed an  
acknowledgment to Mr. Crozier that he would pay the owing taxes to Mr. Crozier  
as a result of this transaction. Daniel’s interpretation of this agreement is that if  
Canada Life wanted the withholding tax from Mr. Crozier, Daniel would pay, but if  
Canada Life did not deduct the withholding tax, Daniel would not pay. Canada  
Life ultimately did not deduct the withholding tax and let the client remit to the  
CRA.  
[2187]  
Daniel denied that, in December of 2008, his companies were  
collapsing but indicated they were cash-strapped. Daniel had the pending  
Millionaire Mortgage deal, his intellectual property and was three weeks away  
-
607 -  
from $1.6 million and the $300,000 trailer fees. With reference to the October 15,  
008 Hoffman agreement, Daniel indicated he was one and a half months away  
from the $1.6 million payout.  
2
[2188]  
There were no discussions with clients regarding investment monies to  
be used to pay overdrafts or the Home Trust Mortgage on 46 Cambridge Street.  
When Daniel took the monies, he did not know that was how the money was to  
be used.  
[2189]  
Mr. Crozier’s money was to be invested in the Breadalbane but no  
money went into the Breadalbane. Mr. Crozier testified that Daniel approached  
Mr. Crozier by calling him and asking him if Mr. Crozier would like to make better  
returns. Daniel testified that he did not approach Mr. Crozier and denies asking  
Mr. Crozier, “How would you like to withdraw your money tax-free?”  
[2190]  
Daniel denied using tax-free statements as a marketing tool. Daniel  
never used the phrase, “withdraw your RRSPs tax-free.” Daniel denied using that  
term because he wanted the money for himself. Mr. Crozier was panicking  
because of what was happening in the market. Steve Haney was the one who  
asked Daniel if a corporate bond was available and what it would pay. Daniel  
denies saying that the Breadalbane would close in two months. Daniel did not  
say he was raising $300,000 to $400,000 per month. Mr. Crozier was of modest  
means and was in the category of an emerging middle-class client.  
-
608 -  
Regarding Andrew Eplen, Daniel denies that he offered to cover Mr.  
Eplen’s entire taxes. At Exhibit Stick File 15, there is a bank draft dated August  
9, 2008 in the amount of $78,400 to Jakobstettel properties by Mr. Eplen. A  
[2191]  
2
corporate bond was then entered into between Millionaire Mortgage Inc. and  
Andrew Eplen in the amount of $111,978.01, payable at 16 percent interest (this  
was the entire amount of the RRSP before deductions). The bond provided that,  
in 2013, $111,978.01 was due and payable (this would include the withholding  
taxes of $33,593.40). In the final year, with withholding tax and interest on the  
larger amount due, $51,509.88 was due, which would be an interest rate of 65.7  
percent on an investment of $78,400—above the criminal rate of interest.  
[
2192] Daniel explained that this was done to avoid churning. Daniel was  
paying an extra $5,372.48 per year to avoid churning which adds up to an extra  
26,862 over the course of five years. Adding in the payment of withholding  
taxes, the cost of avoiding churning was $60,455.  
$
[2193]  
Daniel explained this was all done to create goodwill and denied that  
he entered into the contract knowing that he could never repay it. Daniel denied  
there was no explanation of the withholding tax and indicated that Mr. Eplen was  
a longstanding client who was an executive despite being a plumber by trade.  
[2194] Daniel testified that he told Mr. Eplen that the $78,400 was going to  
Millionaire Mortgage, but the cheque was made out to Jakobstettel Properties on  
-
609 -  
August 29, 2008. Daniel never made any payment on either interest or principal  
on Mr. Eplen’s investment.  
[
2195] Kevin Hillman provided a cheque to Millionaire Mortgage Inc. on July 9,  
008 of $41,031.78. His bond, however, was made out for $51,031.78 which  
Daniel thinks was a typo that was overlooked. Daniel denied adding an extra  
10,000 to get Mr. Hillman’s money.  
2
$
[2196] In year 3 of this three-year bond, Mr. Hillman was to receive deferred  
sales charges and withholding taxes and interest and, if he agreed to the  
$
41,031.78 as an accurate figure, Mr. Hillman in year 3 would receive  
32,880.96 or 80 percent interest or a higher rate of 84 percent interest if Mr.  
$
Hillman forced the $51,031.78 amount. Daniel’s explanation was that, in offering  
these bonds, he was staying competitive and keeping clients happy, so it made  
sense.  
[2197]  
Daniel denied that he told Mr. Hillman that he was moving the Hillman  
money into the stock market as alleged by Mr. Hillman. Daniel was not licenced  
to do that.  
[2198] On August 8, 2008, Mr. Hillman made a second investment of  
$144,360.44 and could not recall if that was for a workhorse account for a  
Millionaire Mortgage program. Mr. Reeve could not recall where that Mr. Hillman  
money came from. There was no discussion of the Hillman money going to Ms.  
-
610 -  
Reeve. Daniel testified that his obligation to Ms. Reeve was no different than any  
other obligation from DPR.  
[2199]  
On August 28, 2008, the Hillman money of $144,360.44 was deposited  
into the Jakobstettel account and the next transaction is a $100,000 transfer to  
Ms. Reeve – see the Exhibit Stick File 101 at pages 3513, 3520, and 3523.  
Daniel’s explanation is that he had overdraft protection of $50,000 to $250,000  
for the Jakobstettel account and he does not know if overdraft was used to pay  
Ms. Reeve that $100,000. Daniel indicated that he had a legal right to make the  
transfer to Ms. Reeve despite his having a cash crunch and he was late on  
payments to some investors in a fashion more than he wanted.  
[2200]  
It was suggested that Daniel would regularly use investors’ money to  
pay off overdrafts but Daniel indicated he gave no thought to the overdraft when  
investor money was deposited. It was never his intention to use investor money  
to pay off overdrafts but it may have happened. Every commitment he entered  
into was made with the belief that he would make it good.  
[2201]  
Daniel testified that only the original $500,000 to his ex-wife could have  
come from an investor. All the other money to his ex-wife could have come from  
overdraft and not from investors.  
[2202]  
In Exhibit Stick File 19 at page 11 of 11 there is a note, dated  
December 8, 2008, purportedly made by Daniel that he will notify said companies  
-
611 -  
of Mr. Hillman’s request to withdraw his investments. Daniel has no recollection  
of meeting Mr. Hillman and denies that this note was a ruse that these  
companies were not Daniel’s companies. Daniel testified that Mr. Hillman knew  
of the companies as Daniel told him about them and that Daniel owned them.  
[2203]  
Daniel previously testified that he distinctively remembers giving Mr.  
Hillman a copy of the Millionaire Mortgage agreement. Mr. Hillman testified that  
he never received a copy. On this date, Mr. Reeve changed his testimony  
indicating that he does not recall if he gave Mr. Hillman a copy of the agreement.  
Mr. Hillman was aware that Daniel was not a financial advisor as that fact had  
been on a screen during a presentation that Mr. Hillman attended.  
[2204]  
Regarding winterizing the fountains at DPR Windsor, Daniel indicated  
he told Mr. Hillman this in August or September but it could have been in July. It  
was suggested July makes no sense and Daniel indicated he could not  
remember what month it was.  
[2205]  
Regarding Amos and Dorothy Lichty, they entered into a Plaza joint  
ownership agreement in the amount of $100,000 paying 15 percent interest for a  
monthly payment of $1,500. Daniel does not recall that the Lichtys required the  
money to pay their rent.  
[2206] Daniel made up the name of “Wellington Suite,” and the suite number  
09-07-100 was an internal code representing one unit.  
-
612 -  
[2207]  
Daniel denied that the paragraph 3 clause regarding the seller wanting  
to sell their interest in the suite was to give the investor the deceptive impression  
that Daniel owned part of the Plaza.  
[2208]  
On March 20, 2009, Daniel entered into a payment agreement with the  
Lichtys to pay them $5,000 per month commencing April 3, 2009. The Lichtys  
were paid $3,000 on April 8, 2009 and nothing thereafter – see page 163 of  
Appendix E of the GT Report. It was suggested that Daniel knew he could not  
repay the Lichtys the $100,000 or 18 percent interest and there was no chance of  
paying the payment schedule in March 2009, and that Daniel was making  
promises he could not keep. Daniel disagreed, stating that repayment will  
happen and he will repay once he gets out of jail. How this is to be done, Daniel  
is not at liberty to say, but it is his number one priority.  
[2209]  
When the trial resumed on January 3, 2017, the Crown asked again  
how Daniel was planning to raise the money to pay back the investors. Daniel  
explained that he still owns trademarks and processes and this will allow him to  
proceed to raise the money to pay back investors. He intends, upon his release,  
to pursue the MyPerfectMortgage concept and feels that there is an opportunity  
there. Brokers would be happy to proceed on that concept and there are no  
restrictions on his marketing his assets.  
-
613 -  
The investors’ money is all gone and Daniel has not squirreled any of it  
away. He has no other money sitting anywhere.  
[2210]  
[2211]  
Daniel’s plan is to utilize his concepts and he does not need to get any  
investor money. This experience has been a nightmare and he has no intent to  
defraud. He has learned a horrific lesson, but he acted on the advice of experts  
such as lawyers and accountants. Daniel was advised that he had rights as a  
shareholder and he could take on debts and do intercompany loans.  
[2212] Daniel denied that he told clients that he owned the Breadalbane or  
lied by omission. Daniel told the clients he had made an offer to purchase.  
[2213]  
Daniel did not tell investors that the Breadalbane deal did not go  
through as they ran into delays due to the owner Peter Egger discovering a  
hidden $300,000 debt. Mr. Egger wanted to sell and Daniel wanted to buy and  
they had been working with lawyers and accountants to resolve it.  
[2214]  
Daniel collected $3 million to buy the Breadalbane and this was more  
than enough to buy it. However the money came in bits and pieces, starting with  
Warren Boldt in March of 2008 and finishing with Heather Gardner in June of  
2008. Accordingly it was collected over a period of three months.  
[2215]  
The $3 million collected was raised in bonds yielding 12 to 20 percent  
and some were limited partnerships. Daniel agreed that the interest obligation  
was $360,000 annually. Exhibit 319 is an email with an attachment which  
-
614 -  
contains an interest and income expense statement. Daniel testified that he had  
not seen this income statement until trial.  
[2216]  
The income statement indicated that the projected income from the Inn  
was $87,000 per year and the debt obligations to buy it were $360,000 per year  
in interest. It was suggested that Daniel would never be able to pay back the  
interest and principal. Daniel testified that he believed the Breadalbane was a  
gem in the community and with the proper investments (like those made at  
Jakobstettel which also lost money before he bought it), Daniel could make  
money.  
[2217]  
Daniel denied that the Breadalbane did not close due to fact the money  
was already spent. Daniel testified that the capital had been diverted to other  
corporations temporarily and the deal did not close due to the $300,000 private  
loan problem and also Peter’s mother was dragging her feet. Daniel testified that  
there were two stumbling blocks that “we could not get past right up to April of  
2009.”  
[2218]  
Daniel had a cashflow problem in 2008 due to the global meltdown and  
they could not raise capital in the traditional way. People were panicking and  
revenue streams were drying up.  
-
615 -  
[2219]  
Daniel’s cashflow problems were compounded by his divorce  
obligations which, per the advice of his lawyers, was paid by taking out an asset  
he was entitled to, i.e., a shareholder loan.  
[2220]  
Daniel did not tell his clients that their money was being directed to his  
companies that had cashflow problems. Daniel did not tell them that because he  
did not know. Some clients had been paid back.  
[2221]  
Daniel testified that he took the clients’ money and operated legally by  
following the advice he was given. Daniel had intended to use the money in the  
ways he told to clients and made decisions to divert it afterward. Daniel never got  
his lawyers or accountant’s advice in writing as he was never told that was  
required.  
[2222]  
Daniel testified that he did not know he was not going to use the  
money in other ways in advance of getting clients’ money for the Breadalbane.  
Daniel told the clients he was buying the Breadalbane and he wanted to buy it.  
Daniel testified that he was open with the clients and told people that the  
Breadalbane had hit a snag.  
[2223]  
Daniel testified that he voluntarily gave up his licence as a financial  
advisor and although he never told people he was no longer licenced, he did not  
act as anyone’s financial advisor after giving up his licence.  
-
616 -  
[2224]  
Daniel had mountains to move to arrange the transition of his clients to  
other financial advisors. This is why he changed the name to DPR Financial from  
Daniel P. Reeve and Associates. It took all of 2007 and 2008 to explain the  
transition and that Daniel was no longer a financial advisor.  
[2225]  
The Millionaire Mortgage book indicated that he was not a financial  
advisor. Daniel denied that this disclaimer was in small print and indicated that it  
was okayed by compliance.  
[2226]  
Daniel set up the DPR Portfolios A through F which outlined safe to  
aggressive portfolios. He did not need to be licenced to do it and it was created in  
tandem with other financial advisors.  
[2227]  
Daniel had a right as the director of the company to limit the products  
the company would invest in and this is why David was told not to invest in T-  
SWPs. Brad Ashman was told by David to invest in a T-SWP; Daniel had a  
conversation with Mr. Ashman explaining T-SWPs as it was clear that Mr.  
Ashman did not understand the product.  
[2228]  
When Mr. Ashman then gave the $150,000 to a Reeve company  
(
Millionaire Mortgage), Daniel did not know it was going to be put toward other  
companies. Daniel never told him it was going to be used for other companies.  
Daniel never told him the money was going into the bond market. One of the  
uses was a payment to the Ritz Carlton which Daniel said was for legal fees, but  
-
617 -  
was not sure without looking at the cheque. When the Crown produced it, the  
cheque was made out to the Ritz Carlton Dearborn Michigan for a conference for  
DPR Financial and Millionaire Mortgage presentations. Daniel agreed that the  
conference had nothing to do with Mr. Ashman and Mr. Ashman did not know the  
money would be used in that way. Daniel’s memory is that Mr. Ashman would  
have gotten a copy of his corporate bond; Mr. Ashman must have lost it. Further,  
Daniel testified that the investors, who testified that they did not get copies of  
their bonds, did get copies.  
[2229]  
Numerous investors outside of the 41 alleged victims also invested in  
the Reeve companies in the form of (1) corporate bond agreements, (2) joint  
partnership agreements, (3) private equity, and (4) private loans. Although Daniel  
could not remember all the details, these clients could include Lloyd and Lisa  
Rutt, Lloyd and Ruth Hoffman, Keith Austin, Meghan and Tim Lewis, Jim and  
Joan Hall, Lynne Hoffman, Brad and Stephanie Moxey, Ezra Jantzi, Geraldine  
Heil, Andrea Morgan, Brad Alyea, Jane and Roger Caron, Mr. Dowling, Manuel  
Brubacher (Murdue Farms), Barb and Ken White, Anzie and Annie Morton,  
Jason Gingrich, William and Brenda Fisher, Larry and Kimberley Smith, Joe  
Brodie, Kerry Reibeling, Hazel Gardner, Larry and Ann Boehm, Adam Lippert,  
Maureen and Terry McDonald, Nancy Comfort, Diane Crozier, Art Freeman and  
Doug Duesling.  
-
618 -  
[2230]  
Copies of the corporate bond agreements were made for Mr. Ashman.  
However, it is possible a few clients in November 2008 to February 2009 did not  
receive copies of their agreements. Those months were extremely difficult as he  
lost two bookkeepers and Karen Gingrich had taken files without permission and  
they were “flying blind.” Daniel conceded that a few individuals in those months  
did not get their copies.  
[2231]  
The media said that $30 million was lost. Daniel conceded that he  
owed a lot of money to a lot of investors and when it was put that he owed  
another $7 million to other investors, Daniel indicated he did not know.  
[2232]  
Regarding Josephine DeSalvo, Daniel was brought in by David to talk  
about a corporate bond. At the meeting at Angela DeSalvo’s home, Daniel never  
told her that this was a “zero risk” investment. Daniel never told that to anyone.  
Daniel did tell her it was “low risk.” Daniel never told Josephine or Angela that  
this was a time-sensitive investment.  
[2233]  
The $200,000 cheque made out by Ms. DeSalvo in June of 2007 was  
made out to Emerald Met. Emerald Met was used for administration and banking.  
The June 18, 2007 agreement was between Celebrity Management c.o.b. as  
Jakobstettel. The Hendrick Suite had a number that was used for administration  
purposes and did not reflect the suite number. This document was prepared by  
Daniel’s legal representation.  
-
619 -  
[2234]  
Daniel did not tell Ms. DeSalvo that $110,000 of her money went to a  
previous investor. Daniel’s intent when he got the money was to invest it in the  
Jakobstettel. Daniel did not tell Ms. DeSalvo that the rest of the money was going  
to DPR that was receiving little money. Daniel denied that, saying that the  
company had $2 million in revenue. (The accounting records indicate revenues  
of $1.5 million.)  
[2235]  
Paragraph 36 of the DeSalvo-Jakobstettel agreement provided that  
Ms. DeSalvo could sell the suite back to Jakobstettel management with 30 days’  
notice.  
[2236] Ms. DeSalvo gave that 30-day notice sometime between February 1  
and 15, 2008 and wanted to pull out her money.  
[2237]  
Daniel could not return the money in February of 2008 due to cashflow  
problems arising out of market difficulties that he had not anticipated. The market  
crisis was all over the news and that is why Ms. DeSalvo wanted a real estate  
investment. Daniel told her about the real estate offer he had made regarding the  
Breadalbane Inn. Ms. DeSalvo liked it because it was secured by something  
tangible.  
[2238] The March 10, 2008 agreement between Ms. DeSalvo and Reeve  
Hotels c.o.b. as Breadalbane Inn was set up like that on his lawyer’s advice.  
-
620 -  
Every property that Daniel was going to buy was going to have its own separate  
corporation.  
[2239]  
Daniel never told Ms. DeSalvo that Reeve Hotels did not own anything  
but Daniel did tell her that Reeve Hotels was a holding company and she  
understood. Daniel did not tell her the money could be directed elsewhere.  
Daniel testified that he was not trying to fool anyone but was told that this is the  
way it could be done. Daniel was not trying to defraud anyone and always knew  
he had the obligation to pay the money back. Daniel testified he will rebuild and  
pay it back.  
[2240]  
On June 18, 2008, the Jakobstettel agreement was rolled over into  
another corporate bond paying 15 percent. At this time, Daniel had already  
missed one payroll. Daniel denied that he did not care if he could satisfy this  
obligation. Daniel knew in June that he was gathering a number of mortgage  
brokers for his Millionaire Mortgage deal and he believed that deal could be  
done.  
[2241] In June of 2008, Daniel’s cashflow problems were small but by  
November of 2008, he had taken a big hit due to the global meltdown.  
[
2242]  
payments totalling over $100,000 to Ms. DeSalvo as set out in Exhibit Stick File  
3, G dated December 8, 2008.  
In December of 2008, Daniel felt that he could make good on the  
1
-
621 -  
2243] Daniel was expecting, in December 2008, (1) $400,000 in transfer fees  
as he had received in other years, (2) $200,000 from David and (3) $1.2 to $1.6  
[
–
million for assets David had purchased from Daniel. Further, Daniel was on “third  
base” with Mortgage Architects involving the Millionaire Mortgage deal.  
[2244] When the DeSalvos threatened to go to the police, Daniel told them it  
was their right but told them he was going to pay their money back.  
[2245]  
Regarding the accounting, David Webb had access to the 2008  
quarterlies (except for the records that Karen Gingrich took) and Daniel believed  
that 2007 was compiled as well.  
[2246]  
Daniel testified that once money would come in, it was deployed.  
Daniel was borrowing money at 12 percent and some of it went into shareholder  
loans which only paid 3 percent. Shareholder loans was not the purpose for  
raising money and using money for shareholder loans was not planned in  
advance. Daniel left in as much money in infrastructure as he could. From 2007  
to 2009, Daniel pulled out $1 million in shareholder loans and did not pay taxes.  
[2247]  
Daniel testified that he owes investors $14 million to $16 million and  
that if he were not in custody, he could raise that money in 23 months and pay it  
back.  
-
622 -  
[2248]  
Daniel testified that in a crisis situation, a corporation is entitled to use  
its capital that it has raised and is allowed to transfer those monies elsewhere.  
Daniel was sitting on a $20 million payday.  
[2249]  
Sherrill (Martin) Stevenson, per Exhibit 121, was going to invest her  
money with Investia but Daniel was not licenced to sell it. Instead, per the  
Exhibit Stick File 37, C bank draft, she provided a draft to the Wealth Institute  
for $75,000 on November 10, 2008. She and Daniel drove to the bank to get the  
draft. Ms. Martin had slept on the decision and Daniel went to the bank with her  
as a personal service. Daniel had waited two weeks to get the bank draft.  
[2250]  
Regarding the Exhibit 121 appointment with Ms. Martin and assuring  
her he would bring a cheque, Daniel does not remember if he kept that  
appointment and brought the cheque.  
[2251]  
In February of 2009, Daniel expected to come up with the $75,000 to  
pay Ms. Martin due to commission cheques, the anticipated $200,000 from  
David, which would give David Reeve breathing room on the $1.6 million he  
owed Daniel.  
[2252]  
Heather Gardner was a nurse who was a long-time client. She was an  
“A” client with over a million dollars in assets. David took over as her financial  
advisor. Daniel told Ms. Gardner that the company was still monitoring her  
accounts and Daniel was available for questions.  
-
623 -  
[2253]  
Ms. Gardner and her husband, Albert Gardner, had done five private  
equity deals including one in 2003 and one before 2003. In June 2007, Daniel  
became aware of Mr. Gardner being stricken with pancreatic cancer.  
[2254]  
In June 2007, Mr. and Ms. Gardner provided $200,000 for an  
agreement bearing 15 percent interest with Celebrity Management c.o.b. as  
Jakobstettel Inn (see Exhibit Stick File 17, A, B, and C). On July 12, 2007, the  
Gardners entered into an agreement with Reeve Hotels for $100,000, paying 18  
percent interest for the Wellington Suite at the Park Plaza Hotel in New York.  
[2255]  
Daniel testified the Gardners wanted to diversify out of the market and  
out of RRSPs and the Jakobstettel deal was similar to previous successful deals.  
Daniel denied he told Ms. Gardner that he had bought the suite at the Plaza. He  
told Ms. Gardner to keep the pending deal a secret from certain of his staff  
members as he did not want his wife to hear he was making a deal for the Plaza.  
[2256]  
Daniel testified that it was possible that the $300,000 for the two  
investments in 2007 had come from RRSPs. Daniel does not look at every  
document but was aware that some of the clients’ funds came from RRSPs.  
[2257]  
Exhibit 303 is a folder of documents containing a document entitled,  
“Leverage Suitability.” Daniel was asked if the buck stops with him regarding  
leverage and Daniel gave an evasive answer despite having said that in chief.  
Paragraph 2 of the Leverage Suitability document indicates that RRSPs should  
-
624 -  
be melted down or withdrawn over a minimum ten-year period. Daniel indicated  
there was nothing illegal about withdrawing it all at once and the regulators could  
overrule RRSP withdrawals but had no problems with that.  
[2258]  
It was suggested that if you withdraw all of the RRSP at one time, you  
get a higher tax hit especially if it puts you in a higher tax bracket. Daniel  
indicated that a lot goes into the mix and DPR had a tax counselling firm to  
consult clients. Also, the financial advisors would go through the ins and outs of  
RRSP withdrawals. Daniel denied that his financial advisors were incompetent.  
[2259] In 2008, people were panicking and wanted out of the market due to  
the market meltdown. If people wanted out, DPR would have to facilitate that.  
[2260]  
It was suggested that unless an individual is already in the highest tax  
bracket, it is better to take out the RRSP over two years’ time. Daniel denied that  
he wanted money right there and then. The financial advisors would advise the  
clients and Daniel was not part of those discussions. His role was to explain why  
he was raising capital and what the money was being used for.  
[2261]  
Ms. Gardner phoned Daniel in April of 2008 to advise that her husband  
had passed away. In April of 2008, they were in the middle of a global meltdown  
with a possible recession and Daniel told her at her home that David had said  
that she should get out of RRSPs.  
-
625 -  
[2262]  
Daniel could not remember where she got the money from (it may have  
been life insurance) but Ms. Gardner provided him with $375,000 for the  
Breadalbane (this was done in May and June of 2008 – see Exhibit 75 – 17N).  
Daniel never told Ms. Gardner that he had permission to build condos there.  
[2263]  
Exhibit 75 – 17R is a cheque signed by Daniel for $30,000 for an  
interest payment to Ms. Gardner dated November 6, 2008 and which was  
returned NSF on November 10, 2008. Daniel testified that he thought there was  
money to cover the cheque. (Note that Account #5206583 on which the cheque  
was written showed a balance at November 4, 2008 of $162.28 with one  
subsequent deposit of $5,978.37 from TD VISA on November 6, 2008 – see  
Exhibit Stick File 101 at page 4188. Further note that a payout of $186,000 had  
been made to Gwyn and Andrea Morgan on October 31, 2008 from monies  
raised from alleged victims Jeanette Harrop, Isaac Thiessen and an emergency  
$100,000 loan from Ms. Reeve. By November 4, 2008 all of these monies had  
been disbursed mainly to the Morgans and some other individuals – see Exhibit  
Stick File 101 at pages 4133, 4149, 4156, and 4171-4190.)  
[2264]  
Daniel testified that there was another $50,000 cheque that had gone  
through to Ms. Gardner – it may have been in August. Daniel testified, “I distinctly  
remember a $50,000 one.” Daniel testified, as well, that he did not know that the  
$30,000 was not there when he wrote the $30,000 cheque and he thinks he  
made good on it after November 10, 2008. (It is to be noted that Ms. Gardner  
-
626 -  
testified that she received $10,000 in January of 2009 and received a total of  
43,000 on her total investments of $775,000. Also see Schedule C, attached to  
$
this judgment, and page 6 of Appendix C of the GT Report which indicates that  
Ms. Gardner received a total of $43,000 in repayments. Accordingly, there was  
never a $50,000 cheque paid to Ms. Gardner in August or at any other time.)  
[
2265]  
investments in the Jakobstettel Inn and entered into a new agreement of  
338,021.90 payable at 15 percent annually. Daniel testified that he was 100  
On December 6, 2008, Daniel rolled over all the outstanding  
$
percent confident he could pay on this agreement. He was sitting on the  
prospective $20 million from Millionaire Mortgage, plus David was to repay a  
$
200,000 loan that was due on December 31, 2008, as indicated in the Nagel  
Report. Plus David owed Daniel $1.2 million to $1.6 million, due on December  
1, 2008.  
3
[2266]  
Regarding Warren Boldt, Daniel told Mr. Boldt he was purchasing the  
Breadalbane. Exhibit Stick File 4, C indicates that Mr. Boldt invested $300,000  
in the Breadalbane at 20 percent interest with monthly payments of $5,000.  
Daniel was aware that Mr. Boldt was depending on these monthly payments and  
Mr. Boldt did receive monthly payments for as long as they could pay it.  
[2267] In December 2008, Daniel testified that he was late on one payment  
and then made a double payment. Mr. Boldt wanted his money back but Mr.  
-
627 -  
Reeve was not in a position to pay it back. The Crown suggested that many  
interest payments were late. Daniel denied that and, after reviewing Exhibit  
Stick File 4, C, indicated that the first interest payment would be due one month  
after the March 3, 2008 agreement date; that is, it was due on April 3, 2008. Mr.  
Reeve testified that the first time the interest payment was late was in November  
of 2008. The court took a break and, after Mr. Reeve referred to Exhibit Stick  
File 103 at page 2641, it was clear that the first April interest payment was made  
on April 22, 2008. Daniel then changed his testimony that the due date may not  
have been April 3, 2008. After the Crown pointed out this change in testimony,  
Daniel confirmed that the payment date was April 3. The Crown then referred Mr.  
Reeve to the DPR account at Exhibit Stick File 103 at page 2637 that showed  
that the DPR account on April 22, 2008 was in serious overdraft (negative  
$34,145.61) and on April 22, 2008, two cheques had bounced and Mr. Boldt was  
paid by a bank draft.  
[2268]  
Jeanette Harrop worked as a payroll clerk and was not independently  
wealthy. She turned 65 on September 15, 2007. She then received her CPP and  
old age security and a pension from her deceased husband. David had taken  
over as her financial advisor but she was not happy with him.  
[2269]  
Daniel testified that after David left, an assistant contacted Daniel to  
meet her regarding melting down her RRSP. David had talked to Ms. Harrop  
about the RRSP meltdown and the implications. Ms. Harrop was contacting the  
-
628 -  
DPR office daily about her investments. Daniel testified that he did not invite the  
conversation regarding her RRSP and a corporate bond.  
[
2270] Daniel did not tell Ms. Harrop about the cashflow situation in his  
company. Exhibit Stick File 18, D is a Letter of Direction dated October 27,  
008, purporting to be signed by Ms. Harrop (she denied signing it) directing  
2
Manulife to give a cheque to Janice Berkin asap. There were two cheques/bank  
drafts, in amounts $47,606.87 and $15,107.37 for a total of $62,714.24, for a  
Millionaire Mortgage agreement dated October 31, 2008. Daniel went with her to  
cash the first cheque along with Janice Berkin. The teller wanted to hold it for ten  
days but Daniel got the manager to sign off as a bank draft is like cash. Daniel  
denied that he went with Ms. Harrop to the bank because he needed the money  
right away.  
[2271]  
Daniel did not tell Ms. Harrop that a large part of her money was going  
to another investor. Daniel did not know that was going to happen. It was  
suggested that the money went to Ms. Morgan who wanted her money back on  
an instrument. Daniel indicated that the Harrop money could have gone to the  
Morgans when it was comingled with other funds. Exhibit Stick File 101 at page  
4156 shows a payment of $186,000 to Gwyn and Andrea Morgan. It was  
suggested that the other part came from Ms. Reeve as a loan of $100,000.  
Daniel testified that he had no prior knowledge as how this money was going to  
be disbursed.  
-
629 -  
[2272]  
Daniel told Ms. Harrop that he was raising capital for the Millionaire  
Mortgage company for marketing, legal fees, building, etc. Daniel cannot say  
how much Harrop money went to Millionaire Mortgage.  
[2273]  
Daniel paid the Morgans $186,000 when there was a major cashflow  
problem. Daniel met with the Morgans at the TD bank just after he received the  
Harrop money; the dates are the same: October 31, 2008. Daniel denied that he  
paid the Morgans back because they were threatening to go to the police. (Ms.  
Morgan testified that she told Daniel on the morning of October 31, 2008, they  
were going to the police if their cheque bounced and Daniel phoned them and  
told them to meet him at the bank at 4 p.m. and he would have their money.)  
[2274]  
Daniel agreed that if Ms. Harrop had waited two months, she would  
have split the tax consequences over two years instead of all at once. Mr. Reeve  
did not know of the tax implications regarding a massive tax liability or that Ms.  
Harrop would lose her old age security money as she was adding $64,000 to her  
income.  
[2275]  
Mr. Reeve has not paid a dime to Ms. Harrop on her instrument but he  
will still pay it. Daniel indicated that he had been Ms. Harrop’s financial advisor  
for 10 years, but not the last two years, and denied that he took advantage of a  
vulnerable client. Manulife and FISCO have investigated this matter and they  
found nothing wrong.  
-
630 -  
[2276]  
Daniel testified that he was a victim himself because he has lost more  
than anyone. Daniel did not know that David would leave and try to undo all of  
Daniel’s contracts for David’s benefits. Daniel did not know that the bookkeeper  
would take his financial information and put it in his trunk. Daniel could not  
foresee the global meltdown and his brother trying to blow the company up.  
Daniel denied lying to investors and failing to disclose the state of company  
affairs. Daniel disclosed what was necessary. Millionaire Mortgage and DPR  
were working on a $20 million payday.  
[2277] Daniel denied stealing Ms. Harrop’s money and retirement savings. He  
still owes her money and needs to get at it.  
[2278] Regarding Isaac Thiessen, he did not have a college education but he  
understood the concepts and was hungry to learn.  
[2279]  
Daniel was aware that Mr. Thiessen had Steve Haney as his financial  
advisor. Mr. Haney’s assistant phoned and told Daniel that Mr. Thiessen was  
concerned about a drop in the market and wanted out of the market.  
[2280]  
Exhibit Stick File 41, B is a Letter of Direction dated October 27, 2008  
and has the exact same date and text as the Harrop Letter of Direction appearing  
at Exhibit Stick File 18, D. Daniel testified that Janice Berkin had the right to  
execute the withdrawal and denied doing this withdrawal behind Mr. Haney’s  
back.  
-
631 -  
Daniel denied that Mr. Thiessen handed Daniel a blank cheque and  
that Janice Berkin filled it out. Exhibit Stick File 41, A shows an October 31,  
008 cheque payable to Jakobstettel Inn in the amount of $40,890.24 which is  
[2281]  
2
the net amount of the withdrawal. (See Exhibit Stick File 101 at page 4133  
which shows this cheque and the $100,000 Cheryl Reeve loan being deposited  
into the Jakobstettel account on October 31, 2008.)  
[
2282] Exhibit Stick File 41, D indicates that Mr. Thiessen entered into an  
agreement with Millionaire Mortgage for a corporate bond of $50,000 which was  
9,000 more than he had invested. It was suggested that this extra amount was  
$
put in because Daniel had no intent to ever pay it back and did not care. Daniel  
denied this and testified that the extra money was put in due to a missed reset.  
Daniel testified that the market had fallen since the reset was supposed to take  
place – so his company “was on the hook.”  
[2283]  
Regarding Eva Bernachi, Exhibit Stick File 2, O is a cheque dated  
January 23, 2009 for $100,000 signed by Daniel Reeve. Daniel denied knowing  
that this cheque would not clear. He had $200,000 coming from David and  
$400,000 in trailer fees.  
[
2284]  
an agreement with Reeve Hotels c.o.b. as Breadalbane Inn. Exhibit Stick File  
0, A is a cheque made out to Celebrity Management International Inc. for  
Regarding Brian Crozier, on March 10, 2008, Mr. Crozier entered into  
1
-
632 -  
$159,601.95, dated March 6, 2008. The Crown indicated that in Mr. Reeve’s prior  
testimony, Mr. Reeve testified that he did not have the Reeve Hotels bank  
account set up. Mr. Reeve indicated there was a banking reason. Exhibit Stick  
File 105 at page 576 indicates that the Reeve Hotels bank account was opened  
on August 1, 2007.  
[2285]  
Exhibit Stick File 10, H is a document dated December 9, 2008  
wherein Mr. Reeve promises to pay taxes owing of $47,880.59 on this  
investment. Daniel denied making this promise knowing he could not keep it.  
[2286] Regarding Lorna Eadie, Daniel denied telling her that her money was  
safer than in any bank.  
[
2287] Regarding Ron DeKoning, Daniel denied telling him that on March 18,  
008 that the Breadalbane deal had closed. Daniel told him that he thought it  
would be closed next month.  
2
[2288]  
Regarding Nancy Herlick, Daniel denied that he told her that her  
money was never invested as indicated and denied telling her he did not have  
the money to return to her. She did get her money back.  
[2289]  
Regarding Exhibit Stick File 51, A and B, minutes of meetings, he did  
not reply to them as they were bogus. The only meeting that happened was  
September 30, 2008 and 90 percent of what is in there is bogus. The meetings of  
October 21 and 28, 2008 did not happen.  
-
633 -  
[2290]  
Regarding Linda Chaffe, who provided a bank draft to Millionaire  
Mortgage for $64,996.70 dated February 6, 2009, there were no restrictions on  
how this money was to be used and does not know how it was used. Daniel  
denied knowing that his companies had failed and he denied knowing he could  
not pay it back. In January of 2009, brokers were signed and ready to roll and he  
was waiting for David’s $1.6 million.  
[2291]  
Regarding Steve Manuel, Mr. Manuel provided a bank draft of $50,000  
for a Millionaire Mortgage agreement dated January 19, 2009. Daniel did not tell  
Mr. Manuel about his problems. Daniel did not tell Mr. Manuel that half of Mr.  
Manuel’s money went to Mr. Reeve’s bank account. Daniel had no expectation of  
that happening. The money went to the bookkeepers and they handled it.  
[2292]  
Regarding Lisa and Paul Schnarr, they entered into a Millionaire  
Mortgage agreement on January 4, 2009 and provided $75,000. Daniel did not  
tell them about his problems.  
[2293]  
Regarding Gary and Deborah Raycroft, who provided a bank draft to  
Millionaire Mortgage on December 31, 2008 in the amount of $250,000, Daniel  
did not tell them about his problems. Gary was excited about the Mortgage  
Architect’s prospects. Daniel probably told him it was a low-risk investment.  
Given that the markets were tanking, Daniel thought his corporate bonds were  
-
634 -  
low risk. His corporate bonds done at that time were not different in risk from any  
other corporate bonds he had done.  
[2294]  
Daniel denied that he knew the investments were worthless and that  
had lied about the risk and denied that he abused his position of trust to target  
the victims.  
D. RE-EXAMINATION OF DANIEL REEVE  
[2295]  
Regarding Exhibit 303 and the Leverage Suitability document, the  
minimum meltdown period for RRSPs is ten years, related to leverage situations  
where a person is using his or her RRSP to pay interest in high-leverage  
situations to ensure interest payments can be made. Daniel indicated he does  
not like RRSPs as the client is taxed on the aggregate total as money is  
withdrawn.  
[2296]  
Regarding Exhibit Stick File 13, G (regarding Ms. DeSalvo), a  
document dated December 8, 2008 and signed by Daniel, is a payment schedule  
requiring a $50,000 payment on December 9, 2008, another $50,000 payment on  
December 22, 2008, and another payment of $5,833 on December 22, 2008. The  
Crown suggested there was no hope at that time of paying Ms. DeSalvo back.  
Daniel indicated that 2009 was expected to be a banner year due to his  
Millionaire Mortgage negotiations with Mr. Sammut and Mortgage Architects.  
Exhibit 325 is a licence agreement, dated June 26, 2008, between Millionaire  
 
-
635 -  
Mortgage Inc. and Greg Nowik, a mortgage broker in B.C., committing to broker  
Millionaire Mortgages in a minimum amount to be determined. Exhibit 326 is  
series of emails on July 9, 2008 involving Mr. Nowik, which indicates that he has  
signed the Exhibit 325 licencing agreement and wants to know when the deal is  
moving ahead.  
[
2297] Exhibit 327 is a similar licencing agreement between Millionaire  
Mortgage Inc. and Denis Brunet, a Manitoba mortgage broker, dated June 26  
008. This agreement is signed by Mr. Brunet and again commits to a minimum  
2
amount of millionaire mortgages to be announced. Exhibit 328 is an email dated  
September 3, 2008 where Mr. Brunet indicates he is attaching the signed  
agreement.  
[2298]  
Daniel testified that everything was put on hold at the end of  
September of 2008 when his biggest producer (David) left. The Millionaire  
Mortgage plan was further put on hold when Daniel heard about the criminal  
investigation either in November or December of 2008. Daniel had been  
proceeding methodically but he had cashflow problems when David left and after  
he heard about the criminal investigation, Daniel could not revive the Millionaire  
Mortgage plans.  
[2299] Daniel indicated that it was similar to having a winning Lotto 6-49  
ticket, but he could not cash it in because he was in custody. Daniel is 100  
-
636 -  
percent confident that the Millionaire Mortgage plan, which has now evolved into  
the MyPerfectMortgage plan, can proceed and be successful. The  
MyPerfectMortgage plan is better because no corporate bonds are involved as  
MyPerfectMortgage is just a marketing company. Joe Sammut knew both Mr.  
Brunet and Mr. Nowik.  
[2300] Daniel insisted he had the intention of paying the corporate bonds as  
he would not be cataloging the bonds if that were true.  
[2301]  
Exhibit 329 is a catalogue of monthly and interest payments payable  
on the Jakobstettel Inn and this document has no date. It shows that annual  
payments of interest were approximately $500,000 per year.  
[2302]  
Exhibit 330 is a catalogue on interest payments on joint ownership  
agreements for the Jakobstettel Inn. It shows an additional $600,000 in interest  
payments on the Jakobstettel. The combined total of Exhibits 329 and Exhibit  
330 is about $1.1 million. Daniel indicated that the net profit in the Inn, excluding  
interest payments, was $480,000 in 2008. That is why they put a cap on  
Jakobstettel corporate bonds as early as March 2008 on some units and  
completely stopped on all units in November or December 2008. Daniel felt that  
with the acquisition of the Breadalbane, both establishments would become more  
profitable.  
-
637 -  
[2303]  
Exhibit 331 is a summary of joint ownership agreements on the  
Jakobstettel and the interest rates payable, which vary from 12 percent to 18  
percent annually. This document is undated but was prepared sometime in 2008.  
$3.896 million was outstanding on the Jakobstettel agreements.  
[2304]  
Exhibit 332 is a summary of amounts owing on various investments.  
This document was prepared by Diane Intini in September or October of 2008.  
Daniel indicated that Ms. Intini was a very meticulous and thorough bookkeeper.  
The summary indicates that approximately $375,000 was owing for interest  
payments on Celebrity Management (Jakobstettel); approximately $500,000 was  
owing on principal and interest on Millionaire Mortgage. Page 2 of the summary  
outlines about $75,000 in overdue monthly payments (Daniel indicated that not  
all of that interest may have been outstanding when the document was  
prepared). Page 3 outlines the need for paperwork for Jakobstettel Inn and  
paperwork for Millionaire Mortgage loans.  
ANALYSIS  
A. THE FORENSIC ACCOUNTING EVIDENCE  
[2305] Carolyn Hillyard was qualified as an expert forensic accountant.  
Exhibit 256 was entered as the Grant Thornton Report (GT Report).  
[2306]  
The GT Report analyzes the investments of 41 alleged victims.  
Appendix D to the GT Report takes into account the investments made and  
 
-
638 -  
deducts the monies returned to the alleged 41 victims to come up a net  
investment of $10,094,948.45. This chart does not depend on the principle of  
“
first in first out” (FIFO).  
[2307] Appendix E to the GT Report breaks down the investment receipts  
and disbursements by date.  
[2308]  
Appendix C to the GT Report is a list of proposed investments and a  
summary of what happened to the purported investments as opposed to the  
intended original purpose. Of the net investment of $10,094,948.45, only  
$389,236.59 was identified as disbursements from the Reeve bank accounts  
using the alleged victims’ money that could potentially relate to their purported  
investments. In percentage terms, this translates into only 3.9 percent of the total  
investment money being directed to its intended purpose.  
[2309] Appendix F to the GT Report is a detailed source and use of funds  
schedule for the Reeve credit card account.  
[2310]  
Appendix G to the GT Report is a series of flowcharts (i2 charts) and  
supporting schedules outlining the use of the investment money provided by the  
alleged 41 victims. The gist of Appendix G is that that most of the investment  
money was spent for purposes other than what was intended by the individuals  
who decided to invest.  
-
639 -  
[2311]  
The flowcharts in the report are based on the FIFO methodology. The  
methodology works well when there is no comingling of funds but breaks down  
when funds are comingled with other funds, leading to challenges in interpreting  
the findings.  
[2312] The GT Report relied solely on bank records and did not use  
accounting records.  
[2313]  
The defence forensic expert, Edward Nagel, testified that he did not  
agree with the GT Report methodology; he had identified at least 161 errors in  
the GT Report. Mr. Nagel also compiled his own report (Nagel Report).  
[2314]  
Mr. Nagel testified that Appendix D was in error by approximately  
$100,000 due to mistakes made regarding four investors. However, in cross-  
examination, after the Crown went through the details, Mr. Nagel retracted his  
previous opinion and conceded that Appendix D was correct and the net  
investment by the 41 alleged victims was $10,094,948.45 as set out by  
Appendix D of the GT Report.  
[2315]  
Mr. Nagel did not take much issue with Appendices E or F of the GT  
Report. The only comment he had was that Appendix E had no category for  
income sources.  
[2316] Accordingly, there was no real issue with respect to Appendices D, E,  
or F of the GT Report.  
-
640 -  
[2317]  
Mr. Nagel was critical of Appendices C and G which must be read  
together. Appendix C relies on conclusions arrived at from the Appendix G  
breakdown of transactions in the bank records and on preliminary hearing  
witness testimony and witness statements.  
[2318]  
Regarding Appendix C of the GT Report, Schedule 3A of the Nagel  
Report lists the 41 victims in alphabetical order and identifies six issues with  
Appendix C: (1) overdrafts were not considered as a possible source of  
repayment, (2) other deposits prior to repayment were not considered, (3)  
opening balances were not considered as possible source of repayment, (4) total  
repayments did not reconcile to the payment balance, (5) one repayment to Pat  
Westerhout included an NSF cheque, and (6) on one occasion, repayments  
were included when there were no repayments in the bank records. Schedule  
3
A of the Nagel Report only analyses the 22 victims who received repayments  
and says nothing about the other 19 victims who did not receive any repayments.  
[2319]  
Regarding Appendix G of the GT Report, Schedule 3B of the Nagel  
Report lists the 41 victims in alphabetical order and identifies five issues with  
Appendix G: (1) GT attributes disbursements in excess of the “alleged victim”  
deposit, (2) GT does not fully attribute the “alleged victim” deposit to subsequent  
disbursements, (3) GT incorrectly references entity name or account number in  
their schedules, (4) GT’s date parameter is not consistent with the police  
-
641 -  
schedules, and (5) account balances and entity names are either incorrect or  
missing in the GT i2 charts.  
[
2320]  
2321]  
Schedules 3A and 3B of the Nagel Report must be read together.  
[
Mr. Nagel was also critical of the FIFO approach as it breaks down  
when analyzing comingled funds.  
[2322]  
The Crown, in cross-examination, spent five days going over the  
cashflow charts (there are 70) in Appendix G, taking into account the criticisms  
outlined in Schedules 3A and 3B of the Nagel Report.  
[2323] I will review three of the charts which typify the cross-examination of  
the 70 charts.  
[2324]  
In Chart #1 at Tab 41 regarding alleged victim Pat Westerhout, there is  
an error in the opening bank balance of DPR Financial. Chart #1 lists the opening  
balance as $70,653.45 when it was in fact an overdraft balance of negative  
$29,396.55. This error does not change the $500,000 transfer to Cheryl Reeve  
on December 4, 2007 from Ms. Westerhout’s money. The chart did not take into  
account subsequent deposits of $722.94 and the Celebrity-Jakobstettel opening  
balance of $62.23. This would mean that the payment to Helen and Isabel  
Brossard in the amount of $167,006.50 was made from at least $166,944.27 of  
Ms. Westerhout’s money. The Brossards were paid $24,006.50 of which at least  
$23,944.27 came from Westerhout money. A further $1,000 was paid to Wilma  
-
642 -  
Jordan of which at least $214.83 came from Ms. Westerhout’s money. Four  
thousand dollars was paid to the Brubachers with at least $3,164.83 coming from  
Westerhout money. Exhibit 256A filed by the defence outlines other  
discrepancies which do not change the conclusions reached above. Exhibit 278  
is a revised chart, presented by Mr. Nagel, showing that the $500,000 payment  
to Ms. Reeve was paid with at least $470,653.45 of Ms. Westerhout’s money.  
That evidence changed in cross-examination to indicate that the whole $500,000  
that went to Ms. Reeve came from Ms. Westerhout’s money. This example was  
one of the few instances where bank balances changed significantly in the  
revised chart (the DPR bank balance changed to about negative $30,000 from  
positive $70,000) but even here that change did not significantly alter the end  
result.  
[2325]  
The accounting records listed the $500,000 Westerhout payment to  
Ms. Reeve, which appears at Tab 41 of Appendix G and page 13 of Appendix  
C of the GT Report, as a loan to Ms. Reeve – see Exhibit 278. Mr. Nagel  
indicated that this loan would be listed as an asset on the company books.  
[2326]  
In Chart #2 regarding Dr. Ira Bernstein at Tab 3 of Appendix G of the  
GT Report, the bank balance of $85 is incorrect and it should be $235. This  
correction means that at least $189,443.60 (of the investment amount of  
$189,678.78) of Dr. Bernstein’s money was transferred to DPR Financial. DPR  
Financial paid Ms. Reeve $200,000 that same day and at least $178,617.18  
-
643 -  
came from Dr. Bernstein’s money. The revised charts were filed as Exhibits  
56C and 275.  
2
[2327]  
Regarding the flow chart pertaining to the Stevensons, at Tab 36 of  
Appendix G of the GT Report, the bank balance of the Wealth Institute is  
incorrectly indicated as negative $20 and should be (positive) $58,715 due to a  
deposit the day before the Stevensons’ deposit. On that same day, $115,000  
was paid to the combination of Ms. Reeve ($75,000) and another individual,  
Keith Austin ($40,000). Of the $115,000 paid out to those two individuals, at least  
$56,305 came from the Stevensons’ money. Of the $75,000 paid to Cheryl  
Reeve, at least $16,305 came from the Stevensons’ money. The defence filed  
Exhibit 256B which highlighted some of these errors. This was one of the other  
very few examples of a significant dollar figure change from the Appendix G  
totals.  
[2328]  
I have reviewed the cross-examination of Mr. Nagel in greater detail in  
the facts portion of this judgment. I find that the three examples detailed above  
and the review of the other 67 charts do not change the gist of Appendices C  
and G of the GT Report. Taking into account overdrafts, other deposits, and  
opening bank balances made little difference to the overall conclusions drawn in  
the GT Report in Appendices C and G. For example, the inclusion of the  
amounts and procedures recommended by Mr. Nagel would, for example, mean,  
in most cases, that instead of the entire investment of $200,000 going to Ms.  
-
644 -  
Reeve, Mr. Nagel’s approach would in most cases reduce that amount to, say,  
180,000 or $190,000, more or less.  
$
[2329]  
Mr. Nagel testified that the money from the victims was funding the  
Reeve operations. Mr. Nagel could not say (other than the $263,000 that went to  
the Plaza) whether investor money was going to the Plaza, other N.Y. hotels or  
the Breadalbane purchase or renovations because he did not do the  
investigation.  
[2330]  
Mr. Nagel did not do an investigation, but his task was to spend 800  
hours reviewing the 70 flowcharts. In so doing, he found 161 errors. His ultimate  
conclusion was that the GT Report was unreliable.  
[
2331]  
2332]  
How many of these 161 errors were significant?  
[
I have prepared two further charts outlining the investments and  
significant uses of investments by the alleged victims. Schedule F refers to the  
2 investors whose initial investments were made prior to the separation  
1
agreement on November 26 - 29, 2007. Schedule G refers to investors 13  
through 41 whose initial investments were made after the signing of the  
separation agreement on that date. These schedules were prepared with the  
changes suggested by Mr. Nagel and attribute values most beneficial to the  
accused.  
-
645 -  
[2333]  
A comparison of Appendix G of the GT Report and my revised  
Schedules F and G illustrates that the bulk of the errors, alleged by Mr. Nagel,  
were errors in dollar amounts, involving relatively small amounts of money when  
compared to the investment dollars involved. Examples include:  
1
. Tab 4 of Appendix G of the GT Report listed the overdraft of DPR  
Financial as negative $29,573.05. Mr. Nagel testified that the correct  
amount was negative $31,473.05, or a difference of about $2,000. Given  
that Tab 4 dealt with a $300,000 investment by Warren Boldt, this error  
would have very little impact on the overall flow of funds as can be seen  
by a comparison of Tab 4 of Appendix G and my Schedule G. The  
bottom line conclusion that the Boldt money went to other individuals and  
alleged victims and Reeve companies with none of it going to an  
investment in Breadalbane real estate is not altered.  
2. Tab 9 of Appendix G, Chart #2, indicates that the balance of 2048498  
Ontario Inc. is negative $180.20. Mr. Nagel says is should be positive  
$
104.66. This approximately $300 error would have very little impact on a  
flow of funds involving Ms. Colquhoun’s $200,000 investment as $300 is  
.0015 or 0.15 percent of the total.  
0
3. Tab 3 of Appendix G, Chart #2, indicates that the balance is $85 in the  
Reeve Hotels account but Mr. Nagel says it should be $235.18,  
-
646 -  
approximately $150 more. Given that Dr. Bernstein’s investment was  
189,678.78, the adjustment of $150 is 0.0008 or 0.08 percent of the  
$
total, which obviously is extremely negligible.  
4
. Tab 41 of Appendix G, Chart #2, indicates that the balance of Millionaire  
Executive Services is negative $62.86. Mr. Nagel says it should be more,  
at $37.14. This same chart has a second error: Celebrity Jakobstettel has  
a balance of $241.31 but Mr. Nagel says the balance should be $174.36.  
This approximately $100 increase in one account and $70 difference in  
the other is negligible given the deposit made by Ms. Westerhout was  
$237,286.46  
5. Tab 29 of Appendix G, Chart #2, indicates the balance of Celebrity  
Jakobstettel was negative $42.50. Mr. Nagel says it should be positive  
$
1.78. This approximate $45 dollar adjustment is negligible given the  
68,676.46 investment made by Paul and Elizabeth Meleg.  
$
[2334]  
Mr. Nagel also indicated that the FIFO methodology requires that  
account balances, at the time investors’ deposits were made and subsequent to  
other deposits, before transfers out of that account, be taken into account. In the  
GT Report, they were not. However, many of the examples discussed in  
Appendix G of the GT Report deal with minimal amounts that again had no  
impact on the overall result. Examples include:  
-
647 -  
1
. Tab 17 of Appendix G, Chart #7, did not include the $14.82 balance  
when $275,000 was deposited by Heather Gardner and $248,000 was  
then transferred to the DPR account. A balance of $14.82 is 0.00006 or  
0.006 percent of the total $248,000 transferred.  
2
. Tab 22 of Appendix G illustrates this point in both Keddie charts. In  
Chart #1, the GT Report indicates that $90,000 of a Millionaire Mortgage  
investment went into a Reeve Hotels account and then $90,000 was  
transferred to Ms. Reeve that same day. Mr. Nagel indicated that there  
was $490.64 in the Millionaire Mortgage account at the time of the  
transfer and accordingly that the FIFO methodology require the previous  
account balance to be taken into account. Mr. Nagel therefore indicated  
that at least $89,509.36, or at least 99.5 percent, of Keddie money went  
to Ms. Reeve. As this investment was supposed to go to Millionaire  
Mortgage and not to spousal support and equalization payments,  
whether 99.5 percent or 100 percent went to Ms. Reeve has no impact  
on the conclusions to be drawn. Similarly in Chart #2, the Keddies  
deposited $100,000 in the Reeve Hotels account and $100,000 was  
transferred out within two days. Mr. Nagel testified that the GT Report  
did not consider the $26.19 opening balance in the Reeve Hotels account  
before the $100,000 deposit; this amount should have been considered  
-
648 -  
in the transfer amounts. However, again, $26.19 is 0.0003 or 0.03  
percent of the total amount transferred, which is negligible.  
3
. Tab 27 of Appendix G, Chart #1 deals with a deposit of $169,590.39 by  
Mark McGuire and subsequent $169,000 transfer. This chart is criticized  
by Mr. Nagel for not taking into account an opening balance of $47.70 in  
the Reeve Hotels account. But $47.70 is 0.0003 or 0.03 percent of the  
$169,000 transferred, which again is negligible. Chart #3 of this same tab  
deals with a deposit of $173,736.85. Again Mr. Nagel takes issue with the  
GT Report not deducting the transfers by the $125.92 opening balance  
in the Millionaire Mortgage account. This $125.92 opening balance is  
0.0007 or 0.07 percent of the $173,736.85 deposit, which is negligible.  
4
. In my opinion, Mr. Nagel made a totally absurd revision at Tab 41 of  
Appendix G, Chart #2. Pat Westerhout deposited $237,286.46 in the  
Reeve Hotels account, which had a balance of 9 cents. Mr. Nagel revised  
the $237,000 to a figure of $236,999.91 in order to take into  
consideration the opening 9-cent balance. Taking $0.09 of a $237,000  
transfer is 0.0000004 or 0.00004 percent of the transfer amount. Nothing  
more needs to be said about this alleged error.  
[2335]  
No methodology is perfect. Mr. Nagel’s comingling approach has its  
own flaws. To take a hypothetical example, suppose investor Joe Smith invests  
-
649 -  
$100,000 and the intent is to have it transferred in five tranches of $20,000 each.  
However, if there is $10,000 in the account at the time of transfer or if there is  
zero in the account but a $10,000 deposit is made by another investor before  
those $20,000 transfers are made, the Nagel approach requires that $10,000 to  
be taken into account in those five transfers. Each of the $20,000 transfers would  
consist then of at least $10,000 consisting of Mr. Smith’s money. The total that  
could be attributed to Mr. Smith’s $100,000 would be only at least $50,000 even  
though $100,000 of the total of $110,000 available was transferred out, and at  
least $90,000 of Mr. Smith’s money went out.  
[2336]  
An example of where this flaw appears is in the revision proposed by  
Mr. Nagel at Exhibit 270 in relation to Tab 19 of Appendix G involving a deposit  
by Kevin Hillman of $41,031 that went into a Millionaire Mortgage account that  
had an opening balance of $20,442.98. Under the Nagel approach, only $557.02  
of Hillman money went to the $12,000 transfer to Celebrity Jakobstettel. Of the  
$26,718.10 that paid off the DPR overdraft, only at least $10,057.02 of Hillman  
money could be considered. Accordingly, of the $41,000 invested by Mr. Hillman,  
the Nagel approach can only account for less than $11,000. It is to be noted that  
per my Schedule A, Mr. Hillman’s loss was $41,000 total, with zero repayments.  
Per Tab 19 of Appendix G and page 7 of Appendix C of the GT Report, no  
money was invested in Millionaire Mortgage, other than a deposit to the  
-
650 -  
Millionaire Mortgage account which funded transfers to other Reeve  
corporations.  
[2337]  
Of the alleged 161 errors testified to by Mr. Nagel, my comparison of  
his evidence to the GT Report contains only four errors that involve what I would  
consider significant dollar figures. They are found in Appendix G of the GT  
Report and can be detailed as follows:  
1. Tab 36 of Appendix G indicates that Sherrill Stevenson deposited  
$75,000 to the Wealth Institute account, which had an opening balance of  
negative $20. Then $75,000 was transferred to Ms. Reeve. According to  
Mr. Nagel, there was a balance of $58,695 to make a total of  
approximately $115,000 available for transfer. In addition to the $75,000  
disbursed to Ms. Reeve, $40,000 was paid to Keith Austin with at least  
$56,305 from Ms. Stevenson’s monies. Of the $75,000 paid to Ms.  
Reeve, at least $16,305 was Ms. Stevenson’s money. Even with these  
dollar discrepancies, the bottom line, still, is that Ms. Stevenson’s monies  
never went into a Millionaire Mortgage investment and she received no  
payments of any kind ever. The bulk of her monies went to Ms. Reeve for  
support equalization payment purposes and to another individual—not to  
the investment she intended.  
-
651 -  
2
. As previously discussed in part, Tab 3 of Appendix G, Chart #2, shows  
that Dr. Bernstein deposited $189,678.78 into a Reeve Hotels account  
and then $189,443.60 was transferred to DPR Financial. The GT Report  
indicates that DPR Financial had an opening balance of negative  
$18,909.79, but Mr. Nagel says DPR Financial had a positive opening  
balance of $6,149.79. Mr. Nagel testified that this means that $200,000 of  
Dr. Bernstein’s money did not go to pay Ms. Reeve, “only” $178,617.18  
of his money went to Ms. Reeve. The bottom line here, again, is none of  
the Bernstein money went to the Breadalbane investment but  
approximately at least 90 percent went to pay Ms. Reeve’s spousal  
support/equalization payments. Again, Dr. Bernstein received no  
repayments on his investment in the Breadalbane which never occurred.  
Again these varying figures do not impact the overall conclusion that Dr.  
Bernstein’s money was not used for the purpose he intended but for an  
unauthorized and unknown purpose.  
3
. Tab 38 of Appendix G, Chart #1, indicates that Claudette Taylor  
deposited $400,000 into a Reeve Hotels account and $400,000 was then  
transferred to a DPR Financial account that had an overdraft of negative  
$
3,833.48. Mr. Nagel says that the DPR overdraft was, in fact, negative  
9,133.48, a difference of a little over $5,000 on a $400,000 investment.  
$
Numerous transfers were made thereafter and the changes to Chart #1  
-
652 -  
of Appendix G are reflected in my Schedule F. The only change of any  
significance is that the payment of $3,000 to Ms. Reeve cannot be  
attributed to Ms. Taylor’s money. The bottom line here, yet again, is that  
Ms. Taylor’s $400,000 was supposed to be invested in the Plaza Hotel,  
but it was instead disbursed to numerous Reeve corporations for  
expenses and payments to individuals, including a $10,000 shareholder  
loan to Daniel Reeve, which Mr. Nagel indicated was made up of $9,555  
of Ms. Taylor’s money.  
4. Tab 41 of Appendix G, Chart #1 indicates that Pat Westerhout deposited  
$800,000 to a DPR Financial account that had an opening balance of  
$70,653.45. Mr. Nagel says this opening balance should be negative  
$29,346.55. As can be seen from a comparison of this Chart #1 at Tab  
41 of Appendix G and my Schedule F, there is little overall impact on  
the bottom line. Ms. Westerhout funded the first $500,000 payout of  
spousal/equalization support to Ms. Reeve and also funded significant  
amounts of money to other individuals. None of Ms. Westerhout’s money  
went to the intended Millionaire Mortgage investment.  
[2338]  
Accordingly, I reject Mr. Nagel’s opinion that the GT Report is  
unreliable for the following reasons:  
-
653 -  
1
. One hundred sixty-one errors sounds like a large number, but in the  
context of examining 100,000 documents, it is not an overwhelming  
number of errors. Assuming an eight-hour workday, one or two errors at  
most would be found on a typical day. Further, many of the errors that  
were pointed out would have no impact on the reliability of the GT  
Report. For example, Exhibits 276 and 277 filed by Mr. Nagel refer to  
payments to the incorrectly named “Mark Sutherland” at Tab 12 of  
Appendix G of the GT Report. “Sutherland Mark” is the law firm whose  
lawyers were representing Mr. Reeve. The long-form name of the firm is  
Sutherland, Mark, Bernstein and Fleming, Professional Corporation.  
2
. As I have demonstrated, most of the dollar differences pointed out by Mr.  
Nagel were minor amounts and had no effect on the overall impact of the  
GT Report. Even in the few examples where dollar amounts are  
significant, there is no or little impact on the bottom line. The Bernstein  
example at Chart #2 at Tab 3 of Appendix G of the GT Report is a  
good example as it contains both minor and more major “errors” testified  
to by Mr. Nagel. The opening bank balance of Reeve Hotels, with  
reference to Dr. Bernstein, in Chart #2 at Tab 3 of Appendix G was  
listed at $85 but was in fact $235.18. This is a minor error that is  
negligible. On an investment of almost $190,000, $235 has little impact.  
The bank balance of DPR Financial in that same chart was listed as  
-
654 -  
negative $18,909.79 when in fact Mr. Nagel says it was positive  
6,149.26. This significant difference, even when combined with  
$
subsequent deposits of over $4,000, merely reduced the amount of  
Bernstein money that went to Ms. Reeve from $200,000 to at least  
$178,617.18. The Bernstein money, regardless of which dollar amount is  
chosen, certainly did not go to the Breadalbane investment as intended  
by Dr. Bernstein.  
3
. Mr. Nagel testified that the typographical errors regarding bank account  
numbers, located in the Gardner and Steenbergen flowcharts and  
spreadsheets, were not “minor” errors as suggested by the Crown. Mr.  
Nagel indicated that these typographical errors, in addition to the total of  
161 errors, would cast doubt on the GT Report. I agree with the Crown  
that these typos do not cast doubt on the conclusions within the GT  
Report and are understandable when dealing with numerous  
transactions and multiple bank accounts.  
4
. Mr. Nagel was able to point out errors and had methodology criticisms of  
the GT Report but was not able to express any opinion as to where the  
alleged victims’ money went, except to say that it went to support Mr.  
Reeve’s businesses. For example, the Crown, in cross-examination,  
referred Mr. Nagel to his Schedule 1B and to the reference in that  
schedule to $240,030.12 going to insurance and financial companies. The  
-
655 -  
Crown suggested that not a lot of money went to segregated funds. Mr.  
Nagel indicated he could not comment on that. His role was to critique the  
GT Report.  
5
. The Crown suggested that one of the themes in the 70 charts was that a  
significant amount of money went to Ms. Reeve and was recorded in the  
books as a loan, never to be repaid. It was suggested that the loan  
entries were a lie as the payments were made for spousal/equalization  
support following the Reeves’ separation agreement. Mr. Nagel said he  
did not review the separation agreement as his role was to critique the  
GT Report and, even then, he went beyond the GT Report scope of  
review by looking at accounting records and QuickBooks. Even after the  
Crown reviewed the separation agreement and payments made pursuant  
to it, Mr. Nagel continued to insist that the $500,000 payment made to  
Ms. Reeve shortly after the Westerhout “investment” was in fact properly  
entered into the books as a loan. Mr. Nagel denied he was acting as an  
advocate for Mr. Reeve contrary to Mr. Nagel’s code of ethics. To me, it  
is clear that these payments to Ms. Reeve were not a loan but were paid  
as support/equalization payments pursuant to their separation  
agreement. Entering these payments as a loan on the books was a lie  
and dishonest; Mr. Nagel should or does know that. I find that Mr. Nagel’s  
evidence regarding the loans to Ms. Reeve not to be credible and further  
-
656 -  
that Mr. Nagel was acting as an advocate for Mr. Reeve on this point,  
contrary to Mr. Nagel’s duty as an expert to be independent and  
impartial. See R. v. D.D. 2000 SCC 43 at para 52 and White Burgess  
Langille Inman v. Abbott and Haliburton [2015] 2 SCR 182 at paras 1-3.  
In conclusion, there were very few errors in the GT Report that had any impact  
on the result and in the few instances where there were any significant changes  
in the numbers in the GT Report, this still did not affect the bottom line in a  
material way. These errors and differences did not impact the ultimate result of  
the GT Report, namely that the 41 alleged victims’ money did not go toward  
specified investments but to other expenses that they did not authorize or even  
know about, i.e., support/equalization payments made to Ms. Reeve. Further, Mr.  
Nagel initially disagreed with the totals in Appendix D of the GT Report  
(regarding the net investments of the 41 alleged victims) but, after cross-  
examination, confirmed that the GT Report had it right. Accordingly, while I  
accept Mr. Nagel’s mathematical calculations as outlined both in chief and cross-  
examination, I reject his opinion that the GT Report is unreliable. Accordingly, I  
will rely on the results of the GT Report.  
[2339]  
I note that in Schedule 3A of the Nagel Report, Mr. Nagel lists the 41  
alleged victims in alphabetical order and notes that this schedule excludes the 19  
alleged victims who never received any repayments. This approach to the listing  
-
657 -  
of the victims in alphabetical order sheds no light as to the timing of the alleged  
victims’ investments and potential reasons for their non-repayment.  
[2340]  
Accordingly, I have compiled a Schedule A to this judgment.  
Schedule A lists 12 alleged victims who invested with Mr. Reeve before and  
sometimes after the signing of the separation agreement on November 26 - 29,  
2007. All of them received some repayments. Twenty-nine alleged victims  
invested with Mr. Reeve after November 26 - 29, 2007, the dates of the  
separation agreement. Schedule A illustrates that 19 alleged victims did not  
receive any repayments and all of those 19 alleged victims invested with Mr.  
Reeve after the signing of the separation agreement.  
[2341]  
I have also compiled a Schedule B to this judgment. Schedule B lists  
the repayments to the 12 alleged victims who invested with Daniel both prior to  
and after the signing of the separation agreement on November 26, 2007. The  
repayments total $1,468,066.60.  
[2342]  
I have further compiled a Schedule C to this judgment. Schedule C  
shows that the investments of these 12 alleged victims total $5,978,286.46 and  
their losses total $4,510,219.82. Therefore, the losses total 75 percent of the  
investments made, and the repayment of both principal and interest was 25  
percent on the investments made.  
-
658 -  
[2343]  
I have further compiled Schedule D to this judgment. Schedule D lists  
the repayments to the 29 alleged victims who invested with Mr. Reeve after the  
signing of the separation agreement on November 26 - 29, 2007, and includes  
the 19 individuals who never received any repayment. The repayments total  
$276,965.49, of which $156,965.49 was interest and $120,000 was repayment of  
principal.  
[2344]  
I have further compiled a Schedule E to this judgment. This schedule  
shows that the total investments of these 29 alleged victims are $6,033,422 and  
their losses were $5,756,476.59. The losses totalled 95 percent of the  
investments made and the repayment of both principal and interest was a  
meagre 5 percent on the investments made.  
[2345]  
As indicated, I have also prepared Schedules G and F which outline  
the investments made by the alleged victims and the significant uses of those  
investments.  
[2346]  
I note that Schedules A through F above are not exact duplicates of  
the GT Report Appendices but are roughly consistent with Appendices C and  
G of that report. The schedules were based on the trial evidence, including the  
trial testimony and exhibits. Where the trial evidence differed from Appendix C  
of the GT Report, I attempted to select the values that would be most beneficial  
to the accused.  
-
659 -  
[2347]  
These schedules establish that, after the separation agreement was  
signed, the repayments to the alleged victims were either zero (in 19 cases) or a  
small fraction of the original investment in almost all cases. The total rate of loss  
to alleged victims who invested after the signing of the separation agreement  
was much greater than the rate of loss to alleged victims who had made at least  
one investment before the separation agreement was signed on November 26 -  
29, 2007.  
[2348]  
The separation agreement dated November 26 - 29, 2007 required $3  
million in lump sum payments of $500,000 from November 30, 2007 to August 1  
of 2008. This is $3 million dollars to be paid over 9 months.  
[2349]  
Schedule 1A of the Nagel Report shows that income revenues for  
the Reeve companies were $1,488,110.73 in 2007 and $723,283.47 in 2008.  
With a small stream of income in 2009, there was a total of $2,241,418.11  
income over the indictment period, beginning January 1, 2007 and ending  
September 2009. Schedule 1A of the Nagel Report shows that payroll over the  
indictment period was $2,828,579.82 and office expenses were $1,631,723.16.  
Payroll and office expenses swamped revenues and were approximately,  
together, roughly double the revenues. Exhibit 261, Mr. Nagel PowerPoint  
exhibit, indicates that office and related expenses totalled $8,740,630 or roughly  
4
times the actual revenue.  
-
660 -  
[2350]  
Mr. Nagel stated the obvious when he testified that the Reeve  
businesses were struggling. A lot of the Reeve entities were financed by  
investors, which Mr. Nagel did not deny. According to Mr. Nagel’s PowerPoint,  
83.5 percent of the companies’ sources of funds came from investors (a total of  
$19,439,987).  
[2351]  
Putting it all together, with its revenues what they were, Daniel’s  
struggling business was not able, even remotely, to meet payroll and office  
expenses from 2007 onward. On top of that, the business paid out at least $1.34  
million dollars to Ms. Reeve, marked in the books as a “loan.” These payments  
were not loans. Marking them as such was a lie and a deceit. These payments  
were, in fact, support and equalization payments, not loans. Ms. Reeve testified  
that she received $2 million in support payments – see Exhibit Stick File 57.  
[2352]  
On all the evidence, there was only one possible source for these  
support payments – the alleged victims, and possibly other investors. But of  
course, the investors were never told that their money was going to pay Daniel’s  
support obligations or his failing enterprises. They were told their money would  
be invested safely, mainly in “risk-free” or “minimal-risk” or “low-risk” real estate  
investments.  
[2353]  
In addition to these support payments, this struggling business also  
paid out $1,345,526.74 in 2007 to 2008 to Daniel as “shareholder loans” – see  
-
661 -  
Schedule 1A at page 2 of 2 of the Nagel Report. Most of these loans were  
made in 2008, and totalled $1,052,716.42. This was the same period that  
“shareholder loans” to Ms. Reeve were being made or had just been made to the  
tune of approximately $1.34 million, with a total of $2 million ultimately being paid  
to Ms. Reeve.  
CONCLUSIONS  
A. FORENSIC ACCOUNTING EVIDENCE  
[2354] My analysis of the accounting evidence leads me to the following  
conclusions:  
1. During the indictment period from January 1, 2007 to  
September 2009, Daniel was operating numerous corporations  
that were losing substantial amounts of money. The income for  
that period was $2.2 million, while office and related expenses  
totalled $8.74 million. Accordingly, income was paying for only  
about 25 percent of the companies’ basic expenses – see  
Exhibit 261, Mr. Nagel’s PowerPoint.  
2. Even if all sources of funds (other than investors and creditors’  
contributions) were included, the total funds amounted to  
$3,847,041, or less than half the basic office and related  
expenses – see Exhibit 261, Mr. Nagel’s PowerPoint.  
 
 
-
662 -  
3
4
5
. Accordingly, as indicated by the GT Report and my schedules,  
investors’ monies, including the money invested by the 41  
alleged victims, was diverted to pay the basic expenses of the  
various Reeve corporations.  
. As can be seen from Schedule 1A of the Nagel Report,  
income declined in each year from 2007 to 2009. Income in  
2007 was $1,488,110.73; the 2008 income was 50 percent less  
at $723,283.47 and virtually non-existent in 2009 at $30,023.91.  
. Even in the best year (2007), the available income could not  
even remotely cover expenses. Payroll and office expenses for  
2007 alone came in at $2,374,206.72, approximately $900,000  
more than the income brought in. In 2008, this imbalance  
worsened as income plummeted. The shortfall regarding payroll  
and office expenses exceeded $1.2 million in 2008 – see  
Schedule 1A of the Nagel Report.  
6
. As can be seen from Appendix C and my schedules, the  
following individuals made investments in 2007 toward the  
purchase of the Plaza suite, to the tune of $2.15 million in total:  
Glen Brubacher ($350,000), Rene Brossard ($600,000),  
Heather Gardner ($200,000), Anne Colquhoun ($200,000),  
-
663 -  
Laura Kerr ($100,000), Chin Tan ($200,000), Claudette Taylor  
$400,000), and Amos Lichty ($100,000).  
(
7
. Exhibit 132 – 300E is cheque for $263,500, marked NSF,  
intended for the Plaza purchase, dated August 19, 2007. In July  
and August of 2007, Rene Brossard and Heather Gardner had  
contributed a combined $800,000 toward the Plaza. None of  
this money was used to purchase the Plaza suite as they  
intended. This money was essentially transferred out within a  
day or two to other Reeve companies to cover business  
expenses and payroll. This pattern would occur repeatedly over  
the next two years.  
8
. None of the $2.15 million collected for the Plaza was used for  
that purchase. On May 23, 2008 the Plaza deal was cancelled  
and the deposit forfeited.  
9. Exhibit 132 – 300F is a bank draft payable to Kramer Levin for  
$263,500. This money came mostly from Peter Steenbergen for  
a Millionaire Mortgage investment – see my Schedule G and  
Tab C of the GT Report at page 11.  
-
664 -  
10.On June 27, 2008, Peter Steenbergen made a $50,000  
investment toward the Plaza – see my Schedule G and page  
11 of Appendix C of the GT Report.  
1
1.While $2.15 million was owing to investors for the Plaza  
purchase and the Reeve companies’ expenses were exceeding  
income by $900,000, in 2007, Daniel agreed in a separation  
agreement dated November 26 - 29, 2007 to pay his ex-wife $3  
million in $500,000 installments over the following 9 months.  
1
2.In 2008, with payroll and basic office expenses exceeding  
income by $1.2 million, Daniel funnelled Ms. Reeve $2 million  
from December 2007 to the end of 2008. At the end of 2008, $1  
million was still owing, as indicated by a subsequent separation  
agreement in January of 2009. These payments are listed in the  
accounting records, in part, as shareholder loans to Ms. Cheryl  
Reeve in the amount of $1,539,231.14; in 2007, Daniel  
withdrew a shareholder loan of $292,810.32 and in 2008, took  
out a staggering further $1,052,716.42, for a total shareholder  
loan of $1,345,526.74 during the indictment period.  
13.Accordingly, together, Cheryl and Daniel Reeve took out  
shareholder loans of just under $2.9 million dollars in 2007 and  
-
665 -  
2008 at a time when the Reeve companies’ basic payroll and  
office expenses in those years exceeded total income by $2.1  
million. Exhibit 261, Mr. Nagel’s PowerPoint, indicates that  
shareholder loans to Ms. Reeve, Daniel, and David, plus others,  
totalled $3,106,422 over the indictment period.  
14.Exhibit 261, Mr. Nagel’s PowerPoint, further indicates that  
during the indictment period, office and related expenses were  
$8,740,630 and capital asset purchase and leasehold  
improvements cost $3,151,914. In addition, $7,499,803 was  
paid to investors and creditors over the indictment period.  
15.Exhibit 261, Mr. Nagel’s PowerPoint, also indicates that funds  
were sourced mainly from investors and creditors to the tune of  
$19,439,987, or 83.5 percent of all funds sourced. Simple math  
indicates that, with an income of $2,241,418 against a much  
larger total of expenses, leasehold improvements, shareholder  
loans and payments to investors and creditors, the vast majority  
of funds satisfying those obligations came from Daniel’s  
investors’ money. Ten million dollars’ worth came from the  
alleged 41 victims.  
-
666 -  
1
6.As confirmed by the GT Report and my schedules, the Reeve  
companies used the alleged 41 victims’ investment monies not  
as intended toward low- or no-risk real estate and commercial  
investments, but diverted them for three main purposes:  
1
. Shareholder loans to Daniel and shareholder loans,  
mainly to Cheryl and Daniel Reeve, for the purpose  
of satisfying Daniel’s spousal support/equalization  
payment obligations;  
2
. Expenses incurred by the various Reeve companies;  
and  
3. Repayments of loans made by individual investors.  
B. THE 41 ALLEGED VICTIMS AND OTHER INVESTORS  
2355] The 41 alleged victims and the other investors who testified were  
[
decent, honest, hard-working people. Even Daniel conceded as much. Their  
testimonial evidence was confirmed by the documentary evidence and was  
consistent with the evidence of the other victims and investors. Many of them  
were cross-examined for the better part of two days and they emerged  
unscathed. Their evidence was internally consistent. Their evidence was  
 
-
667 -  
extremely credible and I have no hesitation in relying on the evidence of these  
honest, good people.  
C. DAVID REEVE AND LINZIE BROWN  
[2356]  
David Reeve and his wife Linzie Brown were also extensively cross-  
examined and emerged unscathed from their cross-examination. Linzie Brown  
did testify to a relatively minor criminal past, which I have considered and find not  
to affect her credibility. Both David and Ms. Brown’s evidence was consistent  
with the documentary, accounting and banking evidence. I find that they both  
gave credible and reliable testimony.  
D. THE PROPOSED REAL ESTATE VENDORS  
[2357]  
The proposed real estate vendors, Peter Egger (Breadalbane), Alicia  
Ganz and Meryl Goldberg (Park Plaza Hotel) and Henry Israel (Bayfield  
property), were highly respectable business people who gave their evidence in a  
very forthright manner. Their evidence was confirmed by documentary evidence  
in large part and they all emerged unscathed after detailed cross-examinations. I  
find them all to be credible and reliable witnesses.  
[2358]  
The witnesses listed under the subheading of “The Attempted  
Comeback” were Mark Jackson and Neil Boyd. I found them to be credible as  
well; their evidence was confirmed by documentary evidence and they emerged  
 
 
-
668 -  
unscathed from cross-examination. They were both credible and reliable  
witnesses.  
E. CHERYL REEVE  
[2359]  
Ms. Reeve testified that she separated from Daniel in early 2007.  
Daniel was very terrified of an audit when she brought it up. Daniel would  
become very angry and did not want an audit done. I infer, from the forensic  
accounting evidence, Ms. Reeve’s evidence, and Daniel’s evidence (i.e., that he  
was the sole owner and shareholder of the companies; had control over where  
the money was going; hired the bookkeepers and gave them instructions as to  
how to do the books and had regular meetings with them and directed who/what  
was to be paid, especially larger sums and when bills could not be paid and that  
situation became chronic in 2008; Daniel prohibited access to the books by the  
president of DPR, David; and Daniel directed the spousal support and  
equalization payments to Ms. Reeve and how the spousal/equalization payments  
were to be entered into the books – “shareholder loans to Daniel or Cheryl  
Reeve”), that Daniel was aware that monies were being improperly diverted, from  
the investments supposed to be made in the Plaza and other real estate  
investments, in order to pay for (1) spousal/equalization payments to Ms. Reeve,  
(
2) the expenses of his companies, and (3) repayments to alleged victims and  
other individuals.  
 
-
669 -  
[2360]  
Exhibit 221 – 57A is a copy of Ms. Reeve and Daniel’s separation  
agreement dated November 26 - 29, 2007. It was signed by Ms. Reeve on  
November 26, 2007 and by Daniel on November 29, 2007. The separation  
agreement, at paragraph 5.1, acknowledges that Daniel is paying her $18,000  
per month with $3,500 for child support and $14,500 for spousal support.  
Paragraph 5.2 indicates that, commencing December 1, 2007, Daniel is to pay  
spousal support of $13,500 per month (with the first lump sum payment of  
$500,000 due on November 30, 2007), until June 15, 2008 at which time a lump  
sum of $2 million was to be paid in four installments. If that were paid on time,  
the monthly spousal support payment of $13,500 would cease.  
[2361]  
Paragraph 5.8 required Daniel to pay $3 million in $500,000  
instalments from November 30, 2007 to August 1, 2008. It is unclear whether this  
was for spousal support or net family property equalization. Ms. Reeve testified  
that she ended up receiving $2 million from Daniel, but not exactly as per the  
schedule. Paragraph 5.9 of the agreement indicated that if Daniel was in default  
for longer than 60 days, the entire amount would be due and payable; in the  
alternative, Ms. Reeve could set the agreement aside.  
[2362]  
Exhibit 221 – 57B is the amended separation agreement, dated  
January 15, 2009. It indicates that $1 million is still outstanding and that a $1  
million mortgage was to be placed on Daniel’s Swan Lake farm property. Daniel  
was also to pay $17,000 per month for child support.  
-
670 -  
[
2363]  
2364]  
Exhibit 221 – 57C is the divorce order, dated June 4, 2008.  
[
In January of 2009, Cheryl Reeve received $3,000. This $3,000  
appears to have come from the alleged victim Steve Manuel’s $50,000 Millionaire  
Mortgage investment on January 19, 2009 – see Appendix G, Tab 25 of the GT  
Report and my Schedule G.  
[2365]  
In 2007 to 2008, Daniel asked Ms. Reeve for loans on three occasions  
in the following amounts: $100,000, $80,000 and $5,000. Daniel did not say what  
the money was for but sounded desperate and had a sense of urgency. Ms.  
Reeve gave the loans to Daniel directly and was paid back in one to three weeks.  
[2366]  
Ms. Cheryl Reeve was a credible witness. Her evidence was consistent  
with the accounting evidence and the separation agreement documents. The  
defence did not cross-examine her (whereas the defence cross-examined most  
other witnesses for one to two days, on average). There was absolutely no  
evidence from Ms. Reeve that the $2 million she was paid pursuant to the  
separation agreement was a loan that she was required to pay back. She used  
the $2 million to partly pay off her mortgage and invest in segregated funds.  
[2367]  
Accordingly, I conclude that the $2 million that Ms. Reeve received  
from Daniel was in furtherance of the spousal support and equalization payments  
pursuant to the separation agreement. Daniel even told some of his employees  
that those monies had to be paid pursuant to a court order. It is clear that the $2  
-
671 -  
million paid to Ms. Reeve was not a loan that was intended or required to be paid  
back. The entry of a significant portion of the payments to Ms. Reeve  
(approximately $1.5 million of the $2 million paid) as “loans” on the accounting  
records was a lie and clearly dishonest.  
[2368]  
Daniel testified that the “loans” to Ms. Reeve were put on the books  
and would be later written off as bad loans. This further admission confirms that  
the payments to Cheryl were in the nature of spousal/equalization support. The  
entry of these support payments as loans, to be later written off, was an act of  
clear deception of the companies and investors involved.  
F. DPR FINANCIAL – THE INSIDERS  
[2369]  
The evidence provided by the “insiders” – the employees of DPR  
Financial and related companies – confirms the forensic accounting evidence as  
outlined in the GT Report and schedules that I have prepared.  
[2370]  
The bookkeepers and other employees/contractors of DPR were  
decent and honest people. (The full list of insiders can be found under the  
subheading “DPR Financial – The Insiders.” I have already dealt with Linzie  
Brown and David above.) Many of them quit in the summer or fall of 2008 when it  
became obvious that Daniel was lying to clients and the monies owing to  
investors could never be paid back. Their evidence was consistent with the  
accounting evidence and the business and banking records of DPR and the  
 
-
672 -  
victim/investor evidence. They too emerged from cross-examination unscathed.  
Accordingly, I find that they are all credible and reliable witnesses.  
[2371]  
The defence submitted that Ms. Gingrich and Ms. Taylor had the  
opportunity to collude and/or tamper with documents. There was no credible  
evidence to substantiate this submission. I find that the insiders did not collude in  
giving their evidence and that there was no credible evidence before me to  
indicate that any material documents were tampered with.  
[2372]  
The forensic accounting evidence indicates that the investors’ monies  
were not invested in low- or no-risk real estate investments but mainly siphoned  
to three other purposes: (1) shareholder loans to Daniel and support/equalization  
payments to Ms. Reeve, which were entered in the books as shareholder loans  
to Daniel or Cheryl Reeve; (2) payments for expenses of the various Reeve  
companies; and (3) repayments to alleged victims and other individual investors.  
1. SHAREHOLDER LOANS, MAINLY TO CHERYL REEVE AND  
DANIEL REEVE  
[2373]  
Karen Gingrich, a DPR bookkeeper, got a phone call from Pat  
Westerhout on September 18 or 19, 2008 who indicated that she invested  
800,000 for the new office in Waterloo in December of 2007. Ms. Gingrich was  
aware that $500,000 of that money was paid to Ms. Reeve. Of the other  
300,000, $200,000 went to Jakobstettel Inn and the other $100,000 went to  
$
$
 
-
673 -  
general DPR expenses. Ms. Gingrich quit as head of finance after just one week  
in the role.  
[2374]  
Ms. Gingrich testified that Daniel brought personal invoices in for his  
expenses for his farm and Ms. Reeve’s house. She paid these invoices and put  
the expenses in the books as shareholder loans. Ms. Gingrich stopped giving  
Daniel a paycheque mid-2007 and used this surplus to decrease the shareholder  
loans.  
[2375]  
On September 12, 2008, $100,000 was transferred from Millionaire  
Mortgage to Ms. Reeve by Ms. Gingrich. Daniel instructed Ms. Gingrich to make  
the transfer. When she asked why Ms. Reeve was getting money from  
transactions like this, every time Daniel would say it was a “court order.”  
[
2376]  
On March 6, 2008, Ms. Gingrich deposited Mr. Crozier’s cheque for  
159,601.95 to Celebrity Management. The next day, March 7, 2008, she sent  
100,000 to Sutherland Mark (DPR’s law firm) to pay off the mortgage for the  
$
$
DPR offices at 46 Cambridge Street in Cambridge, which Ms. Reeve was getting  
in the divorce. There was no money in the DPR account before the transfer.  
[2377]  
Similarly, on March 10, 2008, Ms. Gingrich and Daniel signed a deposit  
receipt for $106,000 placed in the Reeve Hotels account as well as a bank draft  
of $100,000 made out to Sutherland Mark to pay off the mortgage on 46  
-
674 -  
Cambridge Street. The only deposits into the Reeve Hotel account were client  
money. Ms. Gingrich was not aware of any other deposits.  
[2378]  
Ms. Gingrich signed a receipt for a deposit of $200,000 from Keith  
Austin Holdings, after which $100,000 was paid out to Starbuck Transportation (a  
client of either DPR or Reeve Hotels, Ms. Gingrich is not sure), and $100,000  
was transferred to Ms. Reeve.  
[2379] Ms. Gingrich testified that there was a total of $1.8 million disbursed  
from corporate accounts to Ms. Reeve.  
[2380]  
Cynthia Taylor, another bookkeeper, testified that approximately $2  
million was directed to Ms. Reeve. Ms. Reeve took no part in the operations of  
DPR. She was not employed but received paycheques.  
[2381] Ms. Taylor indicated that there was $2 million to $3 million outstanding  
in the form of shareholder loans in the various companies.  
[2382] Ms. Taylor indicated that company money (around $200,000) was  
funding extensive renovations at Daniel’s farm in the years 2006 to 2008.  
[2383]  
Sarah Snow, another bookkeeper, indicated that when she worked at  
DPR from September 2008 onward, for instance, a $100,000 cheque would  
come in and a typical disbursement would be to payroll, office expenses, and  
then to Daniel and Ms. Reeve.  
-
675 -  
Ms. Snow testified that there were a number of transfers to “Swan  
Creek,” a farm with no animals.  
[2384]  
[2385] In 2007 to 2008, a contractor named Len Brunen did construction work  
for Daniel at his house.  
[
2386]  
for Daniel on company properties and Daniel’s personal properties. He was paid  
75,000 per year and in bi-weekly instalments as an employee of Celebrity  
Management until October of 2008 when his last few cheques bounced.  
In 2007 to 2008, Howard Southwood also performed construction work  
$
[2387]  
Mr. Southwood, in that same timeframe, did about $230,000 of  
construction work at Daniel’s farm and about $50,000 to $80,000 of work at  
South Street and Ms. Reeve’s office.  
[2388]  
David testified that Daniel lived large. Daniel flew from Kitchener to  
Windsor by helicopter. Daniel’s driver chauffeured him everywhere. Daniel  
bought a farm as his personal residence and was renovating it.  
2. EXPENSES OF THE VARIOUS REEVE COMPANIES  
[2389]  
Karen Gingrich, who started working for DPR Financial in July of 2006,  
testified she was surprised at the extent of Accounts Payable owing. Bank drafts,  
as opposed to cheques, were the preferred method of payment, since cheques  
were bouncing with increasing frequency in the fall of 2006. Ms. Gingrich  
 
-
676 -  
borrowed from her own account to cover cheques that would otherwise bounce  
as she wanted employees to get paid. In 2007, Daniel said “big things” were  
coming in 2008.  
[2390]  
Ms. Gingrich, as indicated earlier, testified that, of the $800,000,  
provided by Ms. Westerhout for new offices in Waterloo, $500,000 went to Ms.  
Reeve, $200,000 to the Jakobstettel Inn, and $100,000 to the expenses of DPR  
Financial.  
[2391]  
Ms. Gingrich testified that Reeve Hotels, as a corporation, did not do  
anything. As soon as a cheque, often in large sums, was deposited in the Reeve  
Hotels bank account, it was transferred to the DPR account and Daniel would tell  
Ms. Gingrich how to disburse it. For example, $200,000 would come in and  
Daniel would use the funds to pay hydro, employee salaries, etc.  
[2392]  
Ms. Gingrich testified that Reeve Hotels and Resorts transferred $6  
million to DPR Financial as a loan to DPR Financial. DPR Financial had no  
revenue or expenses, except for bank charges and interest. She was not sure of  
what was happening with Reeve Hotels and Resorts.  
[2393]  
There was not a lot of money coming in, according to Ms. Gingrich.  
The company lost $2 million per year. None of the companies were making  
money except for Millionaire Travel, which was making a paltry $20,000 per year.  
-
677 -  
[2394]  
From January 2007 until September 19, 2008 (when she left), Ms.  
Gingrich paid bills under $5,000 on her own. From January 2007 through 2008,  
payments of $25,000 to $50,000 required Daniel’s instruction. Anything over  
$5,000, for the six months prior to September 19, 2008, required Daniel’s  
instruction. Daniel had control over where the money was going.  
[2395]  
Keith Austin told Ms. Gingrich that he gave money for the Breadalbane  
Inn. She was never directed to make any payment regarding the purchase of the  
Breadalbane Inn.  
[2396]  
Ms. Gingrich was not aware of any discussions regarding the Park  
Plaza Hotel and was never given any instructions regarding the purchase of a  
suite or renovations there.  
[2397] Ms. Gingrich confirmed that David put money into the company a few  
times so that the payroll could be covered.  
[2398]  
In 2007 to 2008, Ms. Gingrich indicated that DPR was expanding in  
Windsor, London, and Waterloo with satellite offices in Peterborough and Aurora.  
Ms. Gingrich agreed that growth involves debt.  
[2399]  
Len Brunen is a construction contractor. In 2007 to 2008, he built the  
London office at a cost of $400,000. He then contracted to build DPR Waterloo at  
a cost of $1.3 million. He did not complete the walls at DPR Waterloo due to lack  
of payment. Mr. Brunen received $1.7 million for DPR London and DPR  
-
678 -  
Waterloo, plus $250,000 for renovations for two Jakobstettel Suites, for a total  
payment of $1.95 million. Daniel did not pay $600,000 and Mr. Brunen eventually  
recovered $420,000 of it.  
[2400]  
Cynthia Taylor did the books for (1) Daniel Reeve and Associates, (2)  
the Jakobstettel Inn, and (3) the Emerald Met, which operated a store in Guelph  
called The Millionaire In You. Ms. Taylor testified that the cashflow at DPR  
consisted of commissions from Daniel, but that started to decrease. She noticed  
that large amounts were being deposited by individuals for loans and  
investments.  
[
2401]  
Taylor testified that, in 2008, she estimated outstanding loans to stand at about  
30 million.  
In 2007, the value of loans and investments was in the millions. Ms.  
$
[2402]  
Ms. Taylor testified that there were cashflow problems at DPR. There  
was not enough money coming in to cover everyday expenses such as rent. The  
cashflow problems started when Daniel started to expand, at the time of the  
purchase of the Jakobstettel Inn in 2004.  
[2403]  
Ms. Taylor indicated that the Jakobstettel Inn itself had cashflow  
problems. It was difficult to cover interest, payroll, HST and operating expenses.  
Ms. Taylor indicated that, without the investments coming in, the Jakobstettel  
could not have made its payments.  
-
679 -  
[2404]  
Ms. Taylor was receiving many phone calls from investors, demanding  
interest payments. It was obvious to her that they could never be paid. She would  
bring to Daniel’s attention when interest payments were due but it was very  
seldom that payments were actually made on the date set for payment. The  
money was being used to pay for the company’s operating expenses and Daniel  
and Ms. Reeve’s personal accounts.  
[2405]  
Daniel directed where amounts over $5,000 should go. Daniel  
purchased the Jakobstettel Inn for $800,000 to $900,000. According to Ms.  
Taylor, the Jakobstettel had to be booked 100 percent of the time just to meet its  
operating expenses, not including interest.  
[2406] Ms. Taylor met with Daniel once per week and he was made aware of  
what needed to be paid and who was calling for overdue interest payments.  
[2407]  
Ms. Taylor resigned in August of 2008. At that time, several cheques a  
month were bouncing. Ms. Taylor was confident that the dollar amounts could not  
be repaid. Clients were complaining and things were getting worse financially.  
Ms. Taylor voiced concerns that there were no profits and no money to pay  
interest, principal and operating expenses.  
[2408]  
Kimberley Kroeker worked at the Jakobstettel Inn from March of 2008  
to October of 2008. She was the office manager and did the bookkeeping and  
payroll. It was uncomfortable working there as cheques were bouncing and upset  
-
680 -  
people would phone. Even her own first payroll cheque bounced and was  
replaced with a small bonus. This was a common experience.  
[2409]  
Intercompany transfers were used when cheques were about to  
bounce.  
[2410]  
Ms. Kroeker testified that she could not pay the bills just from the  
revenue generated from the Inn. Money would be transferred from Jakobstettel to  
other areas that needed it. There was no money ever transferred from the  
Jakobstettel Inn in connection with either the Breadalbane or the Plaza  
purchases.  
[2411]  
Diane Intini worked for Account Temps. She was sent to work at DPR  
Waterloo in October of 2008 but was pulled two months later, in early December,  
due to non-payment. She returned December 14, 2008 and worked until  
February 2009 when she was again pulled out for non-payment. She did the T4s  
for employees in March of 2009.  
[2412]  
Diane Intini testified that, in October 2008, the books were in a mess.  
There was no money coming in so no bills were being paid. The majority of  
accounts were in overdraft. Investment money could not be deposited as it would  
be frozen. She would get cheques certified and take out bank drafts. This was  
not a normal way to do business. Commissions coming in were $4,000 per  
-
681 -  
month. The rent for the three locations – Waterloo, Windsor and London – was  
60,000 per month.  
$
[2413] Investor money came in three different forms: (1) timeshare for the Inn,  
(2) investments in Daniel’s company, or (3) loans to the company. All  
investments offered 15 to 20 percent interest. However, Ms. Intini never saw any  
money invested. The incoming cheque was certified and then paid out to other  
investors, bills or payroll. Ms. Intini remembers a Mark McGuire. They certified  
his cheque and immediately his money was used to pay bills and other investors.  
[2414]  
Ms. Intini reviewed the books of the Jakobstettel Inn. There was no  
way that income from the Inn, even if fully booked, could pay off the interest,  
payroll and expenses.  
[2415]  
“Freaky Fridays” happened weekly. Daniel would say that a big deposit  
was coming in on Friday. Usually, no deposit came in. The doors would be  
locked and investors would come to the door and bang on it. They weren’t paying  
bills. Daniel was not there. “Freaky Fridays” were part of the lexicon by January  
of 2009. Bailiffs were coming in; people were upset and vendors were calling.  
[2416]  
A meeting took place with Daniel, Diane Intini and David Webb from  
Collins Barrow in January of 2009. Daniel was provided with two options: (1)  
declare bankruptcy, or (2) tell investors to hold off for 60 days so that bills could  
be paid. Daniel did not want to do either, so neither option was implemented.  
-
682 -  
Cheques were bouncing. A $100,000 cheque to Ms. Kerr bounced. On February  
or 4, 2009, Ms. Intini was pulled again for non-payment of her services.  
3
[2417]  
Ms. Intini testified that people were yelling and screaming. One time a  
vendor came in and Daniel hid behind a desk. Daniel was secretive and he did  
not want one company to know what the other was doing.  
[2418]  
Sarah Snow started work at DPR Financial in September of 2008 and  
helped with the books. She wanted to resign but Daniel convinced her to stay.  
She looked at the ledgers and saw tremendous losses year over year. Ms. Snow  
took calls, including calls by investors for their money. For example, Anne  
Colquhoun phoned and Daniel told Ms. Snow to tell her they were waiting for  
cheques to clear. Ms. Snow was aware there were no cheques and told Daniel  
she would not lie for anyone. So, he told her not to take calls anymore.  
[2419]  
Ms. Colquhoun received a partial payment on a Friday. Daniel would  
say that there would be a Friday drop all the time. However, no income or money  
was coming in.  
[2420]  
After Thanksgiving, Ms. Snow heard an investor tell Daniel that a large  
iron fence was being removed from a DPR property. Daniel told that investor that  
they were winterizing. That was a lie. The reason for the fence and fountain  
being removed was that they were not being paid for.  
-
683 -  
[2421]  
Ms. Snow testified that the state of the books was that all of Daniel’s  
companies were showing losses and massive losses. There was no revenue  
stream fuelling any of the companies. They were unable to pay because there  
was no money to pay.  
[2422]  
Ms. Snow testified that the Jakobstettel Inn was different as it did  
generate revenue. However, she told Daniel in October of 2008 that the Inn  
would never meet the interest payments even if it were 100 percent rented and  
had no expenses. If the Inn slimmed down, it might make a small profit. It was  
spending a lot of money on staff and renovations. The Inn was the only asset  
owned by the companies; there was no other real estate.  
[2423]  
Daniel wrote a $100,000 cheque to placate a couple but it bounced.  
Ms. Snow told him not to do that. However, Daniel would come in on weekends  
and evenings and write cheques that could never be covered.  
[2424]  
Ms. Snow testified that when a cheque did come in, a typical  
distribution of a $100,000 cheque, for example, would be to payroll, expenses  
like hydro, and payments to Daniel and Ms. Reeve.  
[2425]  
Ms. Snow testified that an investor would be told that his or her money  
was going into a secure investment, but instead would be used for company  
expenses. For example, a Ms. Wynetta Hill was asking for her GIF regarding a  
-
684 -  
52,000 investment but instead her money went into the operating funds of  
Millionaire Mortgage and not into an investment.  
$
[2426]  
Ms. Snow testified that numerous cheques bounced regarding  
Millionaire Mortgage. Investors in Millionaire Mortgage made their cheques out to  
Reeve Hotels because if they were deposited into Millionaire Mortgage, they  
would be used to pay overdraft.  
[2427]  
Ms. Snow got no money to invest on behalf of investors. She was  
never instructed to pay any monies to a mutual fund company, insurance  
company, or segregated funds.  
[
2428] Ms. Snow told Daniel in December that she was done as the job was  
bullshit.” When she left on December 8, 2008, there was financial chaos. There  
were overdue bills everywhere and there was no money.  
“
[2429]  
Linzie Brown was David Reeve’s executive assistant and later became  
his wife in September 2008. In the spring of 2008, payroll cheques were  
bouncing; in July of 2008, Karen Gingrich opened an account to transfer funds to  
employee accounts.  
[2430]  
Ms. Brown testified that Daniel never gave her any money to invest for  
clients. Daniel was approaching everyone telling them that he had a private  
equity investment that could pay more.  
-
685 -  
[2431]  
On October 10, 2008, Ms. Brown resigned. Investors were phoning for  
their money and were not being paid. She resigned when Adam Lippert came  
looking for his money.  
[2432]  
Steve Haney was a financial advisor with DPR Financial who left at the  
end of August 2008. Regarding the Breadalbane, Daniel never disclosed any  
problems with the purchase of the Breadalbane. Regarding the Park Plaza,  
Daniel gave the impression to clients that he owned it and the client could get a  
piece of it. Daniel never disclosed he did not own the Wellington Suite or any  
suite at the Plaza.  
[2433] Lee-Anne Ruggle became Daniel’s personal assistant from October  
2008 to April 2009 and was inundated by irate clients complaining they were not  
getting paid. Ms. Ruggle quit in April 2009, as she had not been paid for three  
months.  
[2434]  
David Reeve testified that in 2008, Ms. Gingrich told him that she was  
having trouble meeting payroll. David put in $250,000 of his own money and got  
half back. He also contributed $30,000 for expenses.  
[2435]  
Regarding the Breadalbane, Daniel said he was purchasing it in the  
summer of 2008 and that the money was in a lawyer’s trust account with an  
accounting firm. Daniel never told David that the Breadalbane purchase never  
-
686 -  
went through. Daniel said that the Breadalbane was a bricks-and-mortar  
investment and there was very little risk.  
[2436] One of the reasons that David left on October 1, 2008 was that  
cheques were bouncing. Four cheques to David had bounced.  
3. REPAYMENTS TO THE ALLEGED VICTIMS AND OTHER  
INDIVIDUAL INVESTORS  
[2437]  
In August or September of 2008, Karen Gingrich was asked to look  
after nine clients, including Anne Colquhoun. Ms. Colquhoun phoned and told  
Ms. Gingrich she had $700,000 invested in Bayfield properties but could not even  
buy a loaf of bread anymore. Ms. Gingrich did not know anything about the  
Bayfield properties and told Ms. Colquhoun that. Daniel became upset and told  
Ms. Gingrich not to tell clients she “did not know.”  
[2438]  
Ms. Gingrich had loaned Daniel $100,000 in 2004 and made a second  
loan of $100,000 in December of 2007 for the DPR Waterloo expansion. She  
was repaid the second loan of $100,000 in March of 2008. In September of 2008,  
she received $80,000 to $90,000 and another $20,000 back after she left DPR  
Financial.  
[2439]  
According to Kimberly Kroeker, people would complain and Daniel told  
her to tell the people that she would get follow-up information. People were very  
upset and crying about their situations. Daniel would tell her to phone a person  
 
-
687 -  
and tell them to pick up a cheque at a certain time and place. Ms. Kroeker cut  
some of the cheques herself.  
[2440] Ms. Kroeker testified that large sums of money came in from investors  
and only small amounts from the Inn for room rentals, lunches, etc.  
[2441]  
As indicated earlier, Ms. Intini never saw any money invested. An  
incoming cheque would be certified and then paid out to other investors, bills or  
payroll. She remembers a Mark McGuire. They certified his cheque and  
immediately his money was used to pay bills and other investors.  
G. EVIDENCE OF THE INSIDERS  
[2442] The insider evidence confirms and corroborates the forensic  
accounting evidence completely.  
[2443]  
The Reeve companies were not even remotely profitable. From 2007  
onwards, the companies were losing millions of dollars. Revenues did not even  
pay for basic expenses.  
[2444]  
The Reeve companies were being kept afloat mainly by investors’  
monies. The investment money was not going to low-risk, secure investments as  
promised by Daniel, but instead went to meet basic expenses of the Reeve  
companies, make partial payments to previous investors and to pay for Mr.  
 
-
688 -  
Reeve’s extravagant lifestyle and also to fund approximately $2 million of spousal  
support/equalization payments to Ms. Reeve.  
[2445]  
It was apparent to many of the insiders that, by at least August or  
September of 2008, the investor money would never be paid back. Accordingly,  
many of them left during that period. Almost everyone else quit in October of  
2008.  
[2446]  
It is obvious that Daniel was fully aware of this state of affairs, but he  
continued on. He continued taking in investor money, promising that it would go  
to safe, low-risk investments. Instead, he almost immediately diverted it to  
support his failing companies, “large” lifestyle, and support payments to his ex-  
wife.  
[2447]  
It is also obvious that Daniel did everything he could to conceal this  
state of affairs from the investors, making promises of payment that he knew  
could not be kept, writing cheques he knew would bounce, and lying to investors  
about why payment was not being (e.g., “winterizing of the iron fence and  
fountain” at Windsor DPR).  
H. EVIDENCE OF DANIEL REEVE  
[2448] I find that the evidence of Daniel is not believable, is not credible, and  
does not raise a reasonable doubt.  
 
-
689 -  
This trial was very lengthy so I will simply highlight five main areas of  
evidence that have led me to this conclusion.  
[2449]  
1. SPOUSAL SUPPORT AND EQUALIZATION PAYMENTS MADE TO  
CHERYL REEVE  
[2450]  
Daniel’s explanation regarding the $2 million paid to Ms. Reeve  
pursuant to the November 26 - 29, 2007 separation agreement is contradictory  
and makes no sense at all.  
[2451]  
Initially, when asked about how the divorce monies payable to Ms.  
Reeve were to get posted on the books, Daniel testified  
As part of the divorce it was determined in counsel with my divorce lawyer and  
in talking with my accountant and in talking with my business lawyer, so two  
different lawyers and an accountant, the best way of handling the procedure of  
what the obligations were regarding what was going to go to Cheryl…to pay out  
as part of that obligation to simply forgive the loan…So in that case it was  
decided that with my counsel and with the accounts but especially counsel,  
especially divorce counsel, that this was the way to go and if we forgave the  
loan then we’re meeting the obligation of what was supposed to come to her as  
part of the fair settlement that was agreed upon and yet would also be of benefit  
to the company. (See afternoon transcript for February 29, 2016, at page 50.)  
[2452]  
I was shocked to hear that evidence and asked Daniel, “So do I have  
that right? You talked to these people and they said when you make these  
payments to Cheryl, mark it as a loan and then forgive it later?”  
[2453]  
Daniel answered,  
 
-
690 -  
No, no, no, no. They would say actually say make it to Cheryl. At that point in  
time we didn’t have the conversation about, you know, payment back. It was a  
loan, you have to show it as a loan and that was the end of those  
conversations. Those loans then occurred. There was no forethought at that  
point in time about, well forgiving the loan. I mean that’s not something that we  
had planned on at all but it turned out later after the settlement that was a  
remedy that could be done.  
[2454]  
This evidence was still unclear. Daniel was asked further questions.  
Daniel confirmed that there was a separation agreement on November 26, 2007  
and payments were made thereafter and they were marked as loans. Daniel then  
explained, as part of the settlement, there was a need for Ms. Reeve to have the  
loan for a renovation in Guelph, and he could not remember the amount, but a  
loan was given for what she required. It was expected that the loan would come  
back to the company and there were terms and conditions to it. Later, it was  
determined that there was merit in forgiving the loan. In forgiving the loan, the  
loan would have to come to Daniel.  
[
2455]  
pointed out that he had to make six $500,000 payments between December 1,  
007 and August 2008. Daniel testified that these payments were not all done as  
After telling Daniel that I did not understand that explanation at all, I  
2
loans to Ms. Reeve and that is why his shareholder loans went up as he took out  
a loan from the company then paid Ms. Reeve.  
[2456]  
Daniel agreed with my suggestion that that $2 million had been paid  
out by January of 2009. Daniel testified that there was only one loan to Ms.  
-
691 -  
Reeve for $500,000 and the rest came through him. The $500,000 loan was not  
done for any purpose except that she needed a loan and the expectation was  
that she would pay it back. This arrangement had nothing to do with the divorce  
and was a short-term loan. Daniel testified that, months later, it was decided to  
forgive the loan, and thereby Daniel’s obligation was increased. Daniel  
concluded, “I know that it is a little convoluted but that’s how it was.”  
[
2457]  
February 29, 2016 testimony by Daniel Reeve. Mr. Nagel testified that the  
500,000 from the Pat Westerhout investment was listed as a loan to Ms. Reeve  
The defence’s own accounting expert, Mr. Nagel, contradicts this  
$
on December 4, 2007 – see Exhibit 268. Mr. Nagel testified that this loan would  
be listed as an asset on the company books. Schedule 1A of the Nagel Report  
shows that, in 2007, shareholder loans to Ms. Reeve amounted to almost  
$
700,000 in 2007 and a further $841,500 in 2008 for a total of $1.539 million, of  
which at least $500,000 (December 2007) plus $841,500 (2008), equalling  
1.341 million, were made post-separation agreement. All of these loans would  
$
be listed as assets to the company which, in itself, is a lie as there was no  
obligation under the separation agreement for Ms. Reeve to ever pay any of  
these monies back either as a loan or otherwise. According to Daniel, there was  
only one $500,000 shareholder loan to Ms. Reeve and “months later” it was  
forgiven and transferred to him. This would mean that he would have taken out  
$2 million in shareholder loans in 2008. Schedule 1A of the Nagel Report  
-
692 -  
indicates that shareholder loans to Daniel in 2008 were $1.05 million, or roughly  
half of the amount paid to Cheryl Reeve.  
[2458]  
Further, near the end of his examination-in-chief, Daniel returned to the  
separation agreement payments to Ms. Reeve. Daniel testified that the first two  
payments were to come from a $1 million bank loan, based on David signing an  
agreement to pay Daniel $1.6 million. David was expected to sign this contract by  
December of 2007 but he did not. This $1 million bank loan would have covered  
the first two payments but was now not available, according to Daniel (see  
discussion below regarding this alleged $1.6 million owing from David). As  
detailed at paragraph 2072 of this judgment regarding Daniel’s in-chief testimony:  
“
Accordingly, Daniel talked to his lawyer Ron Mark and took out a shareholder  
loan to Daniel and paid Ms. Reeve the $500,000 for the amount that was due on  
November 30, 2007 (the first payment). Daniel explained it to Karen Gingrich that  
he could be late.” This version of events cannot be true. Tab 41 of Appendix G  
of the GT Report and my Schedule F clearly show that the $500,000 paid to  
Ms. Reeve on December 4, 2007 came from an $800,000 investment by Ms.  
Westerhout for a Millionaire Mortgage investment. Further, the $500,000 loan  
was marked in the books dishonestly as a loan to Ms. Reeve and it was recorded  
as an asset which it clearly was not – see Exhibit 278. (It should be noted as  
well that later in cross-examination on July 6, 2016 at pages 38 – 40 Daniel  
suggested that the $500,000 would have come from up to $250,000 in overdraft.  
-
693 -  
As well, when I pointed out that his accountant testified that $500,000  
Westerhaut payment was marked as a loan to Cheryl Reeve, Daniel then  
admitted, “So, I’m corrected” and there’s no reason for my name to be in these.”  
-
see evidence on July 6, 2016 at pages 122 – 126).  
[2459]  
In cross-examination, Daniel persisted in his testimony that the balance  
of payments to Ms. Reeve, other than the $500,000 shareholder loan to him,  
were a loan that Ms. Reeve had to pay back. According to Daniel, the loans  
made to Ms. Reeve were not interest-free but Daniel does not remember the  
discussions he had with her or what the interest rate was. The general ledger  
indicates that the total loan to Ms. Reeve was $1,619,622.27. The Nagel Report  
indicates the loans to Ms. Reeve on the books were approximately $1.5 million.  
Daniel testified that these were loans to Ms. Reeve and he knows that he did  
discuss the interest rate with her; he thinks the interest rate was 8 percent but he  
is not sure. Daniel has no supporting documentation. The Crown suggested that,  
at an interest rate of 8 percent on the loan of $1,539,231.14, Ms. Reeve would  
owe interest of about $123,120 per year. Daniel said the loan documents were  
with his lawyer. The Crown asked why Daniel would loan money to his ex-wife  
when he was having significant cashflow problems in 2008. Daniel’s response  
was that these payments to Ms. Reeve were bona fide loans and could be re-  
categorized later; Daniel relied on the advice of his accountant. There are no  
supporting references at all to the interest payments either paid or owing from  
-
694 -  
Ms. Reeve. The Nagel Report in Schedule 1A Sources of Funds refers to a  
100,000 loan from Ms. Reeve in 2008. This was the $100,000 loan obtained by  
$
Daniel in October of 2008 in order to pay off Andrea Morgan who was  
threatening to go to the police – see Tabs 18 and 40 of Appendix G of the GT  
Report with regard to the Harrop/Thiessen investments, to be discussed more  
thoroughly later.  
[2460]  
In addition to being contradicted by Daniel’s own accounting expert on  
the initial $500,000 payment to Ms. Reeve, there is the contrary evidence of Ms.  
Reeve herself. She testified that she received $2 million dollars from Daniel after  
the separation agreement, usually in bank transfers. She received $3,000 in  
January of 2009. The only evidence regarding loans was Ms. Reeve’s own  
evidence that it was she who, in 2007 to 2008, made three loans to Daniel at his  
request in amounts of $100,000, $80,000 and $5,000. Daniel paid her back in  
one to three weeks’ time. There was no suggestion that Ms. Reeve ever received  
a shareholder loan of $500,000 or any other amount post separation. This was in  
part because the defence did not cross examine Ms. Reeve at all. Further,  
regarding the first $500,000, Mr. Reeve has three contradictory explanations:  
(1) Shareholder loan to Daniel Reeve;  
(2) $250,000 would have come from overdraft;  
(3) Shareholder loan to Cheryl Reeve.  
-
695 -  
The defence argued that the general ledger for the Cheryl Reeve loan account  
had its first entry on January 22, 2007. However, the total prior to the separation  
agreement as entered into (November 22, 2007) stood at $184,816.76. The end  
total after the separation agreement being entered into was $1,619,622.27. The  
notation in the ledger for the $500,000 December 4 loan was “Dan” and also on  
April 28, 2007 a $100,000 loan noted “Dan”. The defence argues there was no  
concealment and no fraud. These arguments carry no weight. It is clear from  
the general ledger and the Nagel Report that approximately $1.5 million in  
support/equalization payments were marked in the books as a loan. The  
defence conceded that Cheryl owed nothing. The only reasonable inference is  
that the $1.5 million was not a loan at all but in the totality of the evidence, was  
support/equalization payments and falsely put in the books, after November 29,  
2007 as a loan to Cheryl Reeve.  
[2461]  
I conclude, therefore, that there were never any shareholder loans  
made to Ms. Reeve post-separation and Daniel knew it. The approximately $1.34  
million noted on the books as a shareholder loan to Ms. Reeve post-separation  
(i.e., an asset) was a complete fabrication perpetrated by Daniel. As the sole  
shareholder of the companies, Daniel was the person responsible for these  
payments and responsible for the documentation of them. The evidence from the  
bookkeepers was that it was Daniel who directed that the payments be made in  
-
696 -  
light of a court order. His explanations for the payments to Ms. Reeve and  
shareholder loan entries are convoluted because they are lies he has concocted.  
2. ALLEGED AGREEMENT BY DAVID REEVE TO PAY $1.2 TO $1.6  
MILLION  
[2462]  
Daniel testified that one of the main reasons that he was expecting to  
pay back the many commitments to investors that were due by December of  
2
008 was that David and Daniel had an agreement that David would pay Daniel  
1.2 million to $1.6 million by December 31 of 2008 for assets that Daniel had  
$
sold to David after Daniel had transferred his book of business to David.  
[
2463] Daniel, in cross-examination, repeatedly testified that he was expecting  
David to pay him back $1.2 million to $1.6 million by the end of December of  
008 – see paragraphs 2121, 2187, and 2243 of this judgment.  
2
[2464] Daniel conceded in cross-examination that he has no documents to  
support this agreement; it was an oral agreement.  
[2465]  
In his evidence in chief, Daniel indicated that David was supposed to  
sign a contract in December of 2007 to reflect the oral agreement. Daniel testified  
that he expected to get a $1 million loan from the bank on the strength of this  
agreement, and was going to use this loan to pay the first two payments of  
$500,000 each, stipulated by his separation agreement. Daniel testified that  
David and Daniel could not agree on the terms. Daniel wanted David to pay 2  
 
-
697 -  
percent but David wanted to pay 1.5 percent. Daniel testified that David told him  
in December of 2007 that he would not sign a contract until April when he was  
the president.  
[2466]  
Daniel also testified that David told Daniel that he was leaving on  
September 30, 2008. The conversation was short. Daniel was sent the minutes  
of the meeting but he read the first two paragraphs of Exhibit 243 – 51A,  
dismissed it as nonsense, and gave it back to Lee-Anne Ruggle. Daniel testified  
that he gave David two weeks’ notice to wrap up files. Daniel testified that he  
reminded David about the monies due by the end of the year.  
[2467]  
David testified and was cross-examined thoroughly by the defence for  
many days. There was absolutely no suggestion ever made to David by defence  
counsel that David owed Daniel $1.2 million to $1.6 million due on December 31,  
2
008. There was absolutely no cross-examination regarding any of the details of  
the breaking down of the deal in December 2007, the postponement of it to April  
008, or the mention of it in September 2008.  
2
[2468]  
At paragraph 356 of the defence’s written submissions, there is  
reference to David making two purchases of a book of business from Daniel.  
David testified that these purchases were for smaller “B” clients and not for  
Daniel’s entire book of business which would include “A” clients – see pp. 74-77  
of September 30, 2015 cross-examination. Daniel held on to his “A” clients; they  
-
698 -  
were not purchased but transferred eventually. David’s evidence, in cross-  
examination, refers to this purchase or these purchases occurring in 2005,  
though he is not sure – see pp. 43, 71 of September 30, 2015 cross-examination.  
Further, David confirmed it was Daniel who owed David money. David paid  
$
250,000 in 2008 for employee salaries, hydro, and other Reeve company  
expenses. David only received 25 to 50 percent of that $250,000 back – see p.  
5 of September 29, 2015 testimony and p. 68 of September 30, 2015 cross-  
examination. David confirmed, at p. 77 of his cross-examination on September  
0, 2015 that he would split commissions for any client for whom he became the  
financial advisor of record.  
1
3
[2469]  
David testified in chief that Karen Gingrich would approach him and  
indicate that there was not enough money to make payroll for the staff of DPR  
Financial and David would kick in his own personal money so that the payroll  
could be met. As indicated, David testified that, in 2008 alone, he has receipts for  
cheques for $250,000 for salaries and hydro, of which he was repaid 25 to 50  
percent. David also indicated that there was also $30,000 in cash withdrawals to  
pay for dinners.  
[2470]  
David testified that he would bring up with Daniel that there was a lot of  
money owed to him and Daniel would say he knew but David would have to wait  
due to DPR’s expansion or “stuff” that Daniel was going through with Ms. Reeve.  
-
699 -  
[2471]  
David testified that, in 2008, he brought in approximately $1 million in  
commissions and it was split about 50/50 with DPR, with exceptions. The split  
was higher to David because David had purchased some clients. However,  
generally speaking it was 50/50.  
[2472]  
In cross-examination, David indicated he had worked with Daniel since  
1997. David testified that he had had to buy two books of business from Daniel.  
David was not sure of the date of purchase. David confirmed in cross-  
examination that, generally, he would pay 50 percent of his commissions to DPR,  
subject to the caveat mentioned in chief.  
[2473]  
In cross-examination, defence counsel referred David to the book of  
business bought from Daniel in 2005. David reiterated that Daniel owed him a lot  
of money and that David got back about 25 to 50 percent of what Daniel owed  
him.  
[2474]  
David indicated that there were two purchases of Daniel’s books of  
business: one in 2005 (although David was not sure of it) and a second one at  
another time. David testified that on the two separate purchases, he bought “C”  
and maybe “B” clients and paid a high rate. David did not buy the entirety of  
Daniel’s business. They were smaller clients for which David paid a high multiple.  
[2475] David testified that Daniel held on to his “A” clients and, over time, they  
were transferred to David but were not purchased. Daniel’s role evolved with the  
-
700 -  
company. As Daniel was less involved as a financial advisor in late 2007 and  
early 2008, he would tell David to handle the A clients but they were not  
purchased. David would receive the trailer fees from the financial institutions and  
would pay commissions. At page 77 of the September 30, 2015 transcript,  
defence counsel indicates that it is David who receives commission fees or trailer  
fees from the financial institutions and David agrees. Counsel then asks, “And  
then whatever arrangement you had with Daniel, you would pay your 50 percent  
commission or somewhere?” and David answers, “Or whatever the split was,  
that’s fair to say.” Counsel then moved to another area. Defence counsel never  
suggested to David Reeve that David owed a large sum of money to Daniel.  
[2476]  
In these exchanges, there is no hint of David owing Daniel $1.2 million  
to $1.6 million which was due on December 31, 2008 or any of the details  
described by Daniel in his evidence in chief regarding this alleged agreement; in  
fact, David testified that it was Daniel who owed David money and it was not  
suggested that David owed Daniel a large sum of money.  
[2477]  
Furthermore, in the minutes of meetings that David and Linzie Brown  
had with Daniel on September 30, October 7 and October of 2008, the only  
reference to monies owing is money owed by Daniel to David. There is no  
reference at all to any money owing to Daniel by David. Daniel never responded  
to these minutes, testifying that only the September meeting occurred and the  
contents are bogus.  
-
701 -  
[2478]  
The Nagel Report, at point 31 on page 7 of 24, indicates that  
payments of $1.5 million to Ms. Reeve were a loan, payments of $260,000 were  
made to David, and $190,000 was a loan. As indicated earlier, the payments  
made to Ms. Reeve were not loans at all but were support/equalization payments  
made pursuant to a separation agreement. Further, Schedule 1A of the Nagel  
Report regarding the sources of funds indicates David was the source for  
$60,512.98. Appendix A of the Nagel Report indicates that accounting records  
were examined. While there is a reference in the Nagel Report to the supposed  
Ms. Reeve loan “asset” of $1.5 million, there is no reference at all to the alleged  
David Reeve debt to Daniel in the amount of $1.2 million to $1.6 million, which  
would be a presumably significant asset to a struggling business.  
[2479]  
Accordingly, there is no documentary evidence of any kind supporting  
the allegation that $1.2 million to $1.6 million was due and payable by David on  
December 31, 2008. In fact, the documentary evidence is to the contrary – Daniel  
owed David money – see the minutes of meetings at Exhibit Stick File 51, A.  
Further, the defence never suggested to David, notwithstanding days of cross-  
examination, that $1.2 to $1.6 million was owing on December 31, 2008, despite  
this being a vital cornerstone of Daniel’s defence on a variety of issues.  
[2480]  
Daniel acknowledged receiving the September 30, 2088 meeting  
minutes and indicated the meeting occurred, but the other two meetings did not.  
Given Daniel’s precarious financial situation and David’s leaving and indicating  
-
702 -  
that it was David who was owed money, it is inconceivable that Daniel would not  
document by email, lawyer’s letter or some communication of some type, that  
David had agreed to pay $1.2 million to $1.6 million by the end of the year,  
particularly since Daniel, as he testified, was relying on the receipt of this money  
to keep DPR and his other companies afloat. As Daniel testified in chief, “David’s  
leaving and taking his clients was a death blow and if that had not happened,  
[Daniel] would have been able to weather the storm.”  
[2481]  
There is yet one further contradictory piece of evidence and it comes  
from Daniel himself. Daniel indicated in cross-examination (see paragraph 2187  
of this judgment) that he denied that his companies were collapsing in December  
2008; the companies were just “cash-strapped.” Daniel testified that he had the  
pending Millionaire Mortgage deal and was “three weeks away from $1.6 million”  
and $300,000 in trailer fees. Further, Daniel, in trying to justify the October 15,  
2008 Hoffman transaction, testified in cross-examination that it was his  
expectation that he was a month and a half from receiving $1.6 million. However,  
at paragraph 1714 of my summary of Daniel’s evidence in chief, he testified that  
the Millionaire Mortgage plans were on hold in October of 2008. Daniel further  
testified in chief that David was on a search-and-destroy mission after David  
announced he was leaving and was refusing to pay for the clients that Daniel had  
transferred to him. According to the transcript, Daniel’s specific evidence on  
March 2, 2016 is as follows:  
-
703 -  
You know we had just worked very hard all 2007 to move over my clients  
to him and my biggest ones…so we had just moved all that over. He was  
owing the dollar amount in a mere matter of months at the end of 2008  
and so, you know, surprise, surprise it comes to October and not only is  
he not going to pay the bill we budgeted for, forecasted for, certainly  
deserved, he decides he’s not going to pay for any of those clients. So  
yeah, that was an issue. And then on top of that he is now trying to take  
those clients to his new firm, which is simply not right. Morally, it’s not  
right. Ethically there’s a problem with it and certainly the regulators would  
have an issue if I pushed the panic button. I chose not to lodge a  
complaint or a lawsuit at that time, he was my brother after all.  
[2482]  
Accordingly, I conclude that no agreement ever existed that David was  
to pay Daniel $1.2 million to $1.6 million by the end of 2008 or at any other time.  
Daniel’s evidence regarding this alleged oral agreement is not credible based on  
the totality of evidence adduced at trial.  
3. KNOWLEDGE OF USE OF ALLEGED VICTIMS’ INVESTMENT  
MONIES  
[2483]  
Daniel Reeve repeatedly indicated that when he received the alleged  
victims’ money, it was his intention that the money was to be used for the  
purpose stated on the signed agreement. However, his corporations were legally  
entitled to perform intercompany loans, and this was done by the bookkeepers.  
Daniel indicated repeatedly in cross-examination that the alleged victims’  
investment money would be received by one of his companies and he did not  
know where that money would be deployed when it was received.  
 
-
704 -  
[2484]  
Daniel testified in chief (on February 29, 2016) that he knew that 2007  
would be a loss year. The year 2008 was also expected to be a loss year, but to  
a lesser degree. 2009 would change all that. Accordingly, there was no purpose  
in having a $100,000 overdraft. The overdraft for DPR Financial was, according  
to Daniel, “around 20 or 25 thousand [dollars].” In cross-examination, Daniel  
changed this evidence and indicated the overdraft was over $250,000.  
[2485]  
Daniel testified in chief (on February 29, 2016) that he would only get  
involved in the day-to-day functioning of finance if there arose a serious situation  
where, for example, it looked like DPR would not meet its payroll. At that time,  
Daniel would look at all the outflows and inflows and to see where there was  
extra capital, credit, or overdraft. Those conversations would take place when it  
was crunch time in late 2007 and 2008. Daniel knows that happened in 2008. At  
page 37 of the February 29, 2016 transcript, Daniel testified that crunch time  
came in October/November of 2007 and “2007 wasn’t as bad as it could have  
been but ‘08 was a disaster.”  
[2486]  
David Reeve testified, on September 29, 2015, that in late 2007 and  
early 2008, David was named president of DPR. However, he had no authority  
and could not see any of the financial books or make any decisions. He was told  
by both Daniel and Karen Gingrich that he could not see the books. David  
testified that Ms. Gingrich told him, in the summer of 2008, that he, David, was  
not allowed to see the books.  
-
705 -  
[2487]  
Ms. Gingrich testified that, in March or April of 2008, David asked to  
see the financial statements but Daniel refused the request. In August or  
September of 2008, Daniel asked Ms. Gingrich to become head of Finance so  
that David could be prevented from accessing the books. David did nothing  
regarding the company’s finances. From January 2007 to September 19, 2008,  
any payments greater than $25,000 to $50,000 required Daniel’s instruction. Ms.  
Gingrich was paying various bills under $5,000 on her own but anything over  
$5,000 for the six months prior to her leaving on September 19, 2008 required  
Daniel’s instructions.  
[2488]  
Regarding Reeve Hotels, Ms. Gingrich testified that it had no bank  
account until 2007. The company did not do anything. As soon as Daniel knew  
that a cheque was coming, she was told how to disburse it. Cheques were  
deposited into the Reeve Hotels and Resorts bank account and pretty well right  
away the funds would be transferred to DPR Financial. For example, $200,000  
would come in and Ms. Gingrich would tell Daniel what they needed – hydro,  
salaries, etc. This evidence is confirmed by my Schedule G and Appendix G of  
the GT Report. To use the $200,000 example as alluded to by Ms. Gingrich, one  
can be found at Appendix G of the GT Report at Tab 39. The chart shows that  
alleged victim Doug Thiel deposited $200,000 on May 22, 2008 into the Reeve  
Hotels account which had a prior balance of $34.96; that same day, $200,000  
was transferred to the DPR account which had a prior balance of an overdraft of  
-
706 -  
negative $60,645.94. As indicated in my Schedule G and Tab 39 of Appendix  
G of the GT Report, with the exception of $34.96, on May 22, 2008, the DPR  
overdraft of over $60,000 was paid off, $10,000 was paid to Ms. Reeve (recorded  
as a loan and an asset in the accounting records), over $100,000 was paid to  
David, $10,000 was paid to Daniel (recorded as a shareholder loan) and over  
$23,000 was paid to alleged victims/other individuals.  
[2489]  
Ms. Gingrich testified that all of Ms. Reeve’s divorce payments were  
put in the books and she took orders from Daniel Reeve, as she was not privy to  
any court orders. Ms. Gingrich testified that the TD bank records at Exhibit Stick  
File 128 at page 305 shows a receipt on September 12, 2008 transferring  
$100,000 which was signed by her. Daniel instructed her to make the transfer,  
and when she asked why Ms. Reeve was getting money from transactions like  
this, Daniel would say he was following a court order.  
[2490] Ms. Gingrich testified that David put money into the company a few  
times so that payroll could be covered.  
[2491]  
Ms. Gingrich testified that only Cynthia Taylor, herself and Daniel had  
access to the bank accounts (other than Linzie Brown for a new account for  
payroll in 2008).  
-
707 -  
[2492]  
Ms. Taylor did the books for Daniel Reeve and Associates,  
Jakobstettel Inn and Emerald Met. Similar to Ms. Gingrich’s evidence, Ms. Taylor  
indicated that deposits of $5,000 or more were directed by Daniel.  
[2493]  
Ms. Taylor testified that the Jakobstettel was purchased for $800,000  
to $900,000 and needed to be booked 100 percent of the time just to cover its  
operating expenses, not including interest. There was a discussion with Daniel  
regarding paying bills on average of once per week. Daniel was made aware of  
what needed to be paid and who was calling for overdue payments. Without the  
investments coming in, the Jakobstettel could not have made its payments.  
[2494]  
Ms. Taylor’s evidence is completely consistent with the Nagel  
PowerPoint presentation tendered as Exhibit 261. Of the sources of funds of a  
total of $23,287,028, 83.5 percent came from investors ($19,439,987). The total  
income of all the companies was $2,241,418 which was devoured by office and  
related expenses of $8,740,630.  
[2495]  
Ms. Taylor was receiving lots of calls for interest payments from  
investors (see Exhibit 332 tendered by the defence which indicated that  
Celebrity (Jakobstettel Inn) had $375,000 in interest payments owing in  
October/November of 2008). Ms. Taylor brought interest payment due dates to  
Daniel’s attention and he would give a day when the payment should be made,  
-
708 -  
but it was very seldom the payment was actually made. Finally, in August 2008  
when it was obvious that the investors could not be paid, she quit.  
[2496]  
Kimberly Kroeker worked at the Jakobstettel from March of 2008 to  
October of 2008. She was the office manager and did bookkeeping and payroll.  
Cheques were bouncing including payroll cheques, and upset people were  
phoning.  
[2497]  
Large cheques came in from investors and only small amounts from  
the Inn. Ms. Kroeker could not pay the bills just with revenue generated by the  
Inn. Money would be transferred from the Jakobstettel to other areas that needed  
it.  
[2498]  
The evidence of Ms. Gingrich, Ms. Taylor and Ms. Kroeker is  
completely consistent with the GT Report and the uses and sources of funds as  
outlined by Mr. Nagel in Exhibit 261. I accept their evidence.  
[2499]  
Exhibit 332 regarding outstanding interest owing for the Jakobstettel  
Inn was prepared by Diane Intini who worked for a temp agency. She worked at  
DPR from October 11, 2008 until February of 2009. In re-examination, Daniel  
praised her for being thorough and meticulous.  
[2500]  
Ms. Intini testified that the investment money came in three different  
types of contracts: (1) timeshare for the Inn, (2) investments in Daniel Reeve’s  
company, or (3) loans to the company. All offered 15 to 20 percent interest. Ms.  
-
709 -  
Intini never saw any money invested. The incoming cheque was certified and  
then paid out to other investors or bills or payroll.  
[2501]  
Ms. Intini remembers a Mark McGuire. She testified that they certified  
his cheque and immediately his money was used to pay bills and other investors.  
Mr. McGuire’s investment flowchart for this transaction appears as Chart 3 at Tab  
27 of Appendix G of the GT Report, and as investor 20 on my Schedule G. On  
October 15, 2008 (three to four days after Ms. Intini started work at DPR), Mark  
McGuire deposited $173,736.85 to Millionaire Mortgage which had a small prior  
balance of $125.92. Within two days, virtually all the money had been used to  
pay expenses of various Reeve companies and alleged victims and other  
individuals. These charts completely confirm Ms. Intini’s evidence.  
[2502]  
Ms. Intini also testified that she looked at the Jakobstettel Inn books  
and there was no way that the income from the Inn, even if fully booked, could  
pay off the interest, payroll and expenses. This evidence is confirmed by Sarah  
Snow who joined DPR on October 5, 2008. Ms. Snow was to do payroll and  
accounts for a variety of Daniel’s companies. When she looked at the general  
ledgers, she saw tremendous losses year over year for all the companies. The  
state of the books showed that all of Daniel’s companies were showing massive  
losses. There was no revenue stream fuelling any of the companies. They were  
unable to pay because there was no money to pay. (This is consistent with Mr.  
Nagel’s charts in the PowerPoint Presentation at Exhibit 261.)  
-
710 -  
[2503]  
Ms. Snow testified that the Jakobstettel Inn was a different company  
and did generate revenue. However, she told Daniel in October of 2008 that the  
Inn would never meet interest payments even if it was 100 percent rented without  
expenses. The Jakobstettel was just barely covering expenses. Assuming no  
interest needed to be paid, Ms. Snow indicated that she did not think the Inn  
could ever run a profit. The Inn spent a lot of money on renovations: if it slimmed  
down, it might turn a small profit. This evidence is contrary to Daniel’s claim in re-  
examination that the Inn had a net profit in 2008 of $480,000 excluding interest.  
[2504]  
Ms. Snow testified that Daniel would say that a cheque was coming in  
and it needed to be certified. He had a list of transfers, which would be more than  
what was coming in. A typical distribution of a $100,000 cheque would be to  
payroll, expenses such as hydro, and payments to Daniel and Cheryl Reeve.  
[2505]  
Brad Ashman invested $150,000 on November 3, 2008 during Ms.  
Snow’s brief two-month tenure at DPR. Mr. Ashman appears as investor 36 at  
page 21 of my Schedule G and at Tab 1 of Appendix G of the GT Report. By  
November 5, 2008 virtually all of Mr. Ashman’s money had been disbursed. The  
money was paid out to other individuals and alleged victims, to employees of  
DPR including Ms. Snow herself, and to other Reeve companies for expenses.  
[2506] Sherrill (Martin) Stevenson was the next investor while Ms. Snow was  
still at DPR. She invested $75,000 on November 10, 2008. She appears as  
-
711 -  
investor 37 at page 22 of my Schedule G, at Tab 36 of Appendix G of the GT  
Report, and at Exhibit 256B. The evidence of Mr. Nagel is that Ms. Stevenson’s  
money was comingled with another deposit of $58,695 and the monies were paid  
to Ms. Reeve ($75,000) and Keith Austin ($40,000).  
[2507]  
As can be seen from the Stevenson and Ashman examples, no money  
was ever invested on behalf of investors. Ms. Snow testified that she received no  
money to invest on behalf of investors. She was never instructed to pay money to  
a mutual fund, segregated fund, or an insurance company. A person was told  
their money was in a secure investment but instead the money was being used  
for company expenses.  
[2508]  
The GT Report indicates that approximately $10 million worth of  
investments was collected from the alleged victims for what Daniel termed “low-  
risk” investments. Of the uses to which that $10 million was put, only  
$389,236.59 could be identified as having been used for investment purposes.  
[2509]  
As indicated earlier and as can be seen from my Schedules F and G  
and Appendix G to the GT Report, the investment monies collected from the 41  
alleged victims were distributed in three major ways: (1) shareholder loans to  
Daniel and Ms. Reeve, (2) expenses of the Reeve companies, and (3) payments  
to the alleged victims/other individuals. This started to occur from about June of  
2007 moving forward into 2008 and 2009.  
-
712 -  
2510] The Reeve companies were losing significant amounts of money in  
007 to 2009 and, as Daniel himself indicated, he was in a cash crunch by  
[
2
November of 2007. This was exacerbated by his decision to require his  
companies to pay Ms. Reeve support/equalization payments of $2 million from  
the end of November of 2007 to the end of December of 2008. (Note that from  
2007 to 2009, the entire revenue stream of all of the companies was barely more  
than the payments to Ms. Reeve – $2.24 million of income. See Exhibit 261.)  
[2511]  
The evidence of all the alleged victims is that it was Daniel who  
negotiated the investment deals with them, on the promise their money would be  
invested in low-risk investments. Daniel, in cross-examination, testified that his  
corporate bonds were low-risk. The evidence is uncontroverted that Daniel was  
the sole shareholder of all the Reeve companies. The bookkeepers and David all  
testified that David had no access to the books, even though he was the  
president of DPR. The bookkeepers were clear that Daniel made the decisions  
regarding where large sums would be disbursed. Two of the bookkeepers  
indicated that Daniel had to approve any amounts to be disbursed over $5,000.  
Ms. Gingrich indicated that the situation of approval of $5,000 amounts or more  
prevailed for the last six months before she left in September of 2008. It was  
Daniel who instructed the bookkeepers to pay Ms. Reeve, and it was his decision  
after consulting his experts to put the transaction in the books as an asset and  
shareholder loan. The bookkeepers all described a worsening situation of  
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713 -  
bounced cheques and missed payments which developed into a full-blown crisis  
which in turn caused most of the staff to start leaving in August 2008 with the  
final blow of David leaving in October the same year. The bookkeepers all  
indicated that they had regular meetings with Daniel to discuss these crisis  
situations in order to prioritize who and what should be paid.  
[2512]  
Ms. Snow testified that in the two months that she was there, from  
early October to early December of 2008, Daniel would tell her what money was  
coming in and would give her a list of payouts.  
[2513]  
Daniel collected millions of dollars for purchases of the Park Plaza  
suite and the Breadalbane in 2007 and 2008. They were not purchased. In fact  
none of those millions went to those purchases (e.g., the $263,506.50 payment  
to Kramer Levin LLP for the Park Plaza mainly came from Peter Steenbergen but  
that was intended as a Millionaire Mortgage investment). These monies were all  
expended to pay for the three major categories of payouts, already discussed:  
Reeve company expenses, shareholder loans to Daniel and Cheryl Reeve, and  
payments to the alleged victims/other individuals.  
[2514]  
From 2007 to 2009, bookkeepers came and went. There was only one  
person who had constant control of what was going in and out over that period –  
that was Daniel Reeve. The bookkeepers themselves testified that Daniel had  
control over where money would go. Daniel himself admitted in cross-  
-
714 -  
examination that he had intimate knowledge of what was happening in the Reeve  
companies – see page 23 of the July 6, 2016 transcript.  
[2515]  
The irresistible and logical conclusion of all this evidence is that Daniel,  
especially after commencing support/equalization payments to Ms. Reeve, knew  
he was in a cash crisis. Daniel knew what money was coming in (he negotiated  
all the agreements with the investors) and, as the sole shareholder and person in  
control of any significant financial decisions, made the decisions as to how it was  
to be disbursed. Accordingly, his evidence and claim that, when the investment  
money of the 41 alleged investors was deposited, he had no idea how it was  
going to be disbursed, flies in the face of both the evidence and logic and is not  
credible.  
[2516] An example of Daniel’s lack of credibility regarding prior knowledge of  
disbursement of investment monies is the evidence surrounding the first  
$500,000 support/equalization payment due to Ms. Reeve on November 30,  
2007. Daniel’s evidence was that he anticipated getting a $1 million loan from the  
bank based on David’s debt of $1.2 million to $1.6 million. Daniel testified that  
David would not sign the contract until April of 2008 and the loan option therefore  
was not available. Daniel Reeve testified in cross-examination that he told Pat  
Westerhout that her investment money was for infrastructure for Millionaire  
Mortgage and its operations. Daniel told her that Millionaire Mortgage was  
expanding and adding a new location with additional equipment and staff. Daniel  
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715 -  
admitted he never told Ms. Westerhout that her money was going to his ex-wife  
for a divorce settlement. Daniel testified that was because he did not know her  
money would go there until after-the-fact.  
[2517]  
The Crown in cross-examination outlined the following to Daniel.  
Exhibit Stick File 57, A is the separation agreement between Cheryl Reeve and  
Daniel Reeve. Paragraph 5.8 of the agreement requires the first $500,000  
payment to be paid on November 30, 2007. The document shows that Ms.  
Reeve signed it on November 26, 2007 and Daniel signed it three days later on  
November 29, 2007. Exhibit Stick File 103 at pages 2077 and 2088 shows two  
cheques from Pat Westerhout, both dated November 28, 2007; one is for  
$700,000 and the other is for $100,000. Both cheques were cashed on  
December 4, 2007 into the DPR account. The DPR account at that time had an  
overdraft balance of negative $29,346.55. On December 4, 2007, there was a  
transfer of $500,000 from DPR to Ms. Reeve, signed by Daniel. This was the  
largest transfer ever. It came immediately after Ms. Westerhout’s deposit of  
$800,000. When the Crown suggested that Daniel used Ms. Westerhout’s money  
to pay Ms. Reeve, Daniel testified that it was possible but not conclusive. Daniel  
indicated that it could have come from in part from the $250,000 DPR overdraft.  
(
In chief, Daniel testified that the DPR overdraft was just $20,000 to $25,000 and  
there was no purpose to a $100,000 overdraft.) Daniel continued to maintain that  
he did not know the money was going to Ms. Reeve when he made his  
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716 -  
agreement with Ms. Westerhout. This evidence by Mr. Reeve is just not credible.  
It is obvious that after the separation agreement was signed by Ms. Reeve on  
November 26, 2007, Daniel had no means to make the first $500,000 payment  
on November 30, 2007. So he secured one, in the form of the $800,000 cheque  
from Ms. Westerhout on November 28, 2007. The next day he signed the  
agreement November 29, 2007. Several days later the cheques were deposited  
and Daniel immediately transferred $500,000 to Ms. Reeve. It is to be noted as  
well that Daniel testified initially that the $500,000 was put in the books as a  
shareholder loan to Daniel, but Daniel’s forensic accounting expert, Mr. Nagel,  
testified the $500,000 was entered into the books as a “shareholder loan” to Ms.  
Reeve, which itself was a lie. This is an example of deceptions followed by lies,  
dishonesty and contradictions.  
[2518]  
The investments from Jeanette Harrop and Isaac Thiessen provide  
another vivid illustration of Daniel’s lack of credibility regarding prior knowledge of  
disbursement of investment monies. Daniel claimed in cross-examination that  
after the deposit of the investment money from Ms. Harrop on October 31, 2008,  
Daniel had no idea how it was to be disbursed. This was in the time period that  
Ms. Snow worked in the office. Ms. Snow testified that Daniel would tell her a  
cheque was coming in and would give her a list of where it was to be disbursed.  
Ms. Snow testified that she got no money to invest on behalf of investors.  
-
717 -  
[2519]  
As can be seen from my Schedule G, at pages 20 and 21 and  
investors 34 and 35, the Harrop ($47,606.87) and Thiessen ($40,890.24)  
deposits on October 31, 2008 were comingled with a $100,000 deposit from Ms.  
Reeve on October 31, 2008. On that same day, $186,000 was paid to Andrea  
Morgan notwithstanding the severe cash crunch Mr. Reeve was experiencing  
(
i.e., David Reeve had left and this deprived Daniel Reeve of the income from his  
biggest producer and, also, as can be seen from Exhibit 332, which was  
prepared by Diane Intini in October or November of 2008, approximately  
$875,000 was owing to other investors for principal and interest).  
[2520]  
Ms. Morgan testified that, on September 28, 2008, she spoke to Nancy  
Herlick who told her Daniel was a pathological liar, mortgaged to the hilt and was  
conducting frauds. Ms. Morgan had invested approximately $176,793 in April of  
2008 for the Breadalbane Inn (she had cashed in her RRSPs and was penalized  
with taxes and fees). The next day, September 29, 2008, Ms. Morgan told Daniel  
that the Breadalbane Inn was a bogus deal and that Daniel had taken her money  
on false pretences. On September 30, 2008, she provided Daniel with a letter  
asking for the return of the $176,739. Daniel provided her with a draft in the  
amount of $200,000 payable on October 31, 2008. On the morning of October of  
31, 2008, Daniel told the Morgans not to cash it; he had another plan in place.  
The Morgans told Daniel that if the cheque did not go through, they were going to  
the police. At 4 p.m. on October 31, 2008, Daniel contacted them and asked  
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718 -  
them to meet him at the TD Bank in Cambridge – he would have their money. He  
gave Ms. Morgan an $186,000 cheque which she cashed on November 3, 2008.  
He promised another cheque for $14,000 but she never received it.  
[2521]  
Ms. Harrop is an unsophisticated investor and a long-time client of  
Daniel. According to Ms. Harrop, on October 22, 2008, Daniel attended at her  
home after phoning her. He got there at 9 p.m. She was unhappy with David and  
Daniel told her he was unhappy with Manulife. She told him that she did not want  
to withdraw her RRSPs and pay income tax. Daniel gave her a blank form. Later  
he met her at the bank and got cheques from her. Exhibit 137 – 18A is a cheque  
dated October 31, 2008 in the amount of $47,606.87 made out to the  
Jakobstettel Inn. She never got any documentation until February of 2009 and it  
was an agreement with Millionaire Mortgage. Exhibit 137 – 18C was shown to  
her; it is a Direction to Manulife dated October 27, 2008 directing the cashing in  
of her RRSPs, but she says her signature was forged. The banking records show  
that Ms. Harrop’s $47,606.87 cheque was deposited on October 31, 2008 into  
the Celebrity-Jakobstettel bank account. Ms. Harrop lost her old social security  
benefits and took a huge tax hit for the cashing in of her RRSPs late in the 2008  
tax year.  
[2522]  
Isaac Thiessen is a Mexican immigrant with less than a high school  
education. He has no specialized training in investing. He testified that in October  
of 2008, Daniel called him to come to the Jakobstettel. Mr. Thiessen had  
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719 -  
segregated funds with Manulife. Daniel told Mr. Thiessen that his investments  
were going down and that now this was going to stop. At the time, Steve Haney  
was Mr. Thiessen’s financial advisor of record. Daniel told him Mr. Haney was  
not at the firm anymore and Daniel was taking over. Daniel told him he (Daniel)  
knew where to invest Mr. Thiessen’s money, where it was guaranteed not to go  
down. Exhibit 205 – 41B is a Letter of direction to Manulife dated October 27,  
2008. This document bears exactly the same date and the same content as the  
Harrop letter of direction to Manulife dated October 27, 2008. Mr. Thiessen did  
not read it and signed it and went back to work. Mr. Thiessen signed a blank  
cheque and Exhibit 205 – 41A is a certified cheque payable to Jakobstettel Inn  
in the amount of $40,890.24 dated October 31, 2008. Daniel had told Mr.  
Thiessen when he signed it that it was a void cheque. In 2009, Mr. Thiessen got  
the Exhibit 205 – 41C report from Manulife that his segregated funds had been  
withdrawn in totality. Mr. Thiessen did not want to leave Manulife and Daniel did  
not say his money was going into a corporate bond. Exhibit 205 – 41D is an  
agreement between Millionaire Mortgage and Mr. Thiessen for $50,000 which  
was almost $10,000 more than the cheque he gave Daniel earlier. Daniel  
testified in cross-examination that the extra money was given due to a missed  
reset by DPR Financial. It is to be noted that Exhibit 303 indicates that DPR  
Financial is not responsible for missed resets. It is to be noted as well that, earlier  
in examination-in-chief, Daniel testified that he agreed to give Mr. Thiessen the  
extra $9,000 for the $9,000 deferred sales charge. Exhibit 205 – 41C is a  
-
720 -  
Manulife statement which indicates that the withdrawal fees were $779.69 and  
not $9,000. Daniel testified at that time in his examination-in-chief that they were  
more than the $779.69, as deferred sales charges start at 6 percent. Later he  
changed that evidence as well – see summary of Daniel’s examination-in-chief  
regarding Andrew Eplen at paragraph 1973 of this judgment. Mr. Thiessen  
testified that he had never heard of Millionaire Mortgage before. Mr. Thiessen  
signed the agreement in February 2009 because his money was there anyway  
and Daniel gave him $10,000 more. (Note that Ms. Harrop testified that she did  
not know anything about Millionaire Mortgage either, until February of 2009.)  
[2523]  
Neither Ms. Harrop nor Mr. Thiessen ever saw a nickel on their  
investments. Their cheques were made out to Jakobstettel Inn but their  
investments were eventually made out to Millionaire Mortgage as the  
Jakobstettel was “fully booked” at that time for further investments. None of their  
money went to an investment in Millionaire Mortgage. Further, their cheques  
went into the Celebrity Jakobstettel account at a time when Daniel knew since  
mid-September of 2008 that no more investments could be made into the  
Jakobstettel – see paragraph 1964 of this judgment.  
[2524]  
There is no evidence that Ms. Harrop, Mr. Thiessen or Ms. Morgan  
know each other and no suggestion of collusion. It is clear that Ms. Morgan was  
accusing Daniel of fraud and false pretences in late September of 2008 and was  
prepared to go to the police. Daniel gave her a draft for $200,000 payable on  
-
721 -  
October 31, 2008 at a time when he owed numerous investors almost $900,000  
and David was leaving. Daniel had virtually no source of income. Further,  
according to the bookkeepers, the Jakobstettel Inn was not making any money  
but was losing money. Accordingly, as the drop-dead date of October 31, 2008  
was approaching, it is obvious that the $200,000 draft to the Morgans would not  
clear. Daniel approached two unsophisticated clients who trusted him. Daniel, at  
the very least, manipulated them or, at worst, forged documents and misled his  
clients in order to raise the extra $86,000 he needed to supplement the short-  
term loan of $100,000 from Ms. Reeve in order to return $186,000 on the  
original $176,000 Morgan investment. After depositing Ms. Harrop and Mr.  
Thiessen’s cheques, Daniel met with Ms. Morgan at 4 p.m. and gave her a  
cheque for $186,000 which did clear. For a short period of time, a complaint to  
the police was avoided.  
[2525]  
It is clear that Daniel, in arranging Ms. Harrop and Mr. Thiessen’s  
investments to Millionaire Mortgage, knew precisely where that money was  
going. It was going to Ms. Morgan and not to any low-risk investment at all. The  
Harrop and Thiessen transactions demonstrate vividly that Daniel’s evidence in  
cross-examination that he did not know where investments were going is an  
outright lie and not credible in any fashion at all. What it does demonstrate is the  
ruthless breach of trust that, particularly in the case of Ms. Harrop, caused her  
ruinous financial consequences that, as an elderly person, she is incapable of  
-
722 -  
adequately recovering from. Further, Daniel testified in chief that Ms. Harrop had  
trouble with her memory and everyone at DPR knew this. This would make her  
an even more vulnerable victim.  
4. INCONSISTENT EVIDENCE  
[2526]  
Daniel was constantly evasive in cross-examination and rarely gave  
direct answers but engaged in long rambling speeches to justify what he had  
done.  
[2527]  
However, even with that approach to answering questions, there were  
numerous inconsistencies between what Daniel said and other credible evidence  
adduced. Examples are given below.  
[2528]  
After the Harrop and Thiessen deposits and payout to Ms. Morgan as  
just discussed, the Jakobstettel account #5206583 had a balance of $162.28 on  
November 4, 2008 (this was after the deposit of the other $15,107.37 from Ms.  
Harrop, which was immediately disbursed by bank drafts as described by Ms.  
Snow – see Exhibit Stick File 101 at pages 4178 and 4179). There was a  
deposit of $5,978.37 from TD Visa on November 6, 2008. On that same day, an  
interest cheque payable to Heather Gardner in the amount of $30,000 came into  
the account and was returned NSF. Daniel testified that he thought there was  
money to cover the cheque.  
 
-
723 -  
[2529]  
By November 6, 2008, David Reeve had left and there were virtually no  
revenues coming in except from investors. After the deposits from Ms. Harrop,  
Mr. Thiessen, and Ms. Reeve, the next deposit was from Brad Ashman on  
November 3, 2008, in the amount of $150,000, into the Millionaire Mortgage  
account. Almost all of that money was then transferred out over the next two  
days with $7,000 going into the Celebrity-Jakobstettel account on November 3,  
2008. On November 3, the same date, the Celebrity-Jakobstettel account paid  
out $5,882.41 in expenses. There was a deposit of another $15,107.37 from Ms.  
Harrop which was immediately disbursed by bank drafts as described by Ms.  
Snow – see Exhibit Stick File 101 at pages 4178-4179 (the bank receipt  
appears to have a signature of “S. Snow”), leaving a balance of $162.28 at the  
end of November 4, 2008. Ms. Snow’s testimony was that it was Daniel who  
would tell her what cheques were coming in and gave her a list of how to  
disburse the funds. There was no other investor money raised from other  
investors until November 10, 2008 – see investor #37 Sherrill Stevenson at page  
22 of my Schedule G.  
[2530]  
Daniel himself, in chief, testified that things got really bad in October of  
2008 and this accelerated in December due to David’s departure, the stock  
market free fall, and people wanting to undo their investments. Daniel testified  
that there was difficulty paying the bills in 2008 and there was a cash crunch in  
September, which worsened in October of 2008.  
-
724 -  
[2531]  
Ms. Snow testified that Daniel wrote the cheques himself. She testified  
that at the end of October, Daniel wrote a $100,000 cheque that bounced. There  
was no chance that it would clear. The account did not contain anything close to  
that amount. Daniel told Ms. Snow that he wrote the cheque to placate the  
couple. Ms. Snow testified that she told Daniel not to do that, as she did not want  
cheque bombs coming into the account. However, Daniel would continue to  
come in on weekends and evenings and write cheques that could never be  
covered.  
[2532]  
Ms. Snow further testified that all of Daniel’s companies were showing  
losses in October and November of 2008. There was no revenue stream fueling  
any of the companies. They were unable to pay because there was no money  
there. The Jakobstettel was just barely covering expenses. Even if no interest  
needed to be paid, Ms. Snow did not think the Inn could ever run a profit.  
[2533]  
Diane Intini worked at DPR during the same time period. She  
confirmed Ms. Snow’s evidence. Ms. Intini confirmed that no income was coming  
in and no bills were being paid. The only money coming in was for commissions  
at $4,000 per month and the rent alone was $60,000 per month. Cheques were  
bouncing. In January, a $100,000 cheque bounced. Daniel said he thought the  
money would be there. Ms. Intini described “Freaky Fridays” where Daniel would  
say that a big deposit was coming in but usually none did and investors would  
-
725 -  
bang on the locked doors. One time a vendor came in and Daniel hid behind  
Janice Berkin’s desk.  
[2534]  
Bouncing cheques was not a new phenomenon. Cynthia Taylor and  
Karen Gingrich also testified that cheques were bouncing regularly before they  
left in August and September of 2008 respectively.  
[2535]  
As alluded to earlier, Exhibit 261, the PowerPoint presentation  
prepared by Mr. Nagel, clearly indicates that office and related expenses were  
almost four times higher than the income.  
[2536]  
Given the circumstances as outlined above, I reject Daniel’s evidence  
that he thought there was money to cover the Gardner cheque. DPR was in a  
chaotic financial crisis with limited funds to pay a flood of debts. The  
bookkeepers’ testimony was that Daniel would write cheques that could never be  
covered and, given the circumstances above, I accept their evidence. Daniel’s  
evidence on this point is not credible.  
[2537]  
Regarding Ms. Gardner, as indicated earlier, Daniel testified that there  
was another $50,000 cheque that had gone through to Ms. Gardner, and it may  
have been in August. Daniel testified, “I distinctly remember a $50,000 one.”  
[2538]  
Ms. Gardner testified that she received $10,000 in January of 2009  
and received a total of $43,000 on her total investments of $775,000. Schedule  
C, attached to this judgment, and page 6 of Appendix C of the GT Report  
-
726 -  
confirm that Ms. Gardner received a total of $43,000 in repayments. The GT  
Report indicates that there were payments up to July 2, 2008 and then again in  
January 2009. There was no payment in August 2008 or even in August 2007.  
Accordingly, there was never a $50,000 cheque paid to Ms. Gardner in August or  
at any time in 2007 or 2008.  
[2539] Accordingly, I reject Daniel’s evidence that he gave Ms. Gardner a  
$50,000 cheque.  
[2540]  
Daniel testified in re-examination that the Jakobstettel Inn made a net  
profit of $480,000 excluding interest payments. There are no records to confirm  
this claim. The picture painted by the bookkeepers is entirely different. Ms. Snow  
testified that, assuming no interest needed to be paid, she did not think the Inn  
could ever turn a profit. If it slimmed down, it might be able to make a small profit.  
This evidence is similar to and consistent with the evidence of all the other  
bookkeepers: Ms. Intini (whom Mr. Reeve praised as being meticulous and  
thorough), Ms. Kroeker (who testified that only small amounts came from the Inn  
and she could not pay the bills just from revenue from the Inn), Ms. Gingrich  
(who testified that all of the companies were not making money with the  
exception for Millionaire Travel which was making $20,000 per year), and Ms.  
Taylor (who testified that the Inn needed to be booked 100 percent of the time  
just to meet operating expenses, not including interest).  
-
727 -  
Further, Daniel testified in chief that he told Marina Ognjanovski that  
the Jakobstettel in 2007 showed a loss but that the picture would get better by  
008 with renovations and improvements.  
[2541]  
2
[2542]  
The bookkeepers all gave credible evidence and were not contradicted  
in cross-examination. I accept their evidence and reject the evidence that the  
Jakobstettel Inn made a net profit of $480,000 in 2008 excluding interest.  
[2543]  
Daniel testified in chief on February 29, 2016 that there was no need  
for a $100,000 overdraft, indicating at page 24 of the afternoon transcript, “it  
wasn’t something that we forecasted ever having a need for so we usually  
carried one, I believe it was around 20 or 25 thousand [dollars] for DPR  
Financial.” Later in cross-examination, Daniel indicated that the DPR account  
had overdraft of $50,000 to $250,000 from 2005 until December of 2008 and that  
the Jakobstettel account had overdraft as well that ranged from $50,000 to  
$250,000. Daniel explained that he has no documentation to prove the $250,000  
DPR overdraft as the TD Bank has lost that information.  
[2544]  
A review of my Schedules F and G indicates that the DPR overdraft,  
especially in 2008, was over $25,000 on a number of occasions. When Brian  
Crozier invested in the Breadalbane on March 10, 2008, the DPR overdraft stood  
at negative $53,561.95, which his money was used to pay off. When Doug Thiel  
deposited his $200,000 cheque to Reeve Hotels on May 22, 2008, the DPR  
-
728 -  
overdraft stood at negative $60,645.94 – see Tabs 10 and 39 of Appendix G of  
the GT Report, respectively. There was no evidence at all of overdrafts  
regarding DPR and Jakobstettel of over $100,000 to $250,000. I requested  
defence counsel to provide me with an example of an overdraft exceeding  
$100,000 but none could be provided. The Crown suggested three possible  
examples but upon further analysis agreed that none of the examples  
established an overdraft of over $100,000. Mr. Nagel, in his report, could not  
obtain documentation regarding overdraft – see Nagel Report at page 3, para.  
11.  
[
2545] As indicated earlier, Daniel initially testified that there was only one  
500,000 shareholder loan to Ms. Reeve and the rest came through him. The  
evidence is clear that Ms. Reeve received $2 million from the end of November  
007 to the end of December 2008. Ms. Westerhout funded $500,000 on  
$
2
December 4, 2007 and that was booked as a shareholder loan to Ms. Reeve.  
According to Schedule 1A of the Nagel Report, a further $841,500 was paid to  
Ms. Reeve in 2008 as a shareholder loan. Further, the general ledger shows Ms.  
Reeve received another $11,500 on December 17 and 21, 2007. The general  
ledger indicates the $11,500 that was entered into the books on a Cheryl Reeve  
loan; however, I will give Daniel the benefit of the doubt and attribute that money  
to shareholder loans to Daniel. Accordingly, contrary to Daniel’s evidence, Ms.  
Reeve received at least $1,341,500 ($500,000 plus $841,500) in shareholder  
-
729 -  
loans in 2007 to 2008 pursuant to the divorce settlement. The additional  
$658,500 to Ms. Reeve would have come from Daniel’s shareholder loan of  
$1,052,716.42 in 2008 and an $11,500 shareholder loan to Daniel in 2007.  
[2546]  
David testified that Daniel “lived large.” Daniel denied this. In his  
testimony, Daniel testified that he received $165,000 in payroll over the  
indictment period which, presumably, he would pay tax on. However, according  
to Schedule 1A, Daniel also took out $1,345,526.74 in shareholder loans over  
the indictment period. Deducting the $658,500 paid to Ms. Reeve in 2007 and  
2008, during the indictment period, Daniel would have received a total of  
$687,026.74 in shareholder loans, on which he paid no tax, in addition to his  
$165,000 payroll salary. This is not a small sum over a two-year and nine-month  
period, when his companies were in a financial crisis for a large part of that  
period. In cross-examination, Daniel admitted to having a $100,000 leased BMW  
740, a Porsche, and two Escalades. Daniel had a driver and was driven about  
regularly in a stretch limo. His Swan Lake property had an expensive renovation  
done which included the installation of marble.  
[2547]  
Daniel testified in chief that David’s leaving (David told Daniel he was  
leaving on September 30, 2008 and was told to be out of the office in two weeks)  
was a “death blow.” Daniel believes had that not happened, he would have been  
able to weather the storm.  
-
730 -  
[2548]  
Further, Daniel testified in chief that, in November of 2008, Ron Madzia  
from IDC Financial phoned and indicated that he could not process any more  
business with DPR due to allegations made by David. Daniel testified that  
immediately put DPR “out of business” as DPR advisors could no longer receive  
money directly through DPR (instead, the advisors would be paid directly and  
then have to pay DPR, which was a long process).  
[2549]  
However, despite the “death blow” administered by David to Daniel in  
early October 2008, Daniel “being put out of business” by Mr. Madzia in  
November 2008, the close to $1 million owing to investors in those two months  
(see Exhibit 332), being treated like a “leper” when the public learned of the  
police investigation, and expenses exceeding revenues by a ratio of three to four  
times, Daniel continued to raise money from investors (see my Schedule G) for  
“low-risk” (according to Daniel) corporate bonds including a large investment  
from Gary Raycroft on December 31, 2008 in the amount of $250,000 – see  
pages 10 – 12 of my Schedule G. In cross-examination, Daniel testified that his  
corporate bonds’ risk in November and December of 2008 was marginally more  
than that of a bank GIC, but less than that of a segregated fund. In the  
circumstances outlined above, that is an absurd description of the risk of these  
bonds.  
[2550] As can be seen from my Schedule C, the losses of the pre-separation  
agreement investors were 75 percent of their original investments (not counting  
-
731 -  
overdue interest owing). As demonstrated by my Schedule E, the losses of the  
post-separation agreement investors were an astronomical 95 percent of their  
original investment (not counting overdue interest). Daniel admitted in cross-  
examination that segregated funds have a guarantee by regulated insurance  
companies of 75 to 100 percent of principal upon maturity after a set term of  
years. Accordingly, for Daniel to continue to maintain that his corporate bonds  
were “low-risk” as between the risk of guaranteed GICs with banks and  
segregated funds, is ridiculous and has no credibility at all.  
[2551]  
Further, in cross-examination, Daniel testified that he never told his 41  
core investors that his businesses were failing as the businesses were not failing.  
Daniel denied in cross-examination that, in December of 2008, his companies  
were collapsing. Daniel explained they were just cash-strapped. This is an  
absurd assertion given the crushing debts owing and virtually no income coming  
in. This description also contradicts Daniel’s own characterization of the “death  
blows” dealt in October 2008, “being put out of business” in November 2008, and  
being treated as a “leper” once the police investigation became public knowledge  
in December 2008. Daniel tried to assert he was three weeks away from a $1.6  
million payday from David (which on the evidence before me, I find did not exist),  
had the Millionaire Mortgage deal (which was no longer viable once the police  
investigation was on in December), and was expecting $300,000 trailer fees (of  
which there was no documentation and was inflated to $400,000 later in Daniel’s  
-
732 -  
cross-examination). Also later in cross-examination, Daniel testified that there  
was a $200,000 debt payment coming from David (again, this $200,000 amount  
was never put to David in his lengthy cross-examination and was not mentioned  
in Daniel’s examination-in-chief).  
[
2552]  
was three weeks away from receiving David’s $1.6 million and that, on October  
5, 2008, he was one-and-a-half months away from receiving that $1.6 million,  
Daniel’s evidence in cross-examination that, in December of 2008, he  
1
conflicts with Daniel’s own testimony in examination-in-chief regarding why he  
did not pay back Ms. Westerhout her $700,000 in the two payment schedules  
dated October of 2008 and January of 2009. As I indicated in paragraph 1930 of  
this judgment,  
Hence there were two other payment schedules dated October 16,  
2
008 and January 8, 2009 – see Exhibits 78 – 42H and 42I  
respectively. October 16, 2008 was two days after the Mark  
McGuire Millionaire Mortgage investment, which largely funded a  
$
4,000 payment to Ms. Westerhout. Daniel testified that in the  
middle of November of 2008, David had advised he was not going  
to pay the $1.6 million he had promised to pay Daniel for the  
transfer of client accounts. (Note the prior testimony of Daniel  
regarding Mr. Cunningham, where Daniel indicated that, regarding  
the Exhibit 39 – 11S December 18, 2008 email schedule of  
payments starting December 31, 2008, Daniel knew he could pay  
as he was expecting $1.6 million from David.)  
[2553]  
Accordingly, Daniel was either expecting David’s $1.6 million or not  
expecting the $1.6 million depending on which version of events assists him in  
explaining why he could or could not pay the alleged victims.  
-
733 -  
[2554]  
Warren Boldt invested $300,000 with Reeve Hotels on March 3, 2008  
with monthly payments of $5,000 interest to be paid – see Exhibit Stick File 4,  
rd  
C. Daniel Reeve initially testified that the payments were due on the 3 of each  
month with the first payment being due April 3, 2008. Daniel testified that the first  
time there was a delay was November 2008. The court took a break and upon  
resuming, the Crown showed Daniel Exhibit Stick File 103 at page 2642, which  
showed the first interest payment made was on April 22, 2008 (it would  
accordingly be 19 days late). Daniel then changed his evidence that the due date  
might not be April 3, 2008. When the Crown pointed out Daniel’s change in  
testimony, Daniel reverted to his original evidence that the due date was April 3,  
2
008. The Crown also showed Daniel the DPR account at Exhibit Stick File 103  
at page 2637 which showed an overdraft of negative $34,145.61 on April 22,  
008 and two NSF cheques for April 22, 2008. This is consistent with the  
2
bookkeepers’ evidence that cheques would bounce regularly. Further, at Exhibit  
Stick File 103 at page 2640, there is a receipt signed by Ms. Gingrich after she  
deposited a cheque for $5,300 and obtained a bank draft of $5,000 to Banyan  
Incorporated (Mr. Boldt’s company). This is again consistent with the  
bookkeepers’ testimony that bank drafts had to be made out to clients as  
cheques would routinely bounce.  
[2555] Daniel, in chief, gave three different dates regarding when he knew the  
Jakobstettel could no longer take any more investments. The dates were August  
-
734 -  
27, 2008 – see paragraph 1974 of this judgment regarding the Andrew Eplen  
investment; around September 15, 2008 regarding Lloyd Hoffman – see  
paragraph 1964; November of 2008 regarding Jeannette Harrop – see paragraph  
1949.  
[2556]  
As outlined in greater detail at paragraphs 2010 and 2011 of this  
judgment, Brad Ashman invested $150,000 on November 3, 2008 during the time  
of Mr. Reeve’s extreme cash crunch. At some point later, Mr. Ashman was told  
by the mortgage company that they had paid him $20,000 too much, so he told  
Daniel he needed $20,000 back. Daniel testified that he “moved mountains” to  
give Brad $20,000 back. When I asked Daniel what mountains he had to move to  
pay Mr. Ashman back, Daniel testified that he looked at all sources possible such  
as revenues, fees, commissions, and amounts from sister companies, since the  
$20,000 request was a curveball. This is a good example of the kind of evasive  
answers that Daniel often provided in his testimony which were not reflective of  
reality. The reality was that Mr. Ashman was paid the $20,000 on January 5 or 6,  
2009 – see my previous paragraph 2011 quoted below. In the Nagel Report in  
Schedule 1A, the sources of funds chart shows that the income for all the  
companies in 2009 was $30,023.91 while intercompany transfers were  
$
25,075.07. Did Mr. Ashman’s money come from these corporate sources as  
intimated by Daniel’s testimony? No, it did not. Firstly, the 2009 payroll was  
76,413.85, office expenses were $33,574.82 and rent for the year was $50,000  
$
-
735 -  
–
see uses of funds in Nagel Report in Schedule 1A. The cumulative total of all  
three expenses was approximately triple the 2009 income and intercompany  
transfers. So where did Mr. Ashman’s $20,000 refund come from? As I indicated  
at paragraph 2011,  
[
2011]  
The reality is that corporate income was not used to pay Mr. Ashman  
at all. Tab 32 of Appendix G of the GT Report and page 1 of Appendix C of  
the GT Report indicates that Lisa Schnarr invested $75,000 in Millionaire  
Mortgage on December 31, 2008 and on January 5-6, 2009, $29,000 was paid  
to the alleged victims Wilma Jordan ($2,000), Brad Ashman ($20,000), Pilita  
Galano ($2,100), and Warren Boldt ($5,000). These amounts were paid with at  
least $27,304.27 of Schnarr money. Accordingly, no mountains or even pebbles  
were moved at all. Ms. Schnarr’s investment was used to pay back the bulk of  
Mr. Boldt’s repayment of $20,000 in classic Ponzi scheme fashion.  
[2557]  
Another example of evasiveness and half-truths (at best) is Daniel’s  
testimony regarding Mr. Thiel’s request for the return of his $200,000 for the  
Breadalbane Inn purchase. After November 17, 2008, Mr. Thiel told Daniel that  
David had told him to get out and he wanted his money back. Mr. Thiel testified  
that Daniel told him that the money was not in the bank but in guaranteed  
investments. Daniel denied that he said that. Daniel testified that the deal was  
not dead and that he was still trying to buy it. Daniel was not in a position to  
return the money. Daniel testified that Daniel wanted to buy the Breadalbane and  
Peter Egger wanted to sell it. Mr. Egger’s testimony was that, in October of 2008,  
he phoned Daniel and told him that he no longer wished to sell the Breadalbane.  
Daniel went to Mr. Egger’s home around Christmas of 2008, attempting to  
sweeten the pot but admitted to Mr. Egger that he (Daniel) was under  
-
736 -  
investigation for fraud. Accordingly, it is clear from Mr. Egger’s testimony that this  
deal was dead as of October 2008. It was in October through December of 2008,  
that Daniel became aware of the criminal investigation and after that, in Daniel’s  
words, that Daniel became a leper. Mr. Egger’s testimony was that they did not  
want to sell the Inn in large part due to Daniel’s wanting a vendor take-back  
mortgage and the Eggers’ emotional attachment to the Inn. Those circumstances  
had not changed by Christmas of 2008 and, in fact, were worse as Daniel had no  
money to buy anything and knew he was under criminal investigation.  
Accordingly, the evidence establishes that this Breadalbane deal was clearly  
dead by October of 2008 and the Christmas visit to the Eggers’ home confirmed  
there would be no resurrection of the deal. Yet, Daniel testified later in chief,  
when discussing the Swan Creek property, “At the end of 2008, the Jakobstettel  
could carry no more debt, the Breadalbane was ongoing and the Plaza was  
dead.” Daniel testified that he required capital to make the Breadalbane  
purchase.  
[2558] Further, Daniel testified that with regard to the Thiel investment that the  
$200,000 was “deployed.” When I asked him where the $200,000 was deployed,  
Daniel could not remember but it would be in journal entries. Daniel is an  
intelligent man and was in court when Mr. Nagel went over each investors’  
investments. It is to be noted, as per Tab 39, of Appendix G of the GT Report  
and my Schedule G, except for an $200 amount to be deducted per the Nagel  
-
737 -  
approach, Mr. Thiel’s money was distributed approximately as follows: $60,000  
to DPR overdraft; $100,000 to David; $10,000 marked as Daniel “shareholder  
loan”; $10,000 to Ms. Reeve, documented in accounting records as a loan; and  
$23,000 to alleged victims and other individuals. None of the money went to the  
Breadalbane or any other real estate investment or even any investment of any  
kind. Further, the Thiel money was deposited on May 22, 2008 and was basically  
all gone by the end of that same day. None of it was available thereafter for the  
intended investment.  
[2559]  
Daniel separated from Ms. Reeve in December of 2006 and had  
previously testified that after the separation, he stayed at Jakobstettel Inn, Swan  
Lake and with friends. When asked by the Crown who the friends were, Daniel  
refused to answer. When instructed to answer the question, Daniel changed his  
testimony and indicated that he stayed after separation at the Jakobstettel and  
Swan Lake, but not with friends. Daniel indicated that his earlier answer that he  
stayed with friends was untrue.  
[2560]  
Regarding winterizing the fountains at DPR Windsor, Daniel testified  
that he told Mr. Hillman this in August or September but it could have been July.  
When the Crown pointed out that it makes no sense to winterize in July, Daniel  
indicated that he could not remember what month it was.  
-
738 -  
[2561]  
Daniel previously testified that he distinctively remembers giving Mr.  
Hillman a copy of the Millionaire Mortgage agreement. Mr. Hillman testified that  
he never received a copy. Later in cross-examination, Mr. Reeve changed his  
testimony indicating that he does not recall if he gave Mr. Hillman a copy of the  
agreement.  
[2562]  
Daniel testified in cross-examination that the first payment to Ms.  
Reeve pursuant to the separation agreement was due on November 30, 2007  
and the next payment was slotted for April 2008. The Exhibit Stick File 57, A  
contains the agreement and paragraph 5.8 indicates the next $500,000 payment  
was actually due on January 31, 2008.  
[2563]  
Daniel testified in cross-examination that only the original $500,000 to  
Ms. Reeve could have come from an investor. All the other money to his ex-wife  
could have come from overdraft and not investors. A referral to Appendix G of  
the GT Report and my Schedules F and G refute this testimony. Monies were  
regularly paid to Ms. Reeve from investor money. Some examples: Michelle  
Keddie invested $90,000 on February 8, 2008 and at least $89,509.36 of it was  
paid to Ms. Reeve; Dr. Ira Bernstein invested $189,698.78 on May 2, 2008 and  
DPR paid $200,000 to Ms. Reeve including at least $178,617.18 of Dr.  
Bernstein’s money; Lorna Eadie invested $244,235.49 on May 12, 2008 and  
$100,000 of her money was paid to Ms. Reeve; on June 2, 2008, Barry  
Cunningham invested $500,000 and $108,000 was paid to Ms. Reeve; and on  
-
739 -  
August 8, 2008, Kevin Hillman invested $144,360.44 then $100,000 was paid to  
Ms. Reeve with at least $98,437.13 of his money – this was put in the accounting  
records as an asset to DPR. Even when Daniel was basically out of business  
with crushing expenses and virtually no income coming in, the payments to Ms.  
Reeve continued from investor money. For example, on November 10, 2008, Ms.  
Reeve received $75,000 which included at least $16,305 of Sherrill Stevenson’s  
investment of $75,000. Most egregiously, on December 31, 2008, when it was  
public that Daniel was under criminal investigation and the Breadalbane and  
Millionaire Mortgage deals were all but dead (the Plaza deal was long dead and  
buried), Daniel took $250,000 from Gary Raycroft and paid $15,000 to Ms.  
Reeve, with at least $14,951.77 of Mr. Raycroft’s money.  
[2564]  
It is to be noted that Daniel testified in chief that he set up a repayment  
schedule with Mr. Raycroft, dated April 14, 2009, regarding an April 28, 2008  
Jakobstettel investment made on April 28, 2008. Daniel testified that he  
anticipated making a $20,000 interest payment on April 28, 2009 because he  
expected to complete the Millionaire Mortgage deal and would get money up-  
front. This testimony conflicts with Daniel’s other testimony that, after the police  
investigation became public in December of 2008, he was a “leper” and the  
Millionaire Mortgage deal was on hold due to the ongoing police investigation. By  
that time as well, as detailed in paragraph 1953 of this judgment, Daniel was in  
default of numerous other repayment plans and was swamped with millions of  
-
740 -  
dollars of debt and expenses with virtually no income stream. Further, Mr.  
Raycroft also testified that Daniel told him in April 2009 that everything was fine  
and the money was doing well and it was invested in low-risk, high-end real  
estate – see paragraph 1954. Daniel testified that he did not say that as it would  
be a lie. Mr. Raycroft was a credible witness, Daniel was not, and I am convinced  
that Daniel said everything attributed to him, knowing full-well he was lying.  
[2565]  
In examination-in-chief, defence counsel went over parts of the 41 core  
victims’ testimony and Daniel disagreed with key parts of virtually all of them.  
Daniel disagreed with the core victims’ versions of discussions of risk. Daniel’s  
testimony was that he discussed risk with all of his clients and always told them  
that the private equity investments were low-risk and explained essential details  
to them. Daniel testified that he never told anyone he owned the Breadalbane or  
the Plaza but made it clear that he was in negotiations and planning to buy those  
properties. Daniel testified he made no guarantees and never told anyone that  
their money was going to trust accounts. Daniel testified that he gave the clients  
copies of the agreement but from August 2008 going forward many clients  
testified they never got copies of their agreements – see my Schedule H. Kevin  
Hillman is the first investor in Schedule H who testified he never got a copy of  
his agreement. Daniel testified in chief that he gave Mr. Hillman a copy in the  
Windsor office but has no copy of it despite the bookkeeper keeping it in a binder  
under lock and key and the accountant taking photocopies. Daniel testified that  
-
741 -  
he gave Wayne Schroeder a copy of the bond, but Mr. Schroeder testified he  
never received any documentation. Daniel testified that he has no comment  
about Ms. Stevenson not receiving documents but has no memory of it. Pilita  
Galano and Lynette Caiger testified they got no paperwork at the time of their  
transactions but Daniel denied those allegations. Daniel testified that Linda  
Chaffe got a copy of her bond, but she says that she never got it. Daniel has no  
copy and cannot now access it. Later in cross-examination, Daniel conceded that  
it is possible that a few clients in November of 2008 to February of 2009 did not  
receive copies of their agreements. He blamed that on the loss of two  
bookkeepers as well as Ms. Gingrich taking the files. They were “flying blind.”  
Daniel conceded that a few individuals in those months did not get their copies. It  
is to be noted that Ms. Gingrich left on September 19, 2008; the two bookkeepers  
leaving were Cynthia Taylor who left on or about August 17, 2008 and Kimberly  
Kroeker who left in October of 2008. They were replaced by the very capable  
Diane Intini and Sarah Snow by at least mid-October of 2008.  
[2566]  
Daniel disagreed with the following categories of claims made by the  
core victims regarding statements they said Daniel made or did not make (I have  
included the investment type and dates of their investments):  
1
. There was no discussion of private equity or investment with  
Millionaire Mortgage (“MM”): Brad Ashman (investment – MM –  
November 3, 2008); Jeannette Harrop (investment – MM –  
-
742 -  
October 31, 2008); Isaac Thiessen (investment – MM – October  
1, 2008); Kevin Hillman (investment – MM – July 9, 2008);  
3
Carin Smith (investment – MM – November 14, 2008); Sherrill  
Stevenson (investment – MM – November 10, 2008); Linda  
Chaffe (investment – MM – February 6, 2009); Paul Meleg  
(
investment – MM – July 7, 2008); Lisa Schnarr (investment –  
MM – January 31, 2009); and Cherrin Meleg (investment – MM  
July 7, 2008).  
–
2. There was no discussion of risk at all: Amos and Dorothy Lichty  
(investment – Plaza – September 5, 2007); Eva Bernachi  
(investment – Jakobstettel – July 21, 2008); Wilma Jordan  
(investment – Jakobstettel – February 2, 2007); Craig Mason  
(investment – Jakobstettel – September 2, 2008); Peter  
Steenbergen (investment – MM – January 8, 2008); Peter  
Steenbergen (investment – Plaza – June 27, 2008); and Pilita  
Galano (investment – MM – August 19, 2008).  
3
. There was no discussion of risk and/or minimal risk: Ronald  
DeKoning (investment – Breadalbane – March 10, 2008); Dr. Ira  
Bernstein (investment – Breadalbane – May 2, 2008); Laura  
Kerr (investment – Plaza – September 14, 2007); Claudette  
Taylor (investment – Plaza – November 1, 2007); Chin Tan  
-
743 -  
(
investment – Plaza – September 14, 2007); Rene Brossard  
investment – Plaza – August 20, 21, and 27, 2007); Claudette  
(
Taylor (Jakobstettel – November 1, 2007); Marina Ognjanovski  
(
Jakobstettel – March 4, 2008); and Barry Cunningham  
investment – Breadalbane – June 2, 2008).  
(
4. Daniel said the deal was guaranteed: Dr. Ira Bernstein  
(investment – Breadalbane – May 2, 2008); Michelle Keddie  
(investment – Breadalbane – May 1, 2008); Michelle Keddie  
(investment – MM – Feb. 5, 2008); and Barry Cunningham  
(investment – Breadalbane – June 2, 2008).  
5. Daniel said he had bought or owned the invested properties:  
Ronald DeKoning (investment – Breadalbane – March 10, 2008  
–
told this in March 2008); Warren Boldt (investment – March 3,  
2008 – told this around March 3, 2008); Dr. Ira Bernstein  
(investment – Breadalbane – May 2, 2008 – Daniel said that  
Breadalbane doing well and booked into next year so Dr.  
Bernstein believed Daniel owned it); Pat Westerhout  
(
investment – Breadalbane – April 11, 2008); Heather Gardner –  
investment – Breadalbane – June 27, 2008); Heather Gardner  
investment – Plaza – July 12, 2007); Glen Brubacher  
(
-
744 -  
(investment – Plaza – September 1, 2007); and Peter  
Steenbergen (investment – Plaza – June 27, 2008).  
6
. The monies invested by the clients were being put in trust  
accounts: David Reeve (investment – Breadalbane –  
approximate summer of 2008); Lorna Eadie (investment –  
Breadalbane – May 12, 2008); and Barry Cunningham  
(investment – Breadalbane – June 2, 2008).  
7. The deal was imminent or there was some suggestion of  
urgency: Andrea Morgan (investment – Breadalbane – April 9,  
2
008); Ronald DeKoning (investment – Breadalbane – March  
0, 2008); Josephine DeSalvo (investment – Breadalbane –  
1
March 10, 2008); Michelle Keddie (investment – Breadalbane –  
May 1, 2008); and Doug Thiel (investment – Breadalbane – May  
26, 2008).  
8. There were no copies of agreements ever provided, or the  
copies were provided many months later: Kevin Hillman  
(investment – Jakobstettel – August 8, 2008); Wayne Schroeder  
(investment – Jakobstettel – August 23, 2008); Pilita Galano  
(investment – MM – September 6, 2008); Jeanette Harrop  
(investment – MM – October 31, 2008 – received it in February  
-
745 -  
009); Isaac Thiessen (investment – MM – received it in  
February 2009); Brad Ashman (investment – MM – November  
2
3
, 2008); Sherrill Stevenson (investment – MM – November 10,  
008); Carin Smith (investment – MM – November 14, 2008);  
2
Linda Chaffe (investment – MM – February 6, 2009); and Peter  
Steenbergen (investment – Plaza – June 27, 2008, received it in  
January of 2009). Please refer to my Schedule H for more  
details.  
9
. Investment monies were to be invested in stocks or segregated  
funds or mutual funds or insurance products or mortgages or  
bank accounts earning interest: Ronald DeKoning (investment –  
Breadalbane – March 10, 2008); Dr. Ira Bernstein (investment –  
Breadalbane – May 2, 2008); Michelle Keddie (investment –  
Breadalbane – May 1, 2008); Sherrill Stevenson (investment –  
MM – November 10, 2008); Brad Ashman (investment – MM –  
November 3, 2008); Lynette Caiger (investment – MM – June 1,  
2008); Pilita Galano (investment – MM – August 19, 2008);  
Linda Chaffe (investment – MM – Feb. 6, 2009); and Steve  
Manuel (investment – MM - January 19, 2009).  
[2567]  
Daniel himself testified that the 41 alleged victims were decent people  
who did not yell and co-operated with him. I have found that all of the 41 alleged  
-
746 -  
victims were in fact decent, honest, hard working people. They were cross-  
examined vigorously, most of them for almost two days. Their evidence was  
supported by documentation and they emerged from cross-examination  
unscathed. Further, many of them were long-term and sophisticated investors  
who trusted Daniel. As can be seen from the analysis above, many of them  
testified to the same themes and statements made by Daniel. There was no  
evidence that they knew each other and absolutely no suggestion of collusion. I  
find that the 41 alleged victims accurately described the false statements made  
by Daniel to them.  
[2568]  
It is to be noted as well that most of the deceptive statements to the  
alleged victims came after the separation agreement and after Daniel found  
himself significantly behind on his spousal payments during all of 2008.  
[2569]  
The motive for Daniel’s deceptions is revealed by his evidence in chief,  
my summary of which I reproduce from paragraph 2084 of this judgment:  
By the end of January 2008, Daniel was about $450,000  
behind in payments. The situation progressively worsened  
and Daniel was engaged in dialogue with Ms. Reeve about  
the progress of the payments. Daniel testified that he could  
not pay the lump sums as they came due and he paid as he  
could and tried to make the payments owing as best as he  
could. Daniel says he consulted with his lawyer and  
accountant  
regarding  
these  
payments.  
Daniel’s  
understanding with Ms. Reeve was that he would do what he  
could as quickly as he could.  
-
747 -  
Initially in cross-examination, Daniel testified that between 2007 and  
009, there were investors other than the 41 core investors. Daniel did not deny  
he took another $7 million in debt paying 12 to 16 or 18 percent interest  
combined with the $10 million from the core investors, this would mean Daniel  
[2570]  
2
(
would owe $17 million plus an interest amount almost equalling that, using the  
rule of 72).  
[2571]  
Daniel indicated in cross-examination initially that he would repay the  
investors when he gets out of jail. How this was to be done, Daniel testified that  
he was not at liberty to say but it is his number one priority. After a long remand,  
Daniel was asked again how the repayment was to be done, Daniel testified he  
still owns trademarks and processes. He will again pursue the  
MyPerfectMortgage concept and feels that there is an opportunity there.  
[
2572]  
money to other investors. When the Crown put to him that the amount owed was  
7 million, Daniel indicated that he did not know. Daniel later testified that he  
Later in cross-examination, Daniel acknowledged that he owed a lot of  
$
owes investors $14 million to $16 million. There was no explanation as to how he  
arrived at that figure; with interest, I think at least double that would be a fair  
assessment (this will be discussed in more detail later). In any event, Daniel  
testified that if he was not in custody, he could raise that $14 million to $16  
million in 23 months. It is to be noted that DPR Financial and all the Reeve  
companies shut down in April 2009. Three years later, in July of 2012, Daniel  
-
748 -  
was arrested on these charges. During that three-year interval, on the evidence  
before me, not a nickel was ever paid to any of the investors despite Daniel now  
saying that it is his number one priority.  
[2573]  
Daniel admitted earlier in cross-examination that the anticipated $20  
million in revenue for the Millionaire Mortgage plan did not pan out. Daniel  
testified that not even $100,000 in revenue was generated. He testified that, by  
March or April of 2008, he expected the extent of the revenues to be $20 million.  
However, by the end of 2008, Daniel did not get even $1 million or 5 percent of  
the anticipated revenues of $20 million by the end of 2008. Daniel could not say  
how many Millionaire Mortgage deals were brokered. Daniel testified that he  
believes that more than five were done but not more than 100. Daniel did not  
know if more than 50 were done. Accordingly, in 2008, when Daniel had a  
reputation of being a highly respected and brilliant investor, the Millionaire  
Mortgage plan produced less than $100,000 from March or April 2008 to October  
through December of 2008 (Daniel testified that the Millionaire Mortgage plan  
was put on hold in October, November, December of 2008 and that in November  
or December of 2008, it became known he was being investigated for fraud) and  
onward until April 2009 when the businesses shut down. Daniel tried a form of  
the MyPerfectMortgage plan in the summer of 2009 but it went nowhere due to  
the notoriety of this investigation. It can be anticipated that the publicity of this  
trial will continue to haunt him for some time regardless of its outcome. Given the  
-
749 -  
track record of Millionaire Mortgage and the failure of MyPerfectMortgage in 2008  
and 2009, the prospect of Daniel making $14 million to $16 million in 23 months  
is extremely remote. I do not accept his evidence as credible on this point.  
5. INTENT TO INVEST IN LOW-RISK INVESTMENTS  
[2574]  
Daniel testified in examination-in-chief that when money from a bond  
came in, it was an asset. It was intended for the investments, but plans can go  
awry. There were no restrictions on how the money was to be used. A private  
company can use it in any way once it comes in. Daniel wanted to use it for the  
intended purpose and told clients that they would grow with him along with the  
renovation work. For example, when testifying regarding a $59,524.74  
investment by Wayne Schroeder on August 22, 2008, Daniel indicated that it was  
the role of the bookkeeper to disburse the money within a week or month to pay  
bills. Daniel testified that most of the time the money would go where it was  
intended.  
[2575]  
Daniel further testified in chief that his companies worked together and  
they had the legal right to do intercompany transfers so long as they reported  
them. Daniel admitted that he did not tell clients that their money was going into  
an account that could be disbursed as a pool of money to pay bills of the other  
Reeve companies.  
 
-
750 -  
[2576]  
In cross-examination Daniel confirmed that he took the clients’ money  
and operated legally by following the advice he got from lawyers and  
accountants. Daniel testified that he did not tell clients their money was being  
directed to his companies with cashflow problems because he did not know that  
was the case in advance. Daniel intended to use the money as told to the clients  
and only made decisions to divert it afterward. Daniel testified that in a crisis  
situation, a corporation is allowed to transfer those monies elsewhere. Daniel  
was sitting on a $20 million payday. Daniel denied lying to investors and failing to  
disclose the state of company affairs. Daniel disclosed what was necessary.  
Daniel denied that he knew the investments were worthless and that he had lied  
about the risk and denied that he abused his position of trust to target victims.  
[
2577]  
2578]  
How credible is this evidence regarding Daniel’s intention?  
[
The evidence of the bookkeepers is that it was Daniel who made the  
decisions about where large amounts of payments went. Their evidence is that at  
least from March of 2008 onwards, any payments over $5,000 had to be  
authorized by Daniel and amounts under $5,000 were paid by them. Even in  
those situations, if bills could not be paid, Daniel testified that he would get  
involved if, for example, they could not meet the payroll. Daniel was the sole  
shareholder of the companies and was the only constant person with access to  
the books. Even the president, David, was prevented from looking at them,  
although David testified that he would contribute his own monies so that payroll  
-
751 -  
obligations could be met. The original bookkeepers left as they were of the  
opinion that the debts could never be paid; this opinion was shared by their  
replacements. It was Daniel who authorized the payments to Ms. Reeve because  
it was a “court order.” Daniel himself testified that he got $450,000 behind by  
January 2008; once he paid $2 million, he would be relieved of the $13,500  
spousal support obligations in June of 2008 – see paragraph 5.2 of the  
separation agreement at Exhibit Stick File 57, A - Daniel indicated in cross-  
examination that he did not tell his clients that the investors’ money was being  
directed to his companies with cashflow problems. Daniel explained that he did  
not tell them that because he did not know. As already outlined, this testimony is  
a ridiculous claim and not credible at all in these circumstances, particularly in  
light of Daniel’s admission in cross-examination that he had intimate knowledge  
of the workings of his companies.  
[2579]  
The bookkeepers testified that, except for the $20,000 income of the  
travel company, all of the Reeve companies were losing a lot of money with the  
estimated losses totalling $2 million per year.  
[2580]  
As can be seen from the conclusions from the forensic accounting  
evidence at paragraph 2354 above, the conclusions from the forensic accounting  
evidence are entirely consistent with the evidence of the bookkeepers.  
-
752 -  
[2581]  
As indicated in paragraph 2354 of this judgment, the income from the  
indictment period from January 1, 2007 to September of 2009 was $2.2 million  
with office and related expenses totalling $8.74 million. Accordingly, income was  
paying for only about 25 percent of basic expenses – see Exhibit 261, Mr.  
Nagel’s PowerPoint presentation.  
[2582]  
As indicated in paragraph 2354, the companies’ best year was 2007  
where payroll and office expenses were $2,374,206.72, which was still  
approximately $900,000 more than the income. The situation was worse in 2008  
as income dropped approximately 50 percent – see Schedule 1A of the Nagel  
Report.  
[2583]  
What is really remarkable is the amount of shareholder loans paid to  
Daniel and Ms. Reeve as compared to the income of the Reeve companies over  
the indictment period from January of 2007 to September of 2009. Schedule 1A  
of the Nagel Report indicates that the income (revenues) of the Reeve  
companies over the indictment period was $2,241,418.11. The shareholder loans  
to Daniel and Cheryl Reeve over that period were a combined $1,345,526.74  
plus $1,539,231.14 respectively, totalling $2,884,757.88 – see Schedule 1A of  
the Nagel Report. Accordingly, the shareholder loans to Daniel and Ms. Reeve  
were over $600,000 more than all the income of the Reeve companies over the  
indictment period! Further, in 2008, income plummeted to only $723,283.47 (in  
2007, it was $1,488,110.73), However, the shareholder loans in 2008 to Daniel  
-
753 -  
and Ms. Reeve were $841,500 and $1,052,716.42 respectively, for a total of  
1,894,216.42. Accordingly, all of the income of the Reeve companies in 2008  
$
was only able to fund 38 percent of the shareholder loans to Daniel and Ms.  
Reeve in 2008! And these shareholder loans were coming from failing companies  
whose income could only meet 25 percent of basic expenses!!  
[2584]  
Accordingly, the money losing Reeve companies could not come close  
to funding either the basic expenses of the companies or the shareholder loans  
to Daniel and Ms. Reeve. There had to be another source and it was the investor  
money. The Nagel PowerPoint Presentation at Exhibit 261 indicates that  
investors/creditors funded 83.5 percent of all sources of funds for the companies  
during the indictment period. Daniel was aware of this situation as he was the  
sole shareholder of the companies, was the only person who had access to the  
books except for the bookkeepers, met regularly with the bookkeepers especially  
in crisis situations which became chronic in late 2007 to 2008, authorized any  
expenditures over $5,000 in most of 2008, provided lists of who to pay by at least  
the fall of 2008 and was the only constant factor in 2008. Further, Daniel  
prohibited the president, David, from having access to the books. Ms. Reeve,  
who was not cross-examined, testified that after their separation in early 2007,  
Daniel was very terrified of an audit when she brought it up.  
-
754 -  
THE N.Y. PARK PLAZA INVESTMENTS  
[2585]  
As indicated in paragraph 2354 of this judgment, Daniel collected  
approximately $2.15 million from investors for a “low-risk real estate investment”  
according to Daniel) in the New York Park Plaza Hotel. This money was  
(
collected from approximately June to November of 2007 – see my Schedule F.  
There was one further “lone wolf” investment from Peter Steenbergen of $50,000  
for the Plaza on June 27, 2008 – see my Schedule G at page 2. Accordingly,  
Daniel collected approximately $2.2 million in total for the Plaza purchase. On  
August 22, 2007 Daniel signed an agreement to purchase a Plaza suite for  
US$2.635 million.  
[2586]  
Exhibit 132 – 300E is an NSF cheque of $263,500 for the Plaza  
purchase dated August 19, 2007. In July and August of 2007, Rene Brossard  
and Heather Gardner had contributed a combined $800,000 for the Plaza. None  
of this money was used to purchase the Plaza as intended by the investors and  
as indicated by Daniel. This money was essentially transferred out within a day  
or two to other Reeve companies to pay business expenses and other investors  
–
see my Schedule F. This pattern would occur repeatedly over the next two  
years.  
[2587]  
Exhibit 132 – 300F is a bank draft payable to Kramer Levin for  
$263,500, dated January 16, 2008. This money came from in most part from  
 
-
755 -  
Peter Steenbergen for a Millionaire Mortgage investment – see my Schedule G  
and Tab C of the GT Report at page 11.  
[2588]  
None of the $2.15 million collected for the Plaza in 2007 was used for  
that purchase. As can be seen from my Schedule F and Appendix G to the GT  
Report, all of the money collected for the Plaza was used within a day or two to  
pay the expenses of the Reeve companies, alleged victims/other individuals  
and/or Daniel Reeve shareholder loans.  
[
2589] On May 23, 2008, the Plaza deal was finally terminated – see Exhibit  
35 filed by the defence. Exhibit 136 is a series of emails filed by the defence  
wherein Daniel requested the return of two-thirds of his deposit on June 10,  
008. The email indicates that Daniel could not come up with the monies to close  
1
2
the deal due to “severe financial and personal hardships.” Accordingly, Daniel, by  
his own correspondence, knew the Plaza deal was dead with no chance of  
revival by the end of May 2008 and requested the return of his deposit on June  
10, 2008.  
[2590]  
However, several weeks later, on June 27, 2008, Mr. Steenbergen  
made a $50,000 investment in the Plaza – see my Schedule G and page 11 of  
Appendix C of the GT Report. Mr. Steenbergen testified that Daniel called him  
and said he was buying a hotel in New York. In the circumstances outlined  
above, this was a clear falsehood. Mr. Steenbergen cashed in his RRSPs and  
-
756 -  
invested in the unnamed hotel. Mr. Steenbergen had a hard time getting his  
agreement and did not get it until January of 2009. He got Exhibit 96 – 36H,  
which is an agreement with Reeve Hotels and refers to the Jakobstettel. The  
$50,000 Steenbergen money went into Daniel’s personal account; shortly after,  
Daniel paid Ms. Reeve $100,000 comprised of at least $45,047.90 of Mr.  
Steenbergen’s money. None of the money was applied to an investment  
regarding a New York hotel or any other real estate investment.  
[
2591]  
Daniel testified in chief that he could not close the Plaza deal in May of  
008 as the market was melting down and he could not get U.S. or Canadian  
With $2.15 million owing to investors for the Plaza purchase and no  
2
financing.  
[2592]  
Plaza purchase and with the Reeve companies’ expenses exceeding income by  
$
900,000 for 2007, Daniel agreed in a separation agreement dated November  
6, 2007 to pay Ms. Reeve $3 million in $500,000 installments over the nine  
2
months to follow. With the Reeve businesses losing ever more money in 2008,  
Daniel begun to pursue his Millionaire Mortgage concept and Breadalbane  
purchase plans.  
THE BREADALBANE INVESTMENTS  
[2593] As can be seen from my Schedules F and G, Daniel, from March 3,  
2008 to June 27, 2008, collected from the alleged victims approximately $3.45  
 
-
757 -  
million for a “low-risk” real estate investment for the purchase of the Breadalbane  
Inn (according to Daniel).  
[2594]  
As can also be seen from my Schedules F and G and Appendix G to  
the GT Report, none of this money was used to purchase the Breadalbane. As  
indicated in paragraph 2354 of my judgment, the money was deposited and,  
usually within a day or two, it was used for three main purposes: (1) shareholder  
loans to Ms. Reeve or Daniel, (2) expenses of the Reeve companies, and (3)  
repayments to the alleged victims and other individual investors.  
[2595]  
In cross-examination, Daniel agreed that he collected $3 million to buy  
the Breadalbane from March to June of 2008. The agreements provided for  
interest rates of 12 to 20 percent and some were limited partnerships. Daniel  
agreed that the interest obligation was $360,000 annually. Exhibit 319 is an  
email with an attachment of projected revenues of the Breadalbane of $87,000  
per year. Daniel said that he could make money with proper investments like  
those made at Jakobstettel.  
[2596]  
Peter Egger testified that Daniel discussed purchasing the  
Breadalbane in November of 2007. Daniel agreed to a purchase price of $2.3  
million in February or March of 2008. Daniel offered to pay $500,000 down and  
take a vendor take-back mortgage of $1.8 million paying 16 percent interest. Mr.  
-
758 -  
Egger had concerns about the viability of payment. In October of 2007, the Inn  
had made a profit of $200,000.  
[2597]  
In October of 2008, Mr. Egger phoned Daniel and told him that the  
Breadalbane Inn was no longer for sale. Mr. Egger testified that there was an  
unregistered loan but the deposit of $500,000 offered by Daniel was to be used  
to pay off that $300,000 unregistered loan. Daniel testified that this $300,000  
loan problem prevented the deal, but Mr. Egger did not confirm that. Mr. Egger’s  
testimony was that the family simply got cold feet and were not comfortable with  
the vendor take-back mortgage. They no longer wanted to sell. Daniel came to  
Mr. Egger’s house at Christmas of 2008 and wanted to increase the deposit but  
Mr. Egger told Daniel that the police had called that December. Daniel confirmed  
that he was under investigation for fraud. Mr. Egger testified that the Christmas  
meeting was the last meeting regarding the sale of the Breadalbane. However,  
Daniel, in cross-examination, testified that he was still negotiating this deal with  
Mr. Egger in April 2009 and did not know the Breadalbane was not happening –  
see pages 67-68 of the July 6, 2016 transcript and page 22 of the January 3,  
2017 transcript. Mr. Egger testified that there were no further discussions after  
this Christmas meeting. I find Daniel’s testimony that there were negotiations  
regarding the Breadalbane until April 2009 to be completely untrue. The  
accounting evidence makes it clear that Daniel did not have $500,000 (he was  
now offering more) at his disposal at Christmas of 2008 or thereafter. And there  
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759 -  
was no prospect of raising those funds at that time. David had left, IDC Financial  
had left DPR dead in the water, the Millionaire Mortgage deal was on hold,  
Daniel was under criminal investigation and Mr. Egger knew it, and there was no  
income stream but a tsunami of debts washing in.  
[2598]  
It is fair to infer that Daniel never intended to use the investors’ money  
collected from March to June of 2008 for the purchase of the Breadalbane. Given  
Daniel’s cashflow problems in 2008 and the immediate diversion of these  
monies, in combination with the fact he collected $3.45 million for a $2.3 million  
property and used none of it for that purpose, and given that Daniel’s intention  
was to only pay $500,000 down (which was, at most, 15 percent of the total  
collected from investors) and take a vendor take-back mortgage (at what Mr.  
Egger thought was an impossible interest rate), there is no way Daniel could  
credibly say he intended to purchase the Breadalbane. Just like the Plaza deal,  
the money collected was disbursed immediately for non-investment purposes  
and the actual purchase, if it ever occurred, would have to be funded by  
mortgages and collections from other future investors.  
[2599]  
The bottom line was that, by the end of June 2008, Daniel had  
collected $2.2 million for the Plaza and $3.45 million for the Breadalbane. He had  
not purchased either and had no money to do so. This $5.6 million was gone and  
he had no Plaza and no Breadalbane to show for it. His debt obligations were  
paying a high interest rate from 12 to 20 percent at a time when the Reeve  
-
760 -  
businesses were failing and the usual corporate interest rate stood at 6 to 7  
percent (according to Daniel).  
THE JAKOBSTETTEL INVESTMENTS  
[
2600] The Exhibit Stick File 600 contains the land registry history of the  
Jakobstettel Inn. Celebrity Management (a Reeve company) bought the Inn for  
675,000 on December 19, 2003 and gave back a $400,000 mortgage on the  
$
same date to Toowoomba Joy Limited. On March 18, 2005 another charge was  
given to Tuerr Holdings in the amount of $300,000. On June 27, 2008 a further  
charge of $655,462 was given to Brunen Holdings. A tax lien was put on the  
Jakobstettel on April 29, 2009 by the government of Canada – see paragraph  
2180 of this judgment.  
[2601]  
In the indictment period, from February 2, 2007 to September 2, 2008,  
the 41 alleged victims invested over $2.75 million in “low-risk commercial real  
estate” (according to Daniel), namely in the Jakobstettel. This was on a property  
that was purchased in late 2003 for $675,000 and had approximately $700,000 in  
mortgage commitments by early 2005. Plus another mortgage was added on  
June 27, 2008 to the tune of $655,462 for a total mortgage commitment of $1.35  
million minus whatever had been paid down.  
[2602]  
The GT Report at page 6 indicates that aside from the $236,506.50  
payment for the Plaza which has been discussed, the only other money paid for  
 
-
761 -  
investments was $100,000 to Grand River Contracting for Jakobstettel Inn  
renovations, another $5,000 to Royal LePage for a down payment on 2 Isabella,  
and $20,730.09 relating to a Pat Westerhout investment. Deducting all that from  
the $2.75 million paid for Jakobstettel investments, this means that $2.6 million  
was diverted for non-investment purposes even though the Jakobstettel was  
heavily mortgaged. A quick glance at my Schedules G and H and Appendix G  
of the GT Report establishes that the supposed Jakobstettel investments went  
the same route as the Plaza and Breadalbane investments: (1) payments to  
shareholder loans to Daniel and Ms. Reeve, (2) payments for expenses of the  
Reeve companies, and (3) payments to alleged victims/other individuals.  
Regarding that $100,000 payment to Grand River Contracting, it came from a  
$400,000 Jakobstettel investment from Marina Ognjanovski – see pages 4-5 of  
my Schedule G. The other $300,000 went to pay a Daniel shareholder loan,  
DPR overdraft and other individuals in the same pattern as all the other  
investments.  
[
2603] Putting the Plaza, Breadalbane and Jakobstettel investments together,  
by October of 2008, Daniel had borrowed $2.2 million (Plaza) and $3.45  
Breadalbane) and $2.6 million (Jakobstettel) for a total of $8.25 million at high  
(
interest rates. None of it had been invested as the investors had intended and it  
was all gone. Further, by October 2008, David and most of his employees had  
quit, leaving Daniel and DPR with no revenue stream. As the bookkeepers  
-
762 -  
testified, the Reeve companies were suffering losses because there was no  
money coming in to pay the bills. Daniel learned of the police investigation in  
December of 2008 and the Millionaire Mortgage deal was put on hold. Yet Daniel  
continued to tell investors about his big payday on the Millionaire Mortgage  
concept and continued to borrow and divert investors’ money.  
THE MILLIONAIRE MORTGAGE INVESTMENTS  
[2604]  
One of the cornerstones of Daniel’s defence is that he was expecting a  
big payout from his Millionaire Mortgage concept. However, Daniel admitted that  
the Millionaire Mortgage concept produced less than $100,000 in revenue in  
2008 and cannot say how many Millionaire Mortgage mortgages were actually  
sold. Daniel testified that this was his biggest project and he was sitting on a  
potential $20 million payday.  
[2605]  
There were only a few actual Millionaire Mortgage mortgage  
applications ever presented in evidence. The only evidence of any promotions or  
investments in the Millionaire Mortgage concept was possibly a payment of  
$11,743.48 to the Dearborn Michigan Ritz Carleton for a conference to promote  
DPR and the Millionaire Mortgage concept in November of 2008 – see Brad  
Ashman chart at page 21 of my Schedule G. One would think that if this  
Millionaire Mortgage concept was the goldmine that Daniel said it would be, one  
would see a larger investment in promotions to be made and a larger return in  
revenues to be generated.  
 
-
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The 41 alleged victims from November 28, 2007 to February 6, 2009  
paid just under $3 million for investments in Millionaire Mortgage.  
[2606]  
[2607]  
This approximate $3 million was disbursed not for the investments  
intended but the usual diversions: (1) shareholder loans to Daniel and Ms.  
Reeve, (2) expenses of the Reeve companies, and (3) payments to the alleged  
victims/other individuals.  
[2608]  
The first Millionaire Mortgage Inc. investment from the alleged victims  
came from Pat Westerhout for $800,000 on November 28, 2007. As previously  
discussed, Daniel knew in advance that he required $500,000 to pay his ex-wife  
on November 30, 2007 so he diverted $500,000 from this Millionaire Mortgage  
investment to pay her. He testified initially that this transfer was put in the books  
as a shareholder loan to Daniel, but the evidence from Mr. Nagel is that it was  
put in the books as a shareholder loan to Ms. Reeve, which was a falsehood.  
None of the rest of the $300,000 went into any form of Millionaire Mortgage  
investment but was diverted per the usual non-investment destinations.  
[2609]  
Regarding Ms. Westerhout, she entered into a $700,000 three-month  
agreement with Millionaire Mortgage on March 1, 2008 at 25 percent annual  
interest (see Exhibit Stick File 42, G). This was not the only Millionaire  
Mortgage instrument that would pay very high and extravagant interest.  
-
764 -  
[2610]  
The next Millionaire Mortgage investment was by Peter Steenbergen  
on January 8 and 16 2008 of $200,000 and $249,437.90 respectively. Of these  
funds, $244,441.35 was diverted to New York lawyers to pay a deposit of  
$263,506.50 for the Park Plaza. Daniel had already collected over $2 million for  
the Plaza but the money was all diverted and gone. This deposit disappeared, as  
well, in May of 2008 when it was forfeited for Daniel’s failing to close the Plaza  
deal. Later in June of 2008, Daniel urged Mr. Steenbergen to invest in a New  
York hotel, presumably to cover his tracks so that he could later say that Mr.  
Steenbergen’s money did in fact go in part to the Plaza.  
[2611]  
The last Plaza and Breadalbane agreements were made on June 27,  
2008; the last Jakobstettel agreement was made on September 2, 2008.  
Basically, as the summer of 2008 wore on and people started to leave the Reeve  
businesses, the only deal left in Daniel’s stable of illusory “low-risk” corporate  
bond deals was the Millionaire Mortgage deal.  
[2612]  
Kevin Hillman entered a Millionaire Mortgage bond on July 9, 2008; in  
year 3, he was promised a payment equivalent to 80 to 84 percent interest.  
Daniel said it was a typo and he had to be competitive and keep clients happy –  
see paragraph 2195 and 2196 of this judgment. Andrew Eplen entered into a  
corporate bond with Millionaire Mortgage on August 29, 2008 that would, in year  
5, pay 65.7 percent interest, which is above the criminal rate of interest. Daniel  
said that he did this to avoid churning but the commission fees would be a  
-
765 -  
fraction of the interest he was paying – see paragraph 2191 – 2192 of this  
judgment. In October of 2008, Lynne Hoffman entered into a bond with  
Millionaire Mortgage that would pay interest of 60 percent in the final year 2011.  
Daniel indicated that it was done to avoid churning. The Crown pointed out that  
the commission was 3 percent, equalling $3,000 to $3,600 as opposed to the  
$36,232 interest. Why not return the commission? Daniel responded that it was  
just good business to compensate the client for withholding taxes. As indicated  
earlier, Daniel paid Isaac Thiessen an extra $9,000 on his investment of  
$40,890.24 by giving him a $50,000 Millionaire Mortgage bond – see Exhibit  
Stick File 41, D.  
[2613] My Schedule I outlines the excessive promised returns on investment,  
and they all come after the signing of the separation agreement with Ms. Reeve.  
[2614]  
As can be seen from my Schedule A, 19 of 29 alleged victims who  
initially invested after the separation agreement got no payments at all. From  
May 23, 2008 onwards, 16 of 19 investors received no payments at all. Twelve of  
the 15 Millionaire Mortgage investors who invested from July 2008 to February  
2009 never received a single payment on either return of principal or interest. As  
can be seen from my Schedule H, 7 of those 15 Millionaire Mortgage investors  
were never given a copy of their bonds and two more did not get them until  
January 2009.  
-
766 -  
[2615]  
Certainly by November or December 2008, even on Mr. Reeve’s  
evidence, he was effectively out of business. David had left in October 2008 and  
IDC Financial informed Daniel in November of 2008, they would not pay DPR  
any more directly. By at least December, Daniel was aware of the criminal  
investigation and the Millionaire Mortgage deal was on hold. There were no  
revenues coming in but there were expenses and bills that could not be paid. By  
December of 2008, there was $2.2 million owing on the Plaza deal and no Plaza;  
there was $3.45 million owing on the Breadalbane and no Breadalbane; there  
was $2.6 million and more owing on the Jakobstettel, which was also heavily  
mortgaged. This $8.25 million was borrowed at high interest rates and interest  
payments and principal payments approaching $900,000 were due – see Exhibit  
332. Daniel was signing numerous payment schedules in the fall of 2008 and the  
winter and spring of 2009, promising to pay large sums of money back to  
investors – as an example see the October 16, 2008 schedule given to Ms.  
Westerhout where Daniel promises to repay just under $700,000 by the end of  
November of 2008 – see Exhibit Stick File 42, G.  
[2616]  
Added to the $8.25 million owing in December of 2008, I have not  
included other investments such as the Emerald Met and Bayfield investments –  
see my Schedule F. With the almost $3 million owing on the Millionaire  
Mortgage bonds, Daniel had taken almost $12 million from the 41 alleged victims  
–
see my Schedules F and G and pages 9 and 17 of the GT Report. When the  
-
767 -  
Crown asked Daniel if another $7 million was owing, Daniel indicated he did not  
know. Exhibit 261, Mr. Nagel’s PowerPoint presentation, indicates that investors  
and creditors provided over $19 million. This figure is consistent with the  
approximately $12 million invested by the 41 alleged victims and another $7  
million from other investors. This does not include interest. Given the high rates  
of interest promised by Daniel, a fair estimate would be that Daniel, with interest,  
probably owes double that $19 million. Accordingly, Daniel’s estimate at trial that  
he owes $14 million to $16 million is way off.  
[2617]  
Even though by December 2008 Daniel had no revenue streams and  
none anticipated, countless millions owing, and was under police investigation,  
Daniel continued to enter Millionaire Mortgage agreements that could never be  
paid back in full until February of 2009 – see my Schedule G.  
CONCLUSION REGARDING INTENT TO INVEST IN LOW-  
RISK INVESTMENTS  
[2618]  
My Schedules F and G and Appendix G of the GT Report outline  
approximately 70 transactions of deposits for investments made by the 41  
alleged victims. The pattern is the same over and over, some 70 times on  
investments made by the investors from January of 2007 until February of 2009.  
Daniel negotiated the deals and benefitted from the deposits. He was aware of  
the state of the losses and deepening crisis of his failing companies, which failure  
 
-
768 -  
was accelerated by his diverting $2 million to pay his ex-wife and falsely putting a  
large portion of the payments into the books as shareholder loans to Ms. Reeve.  
[2619]  
The monies for investments were significant. Of almost $12 million  
deposited, virtually nothing was invested in low-risk commercial investments as  
promised by Daniel. This state of affairs continued into the fall of 2008 and even  
though the bookkeepers told him that the debts could never be repaid, Daniel  
pressed on and continued to sell his “low-risk investments” and continued to  
divert the money to shareholder loans, business expenses and payments to the  
alleged investors/other individuals in a hope to appease at least some of them.  
By the end, many of the later investors received no paperwork, no payments and  
suffered a 100 percent loss. Realistically, by November or December 2008,  
Daniel’s actions constituted bald and unadorned theft.  
[2620]  
In the circumstances exhaustively detailed in what must by now seem  
like an endless judgment, Daniel’s evidence that he intended to use the money  
as told by his clients and that he made decisions to divert it afterward has no  
credibility at all. Further Daniel’s evidence that he did not tell his clients that their  
monies were going to be directed to his companies with cashflow problems  
because he did not know is an absurd fiction given the overwhelming evidence  
outlined that Daniel was intimately aware of the crushing cash crunch that all of  
his companies were experiencing in 2007 to 2008.  
-
769 -  
[2621]  
I find that the evidence is overwhelming that Daniel never intended to  
invest his clients’ money in “low-risk” investments but lied to them knowing that  
he would divert their monies to himself, his ex-wife, and his failing companies’  
expenses and to other investors whose payments were coming due. Daniel  
deliberately did not disclose any of this information to the alleged 41 victims.  
6. OVERALL CONCLUSION REGARDING THE CREDIBILITY OF  
DANIEL REEVE  
[2622]  
As outlined in disturbing detail above, Daniel’s evidence was  
contradicted in material ways by:  
1. Most, if not all, of the 41 alleged victims;  
2. Five bookkeepers – Karen Gingrich, Cynthia Taylor, Kimberly Kroeker,  
Diane Intini, Sarah Snow;  
3
4
5
6
7
8
. David Reeve, Daniel’s brother;  
. Cheryl Reeve, Daniel’s wife;  
. The business and banking records of the Reeve companies;  
. The GT Report with accompanying schedules;  
. Mr. Nagel and the Nagel Report;  
. Peter Egger, the owner of the Breadalbane Inn; and  
 
-
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9. By Daniel Reeve himself.  
[2623]  
Accordingly, for the reasons outlined, Daniel is not a credible witness. I  
do not believe him and his evidence does not raise a reasonable doubt.  
I. OVERALL CONCLUSIONS AS TO THE FACTS  
[2624] I have gone over the minutiae of the evidence presented at trial.  
Surprisingly, once it is all considered, the facts and conclusions are quite simple.  
[2625]  
I would summarize my findings and conclusions from the evidence as  
follows:  
1.  
Up until January of 2007, Daniel was a successful financial advisor  
who had built a respectable business. Daniel had published many  
books on successful and unique approaches to investing – see  
Exhibit 7.  
2.  
David Reeve testified that Daniel lived “large.” Howard Southwood  
testified in 2007 to 2008 he did renovations for Daniel at his home on  
South Street and at Daniel’s farm, which was purchased in 2005. At  
the farm, Mr. Southwood put in an exercise room, a $70,000 to  
$
80,000 bathroom with marble, and a seven-car garage at a cost of  
150,000. A nine-hole golf course was planned but cancelled. For  
$
 
-
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South Street, $50,000-$80,000 was spent on a new bathtub, garage  
exercise room and renovations for Ms. Reeve’s office.  
3.  
On June 30, 2008, when Daniel was having cashflow problems with  
his companies, he and his girlfriend Annie Smith entered into an  
agreement of purchase and sale regarding a Bayfield property for $1  
million. The deal was to close on December 1, 2008 but did not.  
Daniel’s $10,000 deposit was forfeited.  
4.  
In cross-examination, Daniel confirmed that he had a driver (Tony  
Herlick) and used the company’s stretch limo two or three times a  
week in 2007 to 2008. Daniel also had access to a number of other  
high-end vehicles. A helicopter was used once to escort a lawyer and  
a guest to Windsor, and Daniel disagreed that was an expensive  
extravagance as you have to look at “use and functionality.” To quote  
David, Daniel indeed lived “large.”  
5
.
.
Further, the DPR offices projected an aura of wealth (the Windsor  
office had a fountain and an iron fence and one of the offices had a  
bank of TVs).  
6
I agree with the Crown that Daniel, in 2007 to 2008, projected an  
image of wealth and success. The suggestion was that a client could  
-
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be wealthy like him. To again quote Daniel’s brother, Daniel lived  
large.”  
“
7
.
.
Daniel lost his financial advisor licence in early January of 2007. He  
could no longer act as an active adviser to his clients.  
8
As previously discussed, the Reeve companies in 2007 and 2008  
were losing a great deal of money. As indicated in greater detail at  
paragraph 2354, the losses in 2007 were very severe and worsened  
in 2008. The bookkeepers estimated the losses to be in the area of $2  
million per year.  
9.  
This bleak financial picture was further aggravated by Daniel’s  
divorce. In November of 2007, Mr. Reeve agreed to pay his ex-wife $3  
million from November 30, 2007 to August 1, 2008 in $500,000  
installments. It was decided that a number of the payments would be  
put into the books dishonestly as a shareholder loan to Ms. Reeve  
and later written off. This $3 million in payments was more than  
$750,000 more than the income of all the Reeve companies over the  
entire indictment period of January 2007 to September of 2009.  
10. Something had to be done as Daniel could no longer act as a financial  
advisor after January of 2007 but wished to maintain his lifestyle and  
-
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his failing businesses. Complicating matters further in 2007 was a  
separation from his wife.  
1
1. Accordingly, Daniel commenced a series of Ponzi schemes in the  
hope of staying afloat.  
1
2. The Reeve “plan” was to sell corporate bonds and investments,  
advertised falsely as low-risk or no-risk commercial ventures or  
investments. Daniel knew in advance of misdirecting investors that the  
monies he was raising were not going into the investments as  
advertised. Instead, the monies were going to be diverted into three  
priority expenditures: (1) shareholder loans to Daniel and Cheryl  
Reeve including spousal support and equalization payments to his  
wife, a large part of which were to be entered into the books, falsely,  
as a shareholder loan to Ms. Reeve and accordingly an asset which  
was to be written off later; (2) payments to prop up his failing  
companies; and (3) payments to former investors in a Ponzi-like  
distribution. The 41 alleged victims were not given any disclosure  
regarding this information.  
1
3. The first venture was a plan to sell corporate bonds for a “low-risk”  
commercial real estate investment in the Park Plaza Hotel in New  
York City.  
-
774 -  
1
4. From June of 2007 until November 1, 2007, Daniel raised $2.15  
million for a “low-risk” real estate investment in the Plaza. All of this  
money was immediately diverted to support the failing Reeve  
businesses and Daniel’s lifestyle. By early November of 2007, it was  
all gone. Even the deposit cheque of $263,500 dated August 19, 2007  
was returned NSF even though, by the end of August 2007, $800,000  
had been raised from investors.  
1
5. I find that Daniel had no intention of using the $2.15 million he had  
raised from the original investors to purchase the Park Plaza. He  
needed that $2.15 million to keep his businesses and lifestyle afloat.  
At the highest, Daniel hoped to buy the Plaza at some future time with  
monies raised from future investors and by funds raised through  
mortgages. In fact, Daniel was able to raise the initial deposit mainly  
from a Mr. Steenbergen pursuant to a Millionaire Mortgage investment  
in January of 2008. The deal was cancelled in May of 2008 as Daniel  
had no money to complete the deal and could not get financing for  
mortgages on the Park Plaza.  
1
6. Meanwhile, in November of 2007 negotiations were ongoing with Ms.  
Reeve. She testified that after their separation in early 2007, Daniel  
was terrified of an audit being done when she brought it up. Daniel  
would become very angry and did not want the audit done. Given the  
-
775 -  
losses of the Reeve companies and the diversion of the Plaza monies  
in 2007, Daniel’s terror toward an audit is understandable.  
1
7. Presumably, in order to avoid an audit, Daniel agreed to a valuation of  
his companies that was far in excess of what they were worth. Daniel  
agreed to pay Ms. Reeve $3 million from November 30, 2007 to  
August 1, 2008. This $3 million was far in excess of what all the  
Reeve companies’ income was for all of 2007 through 2009.  
1
8. Daniel now advertised to his clients, in late 2007, low-risk investments  
in a company that would sell a revolutionary new concept, the  
Millionaire Mortgage. Daniel believed he was sitting on a $20 million  
payday. In fact, however, he testified that the concept made less than  
$
100,000 in 2008 and 2009. Daniel was not a credible witness. I  
suspect far less was made but, in any event, some amount less than  
100,000 was made.  
$
1
9. Ms. Reeve signed the separation agreement on November 26, 2007.  
Two days later, on November 28, 2007, one of Daniel’s clients, Pat  
Westerhout, entered into an $800,000 agreement with Millionaire  
Mortgage and provided cheques in that amount dated November 28,  
2007. The next day, on November 29, 2007, Daniel signed the  
agreement, deposited the Westerhout cheques. On December 4,  
-
776 -  
2007 he transferred $500,000 to Ms. Reeve. Mr. Nagel testified that  
the payment was put in the books as an asset and a shareholder loan  
to Ms. Reeve. This manoeuver was dishonest, as this payment was in  
furtherance of spousal support and an equalization payment. It was  
not a loan. The plan was to write off the loans to Ms. Reeve at some  
later point. Daniel testified that this payment was put in as a  
shareholder loan to him but this is not true. Daniel further testified that  
many of the payments to Ms. Reeve were bona fide shareholder loans  
to her, as put in the books, but this is yet another one of Daniel’s  
many lies and falsehoods.  
2
0. Daniel found another Ponzi scheme investment in the Breadalbane  
Inn. From March 3, 2008 to June 27, 2008, Daniel collected $3.45  
million for an alleged purchase of the Breadalbane. The purchase  
price of the Breadalbane was only $2.3 million, over $1 million less  
than what Daniel raised. His plan was to pay $500,000 down and do a  
vendor take-back mortgage for the rest. Peter Egger, the owner, was  
not comfortable with this arrangement. This was the reason that the  
purchase did not proceed, not the $300,000 private debt owed by the  
Eggers as Daniel alleged. Similar to the Plaza investment, Daniel took  
$3.45 million from the investors with no intent to invest their money in  
the Breadalbane purchase. The money for the Breadalbane purchase  
-
777 -  
would have to come, if at all, from future investors and mortgages.  
Similar to the Plaza investments, all of the money raised was diverted  
within a day or two to pay the big three priorities: (1) shareholder  
loans to Ms. Reeve and Daniel—really lifestyle, support and  
equalization payments; (2) the expenses of the failing Reeve  
companies; and (3) to pay interest and principal to investors in order  
to continue the Ponzi scheme as long as possible. None of this  
information was conveyed to the 41 alleged victims.  
2
1. Mr. Egger called off the Breadalbane deal in October 2008. Daniel  
attended at Mr. Egger’s home around Christmas of 2008 and tried to  
sweeten the pot. By that time, however, all of the money raised for the  
Breadalbane was long gone and Daniel found himself in a total  
financial crisis and under police investigation. I find that Daniel was  
just trying to cover his tracks so that he could say, as he did in court,  
that the Breadalbane deal was still ongoing when in fact it was  
officially dead in October 2008 but de facto dead much earlier as all  
the money raised for the Breadalbane disappeared many months  
earlier.  
2
2. From February of 2007 until September 2 of 2008, Daniel Reeve  
raised from the alleged victims over $2.75 million in supposed low-risk  
commercial real estate investments in the Jakobstettel. Giving the  
-
778 -  
defence the benefit of all doubts, at least $2.6 million was never  
invested in the Jakobstettel. The Jakobstettel was in fact heavily  
mortgaged by 2005 and on June 27, 2008 a further mortgage of  
$655,462 was added, further prejudicing the 41 alleged victims as  
none of their Jakobstettel Inn investments were registered on title.  
2
3. The bookkeepers testified that the Jakobstettel Inn was losing money  
in 2007 and 2008 and was not even able to meet operating expenses.  
It might be able to make a small profit if expenses were trimmed and  
there were no interest expenses.  
2
4. Similar to the Plaza and Breadalbane investments, the “low-risk”  
investments in the Jakobstettel were immediately diverted to the usual  
three priority payments that all investments were shovelled into: (1)  
shareholder loans to Ms. Reeve and Daniel; (2) the expenses of the  
failing Reeve companies; and (3) payments of interest and principal to  
investors in order to continue the Ponzi scheme for as long as  
possible. None of the 41 alleged victims were told this information.  
2
5. Almost $3 million was raised from the Millionaire Mortgage  
investments from November of 2007 until February 6, 2009. This  
money was shovelled almost immediately into the three priority  
payments. All of the previous investments in the Plaza, Breadalbane  
-
779 -  
and Jakobstettel paid out 12 to 20 percent when the corporate rate,  
according to Daniel, was 6 to 7 percent. However, in the summer of  
2008 and onwards, a number of Millionaire Mortgage investments  
were committed to pay an effective interest rate of 60 to 80 percent in  
the final year of payout – see my Schedule I.  
2
6. The Millionaire Mortgage investments from summer of 2008, when the  
cash crunch was severe, produced a 100 percent loss in many cases,  
and numerous clients got no documentation. By November or  
December of 2008, Daniel had no revenue streams, a tsunami of  
debts, no Breadalbane or Plaza deals, and bleeding bank accounts at  
the Jakobstettel. Yet, Daniel continued to enter into Millionaire  
Mortgage agreements in November 2008 to February 2009 knowing  
that the monies would be diverted to the three priority items, never to  
be repaid to the investors.  
2
7. Like the Plaza, Breadalbane, and Jakobstettel cases, virtually none of  
the $3 million intended for Millionaire Mortgage was invested in  
Millionaire Mortgage. Instead, it was diverted to pay the three priority  
items. None of this information was provided to the 41 alleged victims.  
28. The end result is that Daniel took approximately $12 million from the  
41 victims without intention to invest the money in low-risk commercial  
-
780 -  
real estate or the Millionaire Mortgage venture as he promised.  
Instead he diverted the money to pay (1) his support and equalization  
payments to his ex-wife and shareholder loans to himself, (2)  
expenses for his failing businesses, and (3) some interest and, more  
rarely, some principal in order to prolong his Ponzi scheme. None of  
this information was disclosed to the 41 alleged victims. The result is  
that the 41 alleged victims have lost over $10 million – see my  
Schedules F and G at pages 20 and 25 respectively.  
POSITION OF THE DEFENCE  
[2626]  
The defence contends that Daniel is a credible witness and, at the very  
least, that his evidence raises a reasonable doubt. The defence position is that  
Daniel engaged in conduct solely directed towards the growth and expansion of  
his business, and that he acted to save his corporate entities from bankruptcy.  
[2627]  
The defence submits that Daniel’s actions may have been over-  
ambitious, negligent or even delusional, but at no point in time did his actions  
amount to criminal fraud. The defence submits that Daniel’s conduct may not  
have been the most prudent or conservative course of action but at no time did  
he conduct himself with any intent to defraud anyone.  
 
-
781 -  
POSITION OF THE CROWN  
[2628]  
The Crown’s position is that the accused acted with deceit, falsehood  
and by other fraudulent means to deprive the 41 alleged victims of millions of  
dollars. He acted with the requisite intent to defraud.  
[2629]  
The Crown outlines that the following acts constitute fraud:  
1. Lying about owning the Breadalbane;  
2
. Lying about the imminent nature of the closing of the purchase of  
the Breadalbane;  
3
4
5
. Lying about the Breadalbane having the “best year ever”;  
. Lying about owning the Plaza suite;  
. Lying about investment money being held in lawyers’ trust  
accounts;  
6
7
8
. Lying about the true destination of the funds he was taking for the  
Millionaire Mortgage workhorse accounts;  
. Failing to disclose his dire financial situation to prospective  
investors;  
. Failing to disclose the extent to which his assets, such as the  
Jakobstettel, were leveraged;  
 
-
782 -  
9. Making promises of repayment which he knew he could not  
satisfy;  
10. Redirecting corporate funds to personal purposes;  
11. Drawing from investor funds for personal purposes when his  
companies were experiencing a “cash crunch”;  
1
1
1
1
2. Using investor money to satisfy his separation agreement  
obligations;  
3. Diverting investor funds to failing businesses, which had nothing  
to do with the original investment;  
4. Preferring certain creditors over others (i.e., Nancy Herlick,  
Andrea Morgan) while still taking in investor money;  
5. Making outlandish promises of high interest payments, repayment  
of taxes and deferred sales charges, which he knew he could  
never satisfy;  
16. Lying about the risk profile of his investments, i.e., stating they  
were “low-risk” when they were clearly not;  
17. Abusing his position of trust to access investor money; and  
-
783 -  
18. In some cases, targeting elderly, unsophisticated or inexperienced  
investors.  
[2630]  
For the reasons outlined in this judgment, I reject the defence position,  
as detailed above. I reject Daniel’s evidence. He is not a credible witness for  
reasons extensively analyzed previously in this judgment. Daniel’s evidence,  
coupled with Mr. Nagel’s evidence and/or any other Crown and defence  
evidence, does not raise a reasonable doubt. I accept the Crown’s position that  
there were many instances of fraudulent actions accompanied by the requisite  
fraudulent intent.  
LAW  
[2631]  
This is a case where credibility is important. In assessing the testimony  
of the accused, I have followed the road map as laid out by Cory J. in R. v. W.  
(
D.), [1991] 1 S.C.R. 742, 63 C.C.C. (3d) 397, at p. 409, as follows:  
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. Second, 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)  
5
46 (Ont. C.A.), approved in R. v. Morin, supra, at p. 357.  
Ideally, appropriate instructions on the issue of credibility should be  
given, not only during the main charge, but on any recharge. A trial  
judge might well instruct the jury on the question of credibility along  
these lines:  
 
-
784 -  
First, if you believe the evidence of the accused,  
obviously you must acquit.  
Second, if you do not believe the testimony of the  
accused but you are left in reasonable doubt by it,  
you must acquit.  
Third, even if you are not left in doubt by the  
evidence of the accused, you must ask yourself  
whether, on the basis of the evidence which you  
do accept, you are convinced beyond a  
reasonable doubt by that evidence of the guilt of  
the accused.  
[2632]  
I find that I do not believe the accused Daniel Reeve. I also find that his  
evidence and the defence evidence does not leave me in a state of reasonable  
doubt as to his guilt in the context of the evidence as a whole.  
[2633]  
I must accordingly ask, even though I am not left in doubt by the  
evidence of the accused and the defence evidence, if, on the basis of the  
evidence I do accept, whether I am convinced beyond a reasonable doubt of the  
guilt of the accused.  
[
2634] The leading case involving the law of criminal fraud is R. v. Théroux,  
1993] 2 S.C.R. 5, 79 C.C.C. (3d) 449. Justice McLachlin (as she then was)  
[
outlined the actus reus of fraud as follows, at pp. 456-458:  
Since the mens rea of an offence is related to its actus reus, it is  
helpful to begin the analysis by considering the actus reus of the  
offence of fraud. Speaking of the actus reus of this offence, Dickson  
J. (as he then was) set out the following principles in Olan:  
-
785 -  
(
(
(
i) the offence has two elements: dishonest act and  
deprivation;  
ii) the dishonest act is established by proof of deceit,  
falsehood or “other fraudulent means”;  
iii) the element of deprivation is established by proof of  
detriment, prejudice, or risk of prejudice to the  
economic interests of the victim, caused by the  
dishonest act.  
Olan marked a broadening of the law of fraud in two respects. First,  
it overruled previous authority which suggested that deceit was an  
essential element of the offence. Instead, it posited the general  
concept of dishonesty, which might manifest itself in deceit,  
falsehood or some other form of dishonesty. Just as what  
constitutes a lie or a deceitful act for the purpose of the actus reus  
is judged on the objective facts, so the “other fraudulent means” in  
the third category is determined objectively, by reference to what a  
reasonable person would consider to be a dishonest act. Second,  
Olan made it clear that economic loss was not essential to the  
offence; the imperilling of an economic interest is sufficient even  
though no actual loss has been suffered. By adopting an expansive  
interpretation of the offence, the Court established fraud as an  
offence of general scope capable of encompassing a wide range of  
dishonest commercial dealings.  
Subsequent cases followed Olan’s lead, fleshing out the elements  
of the offence set out in Olan in a broad and purposive manner.  
One of the first questions which arose was whether the third type of  
dishonest conduct, “other fraudulent means”, was a super-added  
element which the Crown must prove in addition to proving either  
deceit or falsehood. This was rejected in R. v. Doren (1982), 36  
O.R. (2d) 114 (C.A.); see also R. v. Kirkwood (1983), 42 O.R. (2d)  
6
5 (C.A.). In a number of subsequent cases, courts have defined  
the sort of conduct which may fall under this third category of other  
fraudulent means to include the use of corporate funds for personal  
purposes, non-disclosure of important facts, exploiting the  
weakness of another, unauthorized diversion of funds, and  
unauthorized arrogation of funds or property: R. v. Black and  
Whiteside (1983), 5 C.C.C. (3d) 313 (Ont. C.A.); R. v. Shaw (1983),  
4
2
C.C.C. (3d) 348 (N.B.C.A.); R. v. Wagman (1981), 60 C.C.C. (2d)  
3 (Ont. C.A.); R. v. Rosen (1979), 55 C.C.C. (2d) 342 (Ont. Co.  
Ct.); R. v. Côté and Vézina (No. 2) (1982), 3 C.C.C. (3d) 557 (Que.  
C.A.); R. v. Hansen (1983), 25 Alta. L.R. (2d) 193 (C.A.); R. v.  
Geddes (1979), 52 C.C.C. (2d) 230 (Man. C.A.); R. v. Currie; R. v.  
Bruce (1984), 5 O.A.C. 280, and R. v. Kirkwood, supra. As noted  
above, where it is alleged that the actus reus of a particular fraud is  
-
786 -  
“other fraudulent means”, the existence of such means will be  
determined by what reasonable people consider to be dishonest  
dealing. In instances of fraud by deceit or falsehood, it will not be  
necessary to undertake such an inquiry; all that need be determined  
is whether the accused, as a matter of fact, represented that a  
situation was of a certain character, when, in reality, it was not.  
A further question, whether it was necessary for the accused to  
have profited by the fraud, had been uniformly answered in the  
negative prior to Olan: Welham v. Director of Public Prosecutions,  
[
(
2
1961] A.C. 103 (H.L.); R. v. Melnyk (1947), 90 C.C.C. 257  
B.C.C.A.); R. v. Rodrigue, Ares and Nantel (1973), 17 C.C.C. (2d)  
52 (Que. C.A.); R. v. Allsop (1976), 64 Cr. App. R. 29, and R. v.  
Huggett (1978), 42 C.C.C. (2d) 198 (Ont. C.A.). In Olan, this Court  
affirmed this rule at pp. 1182-83.  
[2635]  
Justice McLachlin discussed the mens rea of criminal fraud in Théroux  
at pp. 458-461:  
This brings me to the question of whether the test for mens rea is  
subjective or objective. Most scholars and jurists agree that, leaving  
aside offences where the actus reus is negligence or inadvertence  
and offences of absolute liability, the test for mens rea is subjective.  
The test is not whether a reasonable person would have foreseen  
the consequences of the prohibited act, but whether the accused  
subjectively appreciated those consequences at least as a  
possibility. In applying the subjective test, the court looks to the  
accused's intention and the facts as the accused believed them to  
be: G. Williams, Textbook of Criminal Law (2nd ed. 1983), at pp.  
7
27-28.  
Two collateral points must be made at this juncture. First, as  
Williams underlines, this inquiry has nothing to do with the  
accused’s system of values. A person is not saved from conviction  
because he or she believes there is nothing wrong with what he or  
she is doing. The question is whether the accused subjectively  
appreciated that certain consequences would follow from his or her  
acts, not whether the accused believed the acts or their  
consequences to be moral. Just as the pathological killer would not  
be acquitted on the mere ground that he failed to see his act as  
morally reprehensible, so the defrauder will not be acquitted  
because he believed that what he was doing was honest.  
-
787 -  
The second collateral point is the oft-made observation that the  
Crown need not, in every case, show precisely what thought was in  
the accused's mind at the time of the criminal act. In certain cases,  
subjective awareness of the consequences can be inferred from the  
act itself, barring some explanation casting doubt on such inference.  
The fact that such an inference is made does not detract from the  
subjectivity of the test.  
Having ventured these general comments on mens rea, I return to  
the offence of fraud. The prohibited act is deceit, falsehood, or  
some other dishonest act. The prohibited consequence is depriving  
another of what is or should be his, which may, as we have seen,  
consist in merely placing another's property at risk. 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, 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.  
2
5
This applies as much to the third head of fraud, “other  
fraudulent means”, as to lies and acts of deceit. Although other  
fraudulent means have been broadly defined as means which are  
“dishonest”, it is not necessary that an accused personally consider  
these means to be dishonest in order that he or she be convicted of  
fraud for having undertaken them. The “dishonesty” of the means is  
relevant to the determination whether the conduct falls within the  
type of conduct caught by the offence of fraud; what reasonable  
people consider dishonest assists in the determination whether the  
actus reus of the offence can be made out on particular facts. That  
established, it need only be determined that an accused knowingly  
undertook the acts in question, aware that deprivation, or risk of  
deprivation, could follow as a likely consequence.  
-
788 -  
I have spoken of knowledge of the consequences of the fraudulent  
act. There appears to be no reason, however, why recklessness as  
to consequences might not also attract criminal responsibility.  
Recklessness presupposes knowledge of the likelihood of the  
prohibited consequences. It is established when it is shown that the  
accused, with such knowledge, commits acts which may bring  
about these prohibited consequences, while being reckless as to  
whether or not they ensue.  
These doctrinal observations suggest that the actus reus of the  
offence of fraud will be established by proof of:  
1
. the prohibited act, be it an act of deceit, a falsehood or some  
other fraudulent means; and  
2
. deprivation caused by the prohibited act, which may consist  
in actual loss or the placing of the victim’s pecuniary interests  
at risk.  
Correspondingly, the mens rea of fraud is established by proof of:  
1
2
. subjective knowledge of the prohibited act; and  
. subjective knowledge that the prohibited act could have as a  
consequence the deprivation of another (which deprivation  
may consist in knowledge that the victim’s pecuniary  
interests are put at risk).  
Where the conduct and knowledge required by these definitions are  
established, the accused is guilty whether he actually intended the  
prohibited consequence or was reckless as to whether it would  
occur.  
The inclusion of risk of deprivation in the concept of deprivation in  
Olan requires specific comment. The accused must have subjective  
awareness, at the very least, that his or her conduct will put the  
property or economic expectations of others at risk. As noted  
above, this does not mean that the Crown must provide the trier of  
fact with a mental snapshot proving exactly what was in the  
accused's mind at the moment the dishonest act was committed. In  
certain cases, the inference of subjective knowledge of the risk may  
be drawn from the facts as the accused believed them to be. The  
accused may introduce evidence negating that inference, such as  
evidence that his deceit was part of an innocent prank, or evidence  
of circumstances which led him to believe that no one would act on  
his lie or deceitful or dishonest act. But in cases like the present  
one, where the accused tells a lie knowing others will act on it and  
-
789 -  
thereby puts their property at risk, the inference of subjective  
knowledge that the property of another would be put at risk is clear.  
[2636]  
Daniel testified that he thought he was doing nothing wrong. Justice  
McLachlin addressed this issue in Théroux at p. 463-465 as follows:  
Pragmatic considerations support the view of mens rea proposed  
above. A person who deprives another person of what the latter has  
should not escape criminal responsibility merely because, according  
to his moral or her personal code, he or she was doing nothing  
wrong or because of a sanguine belief that all will come out right in  
the end. Many frauds are perpetrated by people who think there is  
nothing wrong in what they are doing or who sincerely believe that  
their act of placing other people's property at risk will not ultimately  
result in actual loss to those persons. If the offence of fraud is to  
catch those who actually practise fraud, its mens rea cannot be cast  
so narrowly as this. As stated in R. v. Allsop, supra, approved by  
this Court in Olan, at p. 1182:  
Generally the primary objective of fraudsmen is to  
advantage themselves. The detriment that results to  
their victims is secondary to that purpose and  
incidental. It is "intended" only in the sense that it is a  
contemplated outcome of the fraud that is perpetrated.  
The law of fraud must be sufficiently broad to catch this secondary  
incident of the defrauder's purpose or it will be of little avail.  
This approach conforms to the conception of the offence of fraud  
which imbues this Court’s decision in Olan. Olan points the way to a  
conception of fraud broad enough in scope to encompass the entire  
panoply of dishonest commercial dealings. It defines the actus reus  
accordingly; the offence is committed whenever a person deceives,  
lies or otherwise acts dishonestly, and that act causes deprivation  
(including risk of deprivation) to another. To adopt a definition of  
mens rea which requires subjective awareness of dishonesty and a  
belief that actual deprivation (as opposed to risk of deprivation) will  
result, is inconsistent with Olan’s definition of the actus reus. The  
effect of such a test would be to negate the broad thrust of Olan and  
confine the offence of fraud to a narrow ambit, capable of catching  
only a small portion of the dishonest commercial dealing which Olan  
took as the target of the offence of fraud.  
The question arises whether the definition of mens rea for fraud  
which I have proposed may catch conduct which does not warrant  
-
790 -  
criminalization. I refer to the fear, reflected in the appellate  
decisions adopting a narrower definition of the required mens rea,  
that the reach of the offence of fraud may be extended beyond  
criminal dishonesty to catch sharp or improvident business  
practices which, although not to be encouraged, do not merit the  
stigma and loss of liberty that attends the criminal sanction. The  
concern is that any misrepresentation or practice which induces an  
incorrect understanding or belief in the minds of customers, or  
which causes deprivation, will become criminal. As Marshall J.A. put  
it in Mugford, supra, at pp. 175-76:  
.
.. it is not sufficient to base fraud merely upon a  
finding that the appellant induced a state of mind in his  
customers which was not correct. Any  
misrepresentation may have that effect. Criminal  
dishonesty extends further... .  
It would be a startling extension of criminal liability if  
every statement urging the public to purchase one's  
wares because only a limited supply remain were by  
itself to be visited with criminal sanction.  
This poses starkly the critical question: does a view of the offence of  
fraud which catches a broad range of dishonest commercial dealing  
also catch conduct which should not be regarded as criminal, but  
rather left to the civil sanction?  
In my view, the approach to the offence of fraud adopted in Olan  
and perused in these reasons does not take us out of the proper  
domain of the criminal sanction. To establish the actus reus of  
fraud, the Crown must establish beyond a reasonable doubt that the  
accused practised deceit, lied, or committed some other fraudulent  
act. Under the third head of the offence it will be necessary to show  
that the impugned act is one which a reasonable person would see  
as dishonest. Deprivation or the risk of deprivation must then be  
shown to have occurred as a matter of fact. To establish the mens  
rea of fraud the Crown must prove that the accused knowingly  
undertook the acts which constitute the falsehood, deceit or other  
fraudulent means, and that the accused was aware that deprivation  
could result from such conduct.  
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. Neither a negligent  
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791 -  
misstatement, nor a sharp business practice, will suffice, because in  
neither case will the required intent to deprive by fraudulent means  
be present. A statement made carelessly, even if it is untrue, will not  
amount to an intentional falsehood, subjectively appreciated. Nor  
will any seizing of a business opportunity which is not motivated by  
a person's subjective intent to deprive by cheating or misleading  
others amount to an instance of fraud. 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.  
[2637]  
In R. v. Zlatic, [1993] 2 S.C.R. 29, 79 C.C.C. (3d) 466, McLachlin J.  
discussed the third branch of fraud, “other fraudulent means,” at pp. 476-481, as  
follows:  
The elements of the offence of fraud are discussed in a general  
fashion in R. v. Théroux, [1993] 2 S.C.R. 5, released  
simultaneously. For the purposes of this case, it suffices to state  
that the actus reus of fraud will be established by proof of:  
1
. the prohibited act, be it an act of deceit, a falsehood or some  
other fraudulent means; and  
2
. deprivation caused by the prohibited act, which may consist  
in actual loss or the placing of the victim’s pecuniary interests  
at risk.  
Correspondingly, the mens rea of fraud is established by proof of:  
1
2
. subjective knowledge of the prohibited act; and  
. subjective knowledge that the prohibited act could have as a  
consequence the deprivation of another (which deprivation  
may consist in knowledge that the victim’s pecuniary  
interests are put at risk).  
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792 -  
Where the conduct and knowledge required by these definitions are  
established, the accused is guilty whether he actually intended the  
prohibited consequence or was reckless as to whether it would  
occur.  
…
2
. The Actus Reus  
The trial judge did not unequivocally find a lie or an act of deceit.  
Therefore the question is whether the scheme outlined constitutes  
“other fraudulent means” within the meaning of the third head of the  
offence as set out in s. 380(1) of the Criminal Code. In my view, it  
does.  
(i) Fraud by “Other Fraudulent Means”  
In Olan, supra, Dickson J. (as he then was) had the following to say  
about the phrase “other fraudulent means” (at p. 1180):  
.
.. proof of deceit is not essential to support a  
conviction [for fraud]... . The words ‘other fraudulent  
means’ in s. 338(1) [now s. 380(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.  
Most frauds continue to involve either deceit or falsehood. As is  
pointed out in Théroux, proof of deceit or falsehood is sufficient to  
establish the actus reus of fraud; no further proof of dishonest  
action is needed. However, the third category of “other fraudulent  
means” has been used to support convictions in a number of  
situations where deceit or falsehood cannot be shown. These  
situations include, to date, the use of corporate funds for personal  
purposes, non-disclosure of important facts, exploiting the  
weakness of another, unauthorized diversion of funds, and  
unauthorized arrogation of funds or property: R. v. Black and  
Whiteside (1983), 5 C.C.C. (3d) 313 (Ont. C.A.); R. v. Shaw (1983),  
4
2
C.C.C. (3d) 348 (N.B.C.A.); R. v. Wagman (1981), 60 C.C.C. (2d)  
3 (Ont. C.A.); R. v. Rosen (1979), 55 C.C.C. (2d) 342 (Ont. Co.  
Ct.), R. v. Côté and Vézina (No. 2) (1982), 3 C.C.C. (3d) 557 (Que.  
C.A.); R. v. Hansen (1983), 25 Alta. L.R. (2d) 193 (C.A.); R. v.  
Geddes (1979), 52 C.C.C. (2d) 230 (Man. C.A.); R. v. Currie; R. v.  
Bruce (1984), 5 O.A.C. 280, and R. v. Kirkwood (1983), 42 O.R.  
(2d) 65 (C.A.).  
The fundamental question in determining the actus reus of fraud  
within the third head of the offence of fraud is whether the means to  
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793 -  
the alleged fraud can properly be stigmatized as dishonest: Olan,  
supra. In determining this, one applies a standard of the reasonable  
person. Would the reasonable person stigmatize what was done as  
dishonest? Dishonesty is, of course, difficult to define with precision.  
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). Negligence does not suffice. Nor does  
taking advantage of an opportunity to someone else’s detriment,  
where that taking has not been occasioned by unscrupulous  
conduct, regardless of whether such conduct was wilful or reckless.  
The dishonesty of “other fraudulent means” has, 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.  
Cases which have considered instances of “other fraudulent means”  
by unauthorized diversion of funds provide concrete examples of  
the application of these principles. Olan, supra, concerned a  
complicated takeover transaction, in the course of which the new,  
post-takeover board of directors transferred the target company’s  
blue chip securities portfolio into investment vehicles which were  
basically valueless. The ultimate purpose of this transfer was to  
permit the parties who effected the takeover to pay the takeover  
price with monies from the target-company's securities portfolio.  
The Crown charged that the target company had been defrauded.  
In finding those who effected the takeover guilty of fraud by “other  
fraudulent means”, this Court did not consider decisive the mere  
fact that the target company’s portfolio was the means by which the  
takeover would be financed. Nor did this Court think it sufficient that  
the transfer to the new investment vehicles was a worthless  
investment decision. Latitude was granted for business operations  
and necessary business risk. The critical question was whether the  
transfer of investment vehicles could be considered within the bona  
fides business interest of the target company, or was more  
appropriately seen as a transfer designed to serve the personal  
ends of the parties who effected the transfer, bearing no relation to  
bona fides business purposes. The inference was that, in the  
circumstances of the case, the target company could not be  
reasonably thought willing to submit to a diversion of its funds to the  
personal ends of those effecting the takeover. This Court had no  
trouble concluding that the transfer could only be characterized as a  
-
794 -  
transfer for personal ends, which deprived the target company of  
something they had an interest in.  
Appellate courts have followed the same approach, asking whether  
the diversion of funds at issue could reasonably be thought to serve  
personal rather than bona fides business ends. For example, in R.  
v. Geddes, supra, a motorcycle dealer accepted money from a  
purchaser as advance payment on a particular type of motorcycle.  
After certain perfunctory efforts to obtain the desired motorcycle, the  
dealer deposited the money into his bank account, which was at the  
time overdrawn. The dealer immediately wrote cheques on this  
account to service his personal debts. The accused argued that he  
fully intended to carry through his undertaking to get the motorcycle,  
and failed only in because he was negligent in the operation of his  
business, in particular, in his expectation that he would shortly get a  
loan which would ultimately permit him to make good on his  
undertaking. The Manitoba Court of Appeal rejected this defence,  
emphasizing that there was nothing negligent or inadvertent in the  
dealer’s use of the purchaser’s money to satisfy his personal  
obligations.  
3
5
The Ontario Court of Appeal in R. v. Currie; R. v. Bruce,  
supra, dealt with a similar situation in the same fashion. The  
accused were in the business of investing funds in a certain  
company, “Water-Eze Products Ltd.”, but diverted these funds  
without notice to the investors to an aviation company known as  
“Aerobec”. There was no question of any misrepresentations. Nor  
was there any question as to what the accused were authorized to  
do with the funds given to them. The court, per Lacourcière J.A.,  
found that the fact that the accused used the funds in a manner  
which was not authorized was sufficient grounds for finding that the  
accused acted dishonestly.  
(ii) Application to this Appeal  
In the case at bar, the funds which the accused used to gamble  
represented the means by which the creditors, who had supplied  
the goods that produced these funds, could be repaid. The creditors  
had, to this extent, a pecuniary interest in the monies. The appellant  
had the legal right to use the funds he obtained from the sale of the  
goods. In this sense the position of the accused is similar to that of  
the parties who effected the takeover in Olan, or the motorcycle  
dealer in Geddes. It may be, depending on the circumstances, that  
had he chosen to invest them in the stock market or a real estate  
venture, he would not be guilty of criminal fraud because in the  
circumstances it could not be shown that these were amongst the  
acts prohibited by the offence. As was found in Olan, it is not  
-
795 -  
decisive that an accused use monies received in the course of  
business transactions in a manner which may not be that preferred  
or selected by his creditors, or those with some other pecuniary  
interest in the monies.  
The appellant did not, however, have an unrestricted right to use  
these funds as he pleased. In accepting these goods with no  
concern for payment and in diverting the funds to a non-business,  
notoriously risky enterprise, he put these funds to a wrongful use. I  
am satisfied that a reasonable person would regard as dishonest a  
scheme involving the acceptance of merchandise for resale without  
concern for repayment and the diversion of the proceeds to a  
reckless gambling adventure. The distinction is the same as the  
distinction between a corporate officer using corporate funds for  
unwise business purposes, which is not fraud, and the diversion of  
corporate funds to private purposes having nothing to do with  
business. Unwise business practices are not fraudulent. The  
wrongful use of money in which others have a pecuniary interest for  
purposes that have nothing to do with business, may however, in  
appropriate circumstances, constitute fraud.  
The fact that the appellant had legal title to the monies he gambled  
away does not alter the result. Fraud looks to the substance of the  
matter. The authorities make it clear that it is unnecessary for a  
defrauding party to profit from his or her fraud in order to be  
convicted; it is equally unnecessary that the victims of a fraud suffer  
actual pecuniary loss in order that the offence be made out: Olan,  
supra; R. v. Allsop (1976), 64 Cr. App. R. 29; R. v. Smith, [1963] 1  
O.R. 249 (C.A.); R. v. Knelson and Baran (1962), 38 C.R. 181  
(B.C.C.A.); Welham v. Director of Public Prosecutions, [1961] A.C.  
1
03 (H.L.); R. v. Melnyk (1947), 90 C.C.C. 257 (B.C.C.A.); R. v.  
Rodrigue, Ares and Nantel (1973), 17 C.C.C. (2d) 252 (Que. C.A.),  
and R. v. Huggett (1978), 42 C.C.C. (2d) 198 (Ont. C.A.). What is  
essential is not the formalities of profit or actual pecuniary loss, but  
that dishonest commercial practices which subject the pecuniary  
interest of others to deprivation or the risk of deprivation be visited  
with the criminal sanction. It follows that the fact that the defrauder  
may have legal title to the property affords no defence; it is not his  
title, but how he has obtained it and what he does with it that is  
important.  
The requirement of deprivation poses little difficulty on these facts.  
As the trial judge found, the appellant’s fraudulent scheme put the  
creditors’ pecuniary interest at risk. Olan establishes that this  
suffices. As is noted above, this deprivation was perpetrated by  
dishonest conduct which amounts to “other fraudulent means”.  
-
796 -  
3
. The Mens Rea  
The findings of the trial judge establish that the appellant, when he  
received the goods, did not care whether or not he paid for them,  
and then proceeded to sell them and divert the money received  
from their sale to gambling. As is pointed out in Théroux, released  
concurrently, fraud by “other fraudulent means” does not require  
that the accused subjectively appreciate the dishonesty of his or her  
acts. The accused must knowingly, i.e. subjectively, undertake the  
conduct which constitutes the dishonest act, and must subjectively  
appreciate that the consequences of such conduct could be  
deprivation, in the sense of causing another to lose his or her  
pecuniary interest in certain property or in placing that interest at  
risk.  
[2638]  
In a recent case, R. v. Riesberry, 2015 SCC 65, at paras. 20-28,  
Cromwell J. discussed the causal connection that is required to be proven  
between the fraudulent act and the victim’s deprivation:  
Like virtually all offences, fraud consists of two main components,  
the prohibited act (actus reus) and the required state of mind (mens  
rea). Mr. Riesberry’s submission focuses on one of the two aspects  
of the actus reus. Those two aspects are:  
1
. ... an act of deceit, a falsehood, or some other fraudulent  
means; and  
2
. deprivation caused by the prohibited act, which may  
consist in actual loss or the placing of the victim's  
pecuniary interests at risk.  
(R. v. Théroux, [1993] 2 S.C.R. 5, at p. 20; R. v. Zlatic, [1993] 2  
S.C.R. 29, at p. 43)  
The issue here concerns the aspect of deprivation. Mr. Riesberry  
contends that there was no evidence that his fraudulent conduct  
caused any risk of deprivation or that at least any such risk was too  
remote from his conduct. He submits that the Crown did not  
establish that anyone betting on the race had been induced to bet  
by, or would not have bet but for, his fraudulent conduct.  
-
797 -  
I cannot accept this position. Contrary to Mr. Riesberry’s contention,  
proof of fraud does not always depend on showing that the alleged  
victim relied on the fraudulent conduct or was induced by it to act to  
his or her detriment. What is required in all cases is proof that there  
is a sufficient causal connection between the fraudulent act and the  
victim’s risk of deprivation. In some cases, this causal link may be  
established by showing that the victim of the fraud acted to his or  
her detriment as a result of relying on or being induced to act by the  
accused’s fraudulent conduct. But this is not the only way the  
causal link may be established.  
We should first be clear about what Mr. Riesberry’s fraudulent  
conduct was before turning to the question of whether it caused a  
risk of deprivation. Fraudulent conduct for the purposes of a fraud  
prosecution is not limited to deception, such as deception by  
misrepresentations of fact. Rather, fraud requires proof of “deceit,  
falsehood or other fraudulent means”: s. 380(1). The term “other  
fraudulent means” encompasses “all other means which can  
properly be stigmatized as dishonest:” R. v. Olan, [1978] 2 S.C.R.  
1
175, at p. 1180. The House of Lords made the same point in Scott  
v. Metropolitan Police Commissioner, [1975] A.C. 819, a case  
approved by the Court in Olan (p. 1181). Fraud, according to  
Viscount Dilhorne in Scott, may consist of depriving “a person  
dishonestly of something which is his or of something to which he is  
or would or might but for the perpetration of the fraud be entitled”: p.  
8
39. And as Lord Diplock said, the fraudulent means “need not  
involve fraudulent misrepresentation such as is needed to constitute  
the civil tort of deceit”: ibid., at p. 841.  
It follows that where the alleged fraudulent act is not in the nature of  
deceit or falsehood, such as a misrepresentation of fact, the causal  
link between the dishonest conduct and the deprivation may not  
depend on showing that the victim relied on or was induced to act  
by the fraudulent act. This is such a case.  
Mr. Riesberry injected and attempted to inject the racehorses with  
performance enhancing substances. The use of such drugs is  
prohibited and trainers such as Mr. Riesberry are prohibited even  
from possessing loaded syringes at a racetrack. This conduct  
constituted “other fraudulent means” because in the highly  
regulated setting in which he acted, that conduct can “properly be  
stigmatized as dishonest”: Olan, at p. 1180. He carried out these  
dishonest acts for the purpose of affecting the outcome of two horse  
races on which members of the public placed bets. His dishonest  
acts, therefore, were intended to and in one case actually did result  
in the possibility that a horse that might otherwise have won would  
not. The conduct therefore caused a risk of deprivation to the  
-
798 -  
betting public: it created the risk of betting on a horse that, but for  
Mr. Riesberry’s dishonest acts, might have won and led to a payout  
to the persons betting on that horse. To return to Viscount  
Dilhorne’s words in Scott, Mr. Riesberry’s dishonest conduct  
created a risk that bettors would be deprived dishonestly of  
something which, but for the dishonest act, they might have  
obtained.  
There is a direct causal relationship between Mr. Riesberry’s  
dishonest acts and the risk of financial deprivation to the betting  
public. Simply put, a rigged race creates a risk of prejudice to the  
economic interests of bettors. Provided that a causal link exists, the  
absence of inducement or reliance is irrelevant. I agree with the  
Court of Appeal that Mr. Riesberry’s reliance on Vézina and Côté v.  
The Queen, [1986] 1 S.C.R. 2, is misplaced. That case made it  
clear that:  
[
f]raud consists of being dishonest for the  
purpose of obtaining an advantage and which  
results in prejudice or a risk of prejudice to  
someone’s ‘property, money or valuable  
security’. There is no need to target a victim ...  
and the victim may not be ascertained. [p. 19]  
This statement covers what Mr. Riesberry did.  
I conclude that the trial judge erred in law by finding that the betting  
public was not put at risk of deprivation by Mr. Riesberry’s dishonest  
acts and that any risk of deprivation was too remote.  
APPLICATION OF LAW TO THE FACTS  
A. COUNT 1 – FRAUD OVER $5,000  
1. ACTUS REUS OF FRAUD  
[2639]  
To repeat, the Supreme Court of Canada in Théroux, at p. 456, and  
Zlatic, at p. 476, held that the actus reus of fraud will be established by proof of:  
 
 
-
799 -  
1
. the prohibited act, be it an act of deceit, a falsehood or some  
other fraudulent means; and  
2
. deprivation caused by the prohibited act, which may consist in  
actual loss or the placing of the victim's pecuniary interests at risk.  
[2640]  
All examples of the prohibited act are present in the facts of this case.  
Daniel told the investors that their investments would go into no-risk, low-risk or  
guaranteed investments. With regard to the Breadalbane Inn, he told some  
investors that their money was going into a trust account. He told his own brother  
David the trust account story as well. There were no trust funds for the  
Breadalbane. Daniel knew these statements he made were lies and deceits.  
Twelve million dollars was given to Daniel for low-risk or no-risk investments.  
Virtually none of it went to these investments, and the 41 alleged victims were  
not given any information that their investments would be diverted elsewhere, to  
their extreme prejudice. Of $12 million deposited, almost none of it was invested  
as stated by Daniel. On approximately 70 occasions, the 41 alleged victims’  
money went into a pool of funds that Daniel knew would be diverted almost  
immediately to: (1) Daniel shareholder loans and $2 million of spousal support  
and equalization payments to his ex-wife (many of these payments were put into  
the corporate books as a “shareholder loan” to Ms. Reeve or as an asset, which  
was a falsehood that was entered into the books on Daniel’s instructions); (2) the  
expenses of his failing businesses which were losing, according to the  
bookkeepers, up to $2 million per year; and (3) interest payments and other  
-
800 -  
payments to previous investors in a Ponzi scheme-type of distribution. None of  
this information was disclosed to the 41 alleged victims. I will refer to these  
diverted funds as “the three priority purposes.”  
[2641]  
Regarding “fraudulent means,” virtually all of the examples given in  
Théroux at p. 457 are present in this case. Corporate funds of the Reeve  
companies were diverted to Daniel’s three priority purposes. Non-disclosure of  
important facts was present throughout, as the investors were not told that their  
low-risk, no-risk, guaranteed and/or trust money investments were being put into  
a pool of money into the failing companies for whatever purpose Daniel wanted.  
The investors were not told that the low-risk “bricks and mortar” real estate  
investments were diverted to the three priority purposes. Nor were they told that  
the Plaza and Breadalbane purchases were not made at all. Nor were they told  
that all the monies for those investments were no longer available for the  
purchases that were intended as they had all been spent for other purposes. The  
investors never authorized the diversion of their funds and were not even aware  
it was taking place. The investors were never told that their “safe” investments  
were propping up Daniel’s failing businesses, crushed by declining revenues and  
debt obligations in 2007 to 2008. When Andrea Morgan threatened to go to the  
police unless she got her money back, Daniel exploited and misled the  
unsophisticated Ms. Harrop and Mr. Thiessen to obtain the funds necessary to  
pay Ms. Morgan. Ms. Harrop cashed in her RRSP in questionable circumstances  
-
801 -  
causing her a massive tax hit which she could not pay and leading to the loss of  
her old age security pension. There are many more examples which have been  
summarized in my “Analysis” section, commencing at paragraph 2305. I  
conclude that reasonable people, after considering Daniel’s actions as detailed in  
the analysis of facts in this judgment, would easily come to the conclusion that he  
engaged in dishonest dealings with all of the 41 alleged victims.  
[2642]  
Regarding deprivation, the GT Report at pages 6 and 9, along with my  
Schedules F and G, establishes that Daniel put approximately $12 million of the  
alleged victims’ money at risk and the 41 alleged victims suffered staggering  
losses of approximately $10 million.  
[2643]  
To conclude, there is overwhelming evidence beyond a reasonable  
doubt that the actus reus of fraud was perpetrated by Daniel Reeve on the 41  
alleged victims.  
2. MENS REA OF FRAUD  
[2644]  
To repeat, the Supreme Court of Canada in Théroux, at p. 458, and  
Zlatic, at p. 481, held that the mens rea of fraud will be established by proof of:  
1
2
. subjective knowledge of the prohibited act; and  
. subjective knowledge that the prohibited act could have as a  
consequence the deprivation of another (which deprivation may  
consist in knowledge that the victim's pecuniary interests are put at  
risk).  
 
-
802 -  
Regarding subjective knowledge of the prohibited act, my analysis of  
evidence establishes that Daniel was engaged in all 70 transactions involving the  
1 alleged victims. He negotiated their deals. He was aware of the $12 million  
[2645]  
4
coming into the Reeve companies and how those monies were going to be  
spent. Daniel admitted in cross-examination that he had intimate knowledge of  
the workings of the Reeve companies. He himself told the investors that their  
investments were going to low-risk, no-risk, or guaranteed investments or into  
trust accounts. I have found in my analysis of evidence section that these  
statements were not true and Daniel knew they were not true. Daniel said he did  
not make many of the statements that the alleged 41 victims testified to.  
However, I have found that the alleged 41 victims gave credible and reliable  
evidence; further, after an exhaustive analysis of the evidence, I have found that  
Daniel is not a credible witness. He is a liar. I do not believe his evidence and it  
does not raise a reasonable doubt.  
[2646]  
Further, Daniel was the sole shareholder of the Reeve companies and  
was the person who would benefit from the diversion of investor monies. The  
bookkeepers and the circumstances that I have reviewed in the “Analysis”  
section, beginning at paragraph 2305, establish that, not only did Daniel know  
what money was coming in and for what purpose, Daniel also knew in advance,  
of the investment, that the money not going into a given investment as he told the  
investors it would. He knew that his companies were losing money. He knew that  
-
803 -  
he collected $2.15 million for the Plaza by November of 2007, but that none of it  
was used to buy the Plaza. Daniel diverted and agreed to a $3 million payout to  
his wife in November of 2007 and thereby avoided an audit which would have  
disclosed his dishonest dealings with the Plaza money. Daniel knew that his  
losing companies could not pay that $3 million and had no money for that first  
$500,000 payment due by November 30, 2007. So Daniel entered an agreement  
with Pat Westerhout for an $800,000 Millionaire Mortgage investment and  
diverted $500,000 to his ex-wife, while making no investment at all in MM. He  
never told Pat Westerhout that his intention was to use her money for spousal  
support and equalization payments to his ex-wife. As indicated previously, Daniel  
paid Ms. Morgan her money back by preying on unsophisticated Ms. Harrop and  
Mr. Thiessen and Daniel knew in advance that their investment was not going to  
a low risk investment but rather was going to pay off another investor who was  
threatening to go to the police. Many more examples are provided in the analysis  
of facts that I have included in my judgment. As previously indicated, Daniel  
testified that he had intimate knowledge of the workings of the Reeve companies.  
The bookkeepers testified that at least by March of 2008, Daniel needed to  
authorize all payments over $5,000. Many payments over $5,000 were made in  
2008 from investor money to Ms. Reeve, expenses for the Reeve companies and  
to the alleged victims and other investors. The Crown in cross-examination  
established that Daniel’s signature was on some of the transfer slips directing  
payments to Ms. Reeve – see cross-examinations regarding Westerhout- and  
-
804 -  
Hillman-funded payments to Ms. Reeve at pages 36 and page 94 of the July 6  
and 7, 2016 transcripts. By the summer or fall of 2008, the Reeve companies  
were in an all-out cash crunch and Daniel was aware of it. The bookkeepers told  
him what money was coming in and he made lists as to who would be paid and  
in what amount. Many of his bookkeepers quit in the summer and fall of 2008  
because they knew that the investors could never be repaid, told Daniel this, and  
did not want to be part of it. Daniel obviously was aware of the situation as the  
companies were now in an all-out crisis and Daniel had been the only constant  
throughout. Yet, Daniel continued to flog his investments in the summer and fall  
of 2008 either knowing that the investors would never get their money, or not  
caring whether they would. From May 23, 2008 onward, 16 of 19 investors never  
got a nickel on their investments – see my Schedule A. Many of them received  
no copies of their agreements or got them many months later – see my Schedule  
H. Daniel testified that he was expecting significant money from David. I found  
that this was not the case. Daniel testified that he was sitting on a $20 million  
payday on MM, but he had only made less than $100,000 with MM. I find that  
Daniel was aware of what money was coming in and on what basis as he  
negotiated all the deals. Further, it was his decision to pay his ex-wife $2 million  
from Reeve companies’ monies and his decision to put a large portion of those  
payments into the books dishonestly as shareholder loans to Ms. Reeve, to be  
later written off. On all the evidence, I find that Daniel was aware of the $12  
million coming in and he was aware that almost none of it went towards the  
-
805 -  
investments intended. Daniel knew in advance of the investments that the  
investments would not go where the alleged victims intended it to go. It was  
Daniel’s intention to divert the money all along to the three priority purposes and  
basically Daniel lied to the alleged victims to get their money. They were  
deliberately never told that their money was going to a pool of funds used for the  
three priority purposes. This was done some 70 times over two years with the 41  
alleged victims. The Westerhout, Harrop, and Thiessen transactions exemplify  
Daniel obtaining agreements with the victims and then immediately diverting it for  
his own personal purposes. Given the circumstances already described in the  
analysis of the evidence, there is overwhelming evidence that Daniel knew in  
advance that he would take investors’ money and divert it immediately to fund his  
ex-wife’s support and equalization payments, Daniel’s shareholder loans, failing  
Reeve companies’ expenses, and payments to previous investors to prolong his  
Ponzi scheme as long as possible. And further, Daniel deliberately did not tell the  
41 alleged victims that their investments would not go to low-risk investments  
and did not tell them that their money would be used for his three priority  
purposes—not investments as they intended.  
[2647]  
Regarding Daniel’s subjective knowledge that he was putting the 41  
alleged victims’ money at risk, Daniel was aware that his companies were losing  
money and at the same time were incurring extensive debt obligations at high  
interest rates. He raised $2.2 million for the purchase of the Park Plaza suite and  
-
806 -  
diverted the money almost immediately. He raised $3.45 million for the purchase  
of the Breadalbane at high interest rates and even told some investors falsely  
that he had bought it. He told some investors that the money was in trust but that  
was a lie. The money was diverted to the three priority purposes. Daniel raised  
$2.75 million for supposed low-risk investments in the heavily mortgaged  
Jakobstettel, but at least $2.6 million was diverted to other purposes. Daniel  
raised almost $3 million for the Millionaire Mortgage company but virtually all of  
that was diverted. Another $7 million was raised from other investors aside from  
the 41 alleged victims. All of this money was raised at a time when DPR had  
declining revenues and basic expenses were at least four times revenue. Daniel  
knew all this as he had intimate knowledge of the workings of the Reeve  
businesses and directed the business and payment decisions in November of  
2007 continuing into 2009 when DPR was shut down. In the absolute cash  
crunch in the summer and fall of 2008, the bookkeepers quit due to people  
phoning for their unpaid interest payments and the bookkeepers knowing that the  
investor money would never be repaid. Daniel was aware of all of this. “Freaky  
Fridays” became commonplace: people had been promised money but when  
they came to collect, the doors were locked. Irate investors would bang on the  
doors. There was evidence that Daniel hid from creditors by literally hiding  
behind a desk. The bookkeepers testified that the bills were not being paid in the  
fall of 2008 because there was no income stream. Daniel in cross-examination  
admitted that he knew after David left and the police investigation ensued in  
-
807 -  
December of 2008 that he was basically out of business. Yet through all this,  
Daniel continued to peddle his low-risk corporate bond investments into February  
of 2009. Daniel’s financial crisis was one created by his actions and not by any  
global financial crisis as claimed by the defence in its submissions.  
[2648]  
In conclusion, I find that Daniel was subjectively aware that he was  
putting the 41 investors’ money at risk; Daniel knew that he was putting the 41  
investors’ pecuniary interests at risk by his actions. Daniel’s actions went beyond  
mere recklessness. I find that Daniel was intent on pursuing this three priority  
purposes and was callously indifferent to the inevitable catastrophic financial  
losses that he knew he was inflicting and would continue to afflict on the 41  
alleged victims. Even after it was obvious that investors could never be repaid,  
Daniel Reeve continued to seek out investors and divert their monies to support  
Daniel’s three priority purposes.  
[2649]  
Daniel testified that he did nothing wrong. He was entitled legally to put  
the money into a pool of funds and make intercompany loans. He also testified  
that he intended to put the investor money where it was supposed to go but  
decisions to divert it were made after. Firstly, Daniel is not a credible witness and  
I do not believe him. In the context of all the evidence, his evidence does not  
raise a reasonable doubt. The Westerhout and Harrop/Thiessen examples  
provide compelling evidence that Daniel was aware he was going to divert the  
investors’ money well in advance of receiving it. This was done some 70 times.  
-
808 -  
Daniel was the person who stood to gain. He had access to the books and  
control of the money in the Reeve corporate accounts; he had to authorize  
payments over $5,000. He knew he was in a financial crisis starting in November  
of 2007 through 2008 to 2009. Daniel was the only common player throughout  
the indictment period. Daniel, in cross-examination, continued to insist that right  
to the very end, his corporate bonds were low-risk investments “slightly riskier  
than GICs” but “less risky than segregated funds,” which have investment  
guarantees of 75 to 100 percent of the investment upon maturity by regulated  
insurance companies. This is a ridiculous statement given the almost total loss  
suffered by the last 29 of the 41 alleged victims.  
[2650]  
As indicated in Théroux, the primary objective of fraudsmen is to  
advantage themselves. The detriment that results to a fraudsman’s victims is  
secondary to that purpose and incidental. Daniel diverted $12 million. His primary  
objective, through deceit, falsehoods and other fraudulent means, was to  
advantage himself. The detriment to the 41 alleged victims was secondary and  
incidental.  
[2651]  
In the result, I find that there is overwhelming evidence beyond a  
reasonable doubt that Daniel possessed the subjective knowledge required to  
establish the mens rea of criminal fraud.  
3. CONCLUSION REGARDING COUNT 1 – FRAUD OVER $5,000  
 
-
809 -  
[2652]  
The Crown has proven beyond a reasonable doubt that Daniel had the  
requisite actus reus and mens rea of criminal fraud as defined by Théroux and  
Zlatic. Therefore, I conclude that Daniel Reeve committed criminal fraud over  
$5,000 against the 41 alleged victims.  
B. COUNT 2 – THEFT OVER $5,000  
2653] Count 2 of the indictment alleges that Daniel Reeve committed the  
[
offence of theft over $5,000 over the same indictment period as the Count 1  
fraud over $5,000, i.e., from January 1, 2007 until September 30, 2009.  
[2654]  
Section 322 of the Criminal Code indicates that a person commits theft  
when, fraudulently and without colour of right, converts to his own use a thing (in  
this case investment monies) with intent to deprive temporarily or absolutely the  
owner of it.  
[2655]  
For the voluminous reasons already outlined, Daniel, fraudulently and  
without colour of right, took the 41 alleged victims’ investment monies in the  
millions of dollars, which at a minimum were to be invested in low-risk  
investments. Instead of making the investments as promised, Daniel converted  
the money to his own use with intent to deprive the investors of their monies  
either temporarily or absolutely. The uses to which he converted the money, as  
already stated, were (1) to pay his shareholder loans and his ex-wife’s support  
and equalization payments, (2) to pay the expenses of his many failing  
 
-
810 -  
businesses, and (3) to fund his Ponzi schemes to partially repay previous  
investors.  
[2656]  
Daniel testified that his dealings were all recorded in the books and  
accordingly, nothing was hidden and the dealings were legal. Subsection 322(3)  
of the Criminal Code indicates that a taking or conversion of anything may be  
fraudulent notwithstanding it is effected without secrecy or attempt at  
concealment. The reality, as well, is that Daniel lied to the 41 alleged victims  
when he told them that he was going to invest their money in low-risk  
investments. On the evidence at trial, I find that Daniel knew full well that the  
monies would be converted to the three priority purposes at the time of and  
before taking the monies from the alleged victims. The result is losses to the  
alleged victims in an amount over $10 million.  
1. CONCLUSION REGARDING COUNT 2 – THEFT OVER $5,000  
[2657]  
Accordingly, Daniel Reeve is found guilty of theft over $5,000 as  
outlined in the indictment.  
DECISION  
[2658]  
Daniel Reeve is found guilty of fraud over $5,000 and theft over $5,000  
as charged in the indictment. Given that the two counts deal with the same set of  
facts, the R. v. Kienapple, [1975] 1 S.C.R. 729, 15 C.C.C. (2d) 524, principle  
 
 
-
811 -  
applies and a conviction is registered on Count 1, fraud over $5,000. Count 2,  
theft over $5,000, is conditionally stayed.  
The Executive Summary commences on the next page.  
-
812 -  
EXECUTIVE SUMMARY  
A. OVERVIEW  
2659] Woody Allen once described a stock broker as someone who invests  
[
your money until it is all gone. This is a good description of what Daniel Reeve  
did to the 41 alleged victims. The evidence is clear that the 41 alleged victims  
deposited approximately $12 million with Daniel for what he described as “low-  
risk” corporate agreements. The low-risk investments provided for interest rates  
between 12 to 20 percent (sometimes higher) but instead delivered losses in the  
staggering amount of approximately $10 million.  
B. ISSUES  
[2660]  
The court at this trial had to resolve two issues:  
1
.
.
A determination of the credibility of the witnesses, and  
2
Whether a fraud and theft was committed in light of the credible and  
reliable evidence.  
C. VERDICT  
2661] On all the credible evidence, I find Daniel Reeve guilty of both fraud  
over $5,000 and theft over $5,000.  
[
 
 
 
 
-
813 -  
D. STRUCTURE OF JUDGMENT AND SUMMARY OF EVIDENCE  
2662] Due to the length of the trial and long remands between hearing dates,  
[
there is a correspondingly lengthy summary of the various witnesses’ testimony  
contained in the judgment.  
[2663]  
As the index to the judgment indicates, the witnesses were grouped  
into certain categories. The first group of witnesses is titled “The Investors”  
which includes the 41 alleged victims, other investors and confirming witnesses. I  
found all of these 51 witnesses to be decent, honest and hardworking individuals.  
Many of them were exposed to the better part of two days of extensive cross-  
examination and emerged unscathed. Their evidence was confirmed by  
documentation and the other viva voce evidence presented at the trial. All of  
these witnesses gave credible evidence.  
[2664]  
Typical of the character of the 41 victims was Josephine DeSalvo. She  
is an Italian immigrant with a Grade 9 education. In Canada, she worked on a  
farm growing vegetables and brought them to a Toronto market. She also worked  
as a babysitter and as a seamstress. She, through hard work, sheer  
determination and grit, was able to save enough money to buy two apartment  
buildings. When she was shown her $200,000 cancelled cheque for her  
investment in the Jakobstettel, a hotel owned by Daniel, she declared, “This is all  
my sweat from 1971 to 2007.” She received a few interest payments on this  
 
-
814 -  
investment but eventually lost her $200,000, which had taken her 35 years to  
accumulate.  
[2665] The next group of witnesses in the index are the vendors of the  
properties that Daniel collected millions of dollars to purchase but never did.  
[2666]  
Alicia Ganz and Meryl Goldberg, both credible witnesses, were  
involved in the failed sale of a Park Plaza suite to Daniel Reeve. Daniel  
committed to buy a suite at the famous and glamorous Park Plaza Hotel in New  
York City for approximately US$2.63 million. From June of 2007 to November 1,  
2007, Daniel collected $2.15 million from the alleged victims. Not one nickel –  
Canadian or American – was invested in the Plaza. Even the initial deposit  
cheque of August 2007 for $263,500 was returned NSF. By November of 2007,  
all the money was gone. It was used, by and large, to support the failing Reeve  
companies whose income over the indictment period, according to the defence’s  
own accounting expert, was about 25 percent of what was required to pay basic  
office and related expenses of the companies. None of these details were ever  
disclosed to any of the Plaza investors.  
[2667]  
Peter Egger, another credible and honest witness, indicated that in  
February or March 2008, Daniel prepared a letter of intent to purchase the  
Breadalbane Inn for Mr. Egger’s asking price of $2.3 million. Later in the  
negotiations, Daniel offered to pay $500,000 down and assume a vendor take-  
-
815 -  
back mortgage for $1.8 million at 15 percent interest. Then, from March 3, 2008  
to June 27, 2008, Daniel collected $3.45 million from a number of the 41 victims,  
which was $1 million dollars more than what would have been required to  
purchase the Breadalbane. Daniel told the investors that they were investing in  
bricks and mortar. He told investors that the investment was “low-risk,” “no-risk,”  
and/or “guaranteed” and even told his brother David and some investors that  
their money was being put into a trust account. There was no trust account. All of  
the money was almost immediately diverted to Daniel’s big three priorities:  
(
1) Shareholder loans to Daniel and/or spousal support and equalization  
payments entered into the books as shareholder loans to Daniel Reeve  
and Cheryl Reeve, which, in Ms. Reeve’s case, was not a shareholder  
loan at all but was listed dishonestly as an asset to be written off the  
books at some later point;  
(
2) payments to the failing Reeve companies, which, in 2008, were  
experiencing a 50 percent reduction in income from the previous losing  
year in 2007; and  
(3)  
payments to the victims/investors in a Ponzi scheme-type distribution.  
I refer to these hereafter as “the three priority purposes.” None of this was  
disclosed to the alleged 41 victims.  
-
816 -  
[2668]  
To put into perspective the cash crunch that was worsening at an  
alarming speed from 2007 until 2009, the Reeve companies in 2008 had a total  
income of $723,283.47. But in that same year, Daniel paid approximately $1.5  
million in spousal support and equalization payments to Ms. Reeve from  
company funds. The shareholder loans to Daniel and Ms. Reeve in 2008  
amounted to $1,894,216.42, or 2.6 times the total income of all the Reeve  
companies. And these were companies whose basic expenses were 4 times the  
income they were earning! None of this was disclosed to the 41 victims.  
[2669]  
However, Daniel was well aware of all of this mathematical breakdown.  
It was Daniel who negotiated all the agreements and tracked the monies coming  
in. It was Daniel who directed that his floundering companies, in November of  
2007 and onward, pay Ms. Reeve $2 million in support and equalization  
payments from company funds (which mainly came from supposedly safe, low-  
risk investments). It was Daniel, supposedly after consulting experts, who  
directed that the payments to Ms. Reeve be put falsely into the books as  
“
shareholder loans” and as “assets,” to be written off at some point dishonestly  
as unpaid loans. It was Daniel who was the sole shareholder of the companies  
and prohibited his president, David Reeve, from ever having access to the books.  
It was Daniel who had intimate knowledge of the workings of the Reeve  
companies. It was Daniel who directed how monies were to be spent from the  
initial cash crunch in November 2007 onwards into 2008 and 2009, until DPR  
-
817 -  
was put out of business in April 2009. It was Daniel who authorized all payments  
over $5,000 from at least March 2008 onwards. It was Daniel who met with the  
bookkeepers regularly when bills could not be paid and, in the fall of 2008,  
directed who was to be paid and in what order. It was Daniel who had control of  
the money deposited in the Reeve companies’ accounts. It was Daniel who was  
the only constant throughout the indictment period, as the bookkeepers began  
dropping like flies in the summer of 2008 when they realized the obvious: the 41  
alleged victims and other investors could never be repaid. It was Daniel who  
literally hid from creditors behind a desk in the fall of 2008. It was Daniel who  
promised that investors would be paid on Fridays but when Fridays arrived the  
doors to the DPR offices were locked. Understandably irate investors would bang  
on the doors demanding to be let in. Those days became known as “Freaky  
Fridays” and Daniel would simply not come to the office on those days. This  
evidence comes from the bookkeepers and employees of DPR themselves who  
are listed in the index of the judgment as DPR Financial – the Insiders.  
[2670]  
It was Daniel, whom I infer knew the obvious as well, but who  
continued hawking supposedly “low-risk” investments in 2008 and into 2009,  
diverting almost all the money to the three priority purposes previously outlined.  
And none of the 41 alleged victims were told about any of this.  
[2671]  
In my opinion, given the circumstances outlined above, it does not take  
a genius to figure out that the ferocious cash crunch (which dawned in the  
-
818 -  
summer of 2008 and continued to worsen afterward) was inevitable after Daniel  
entered into a costly separation agreement in November of 2007 and began  
diverting $2 million from his companies that were already losing substantial  
amounts of money.  
[
2672] The Park Plaza and the Breadalbane investments were not the only  
Ponzi-type investments Daniel plugged. From February 2007 until September 2,  
008, Daniel raised from the victims another $2.75 million for investments in the  
2
Jakobstettel Inn, which he at least did own. More than $2.6 million of that money  
was diverted to the three priority purposes as outlined above. Meanwhile, Len  
Brunen was doing construction work for Daniel at a variety of DPR offices and  
was owed $600,000. By June of 2008, the cash crunch to which I have referred  
was descending. On June 27, 2008 Mr. Brunen put a third mortgage in the  
amount of $655,462 on the Jakobstettel (already mortgaged to the tune of  
around $700,000, which did not include the investors’ corporate bond  
investments with Jakobstettel). Mr. Brunen’s third mortgage accordingly  
prejudiced the 41 alleged victims’ “investments” even further. Mr. Brunen  
eventually foreclosed on his third mortgage due to nonpayment but only received  
a total of $420,000 of the $600,000 owing. None of these details were ever  
disclosed to the 41 victims.  
[2673]  
There was yet one more Ponzi scheme to come. From November of  
2007 until February of 2009, Daniel raised almost $3 million for the Millionaire  
-
819 -  
Mortgage concept or for workhorse accounts in the Millionaire Mortgage concept.  
Daniel failed to provide some investors with copies of their written agreements;  
others waited months for them and only obtained them after “hunting down”  
Daniel. Sixteen of the last 19 Millionaire Mortgage investors lost their “low-risk”  
investment in full and never received a dime in interest or principal. Some of the  
agreements were supposed to pay up to 60 to 80 percent interest in their final  
year of payments. Daniel could never pay these amounts, but I find that he did  
not care. Daniel wanted to keep his Ponzi schemes afloat as long as possible.  
Daniel testified that he was sitting on a $20 million payday for that Millionaire  
Mortgage concept. However, in cross-examination, Daniel admitted that the  
Millionaire Mortgage concept had made less than $100,000, but he could not  
provide the exact amount. By at least December of 2008, Daniel’s criminal  
investigation was publicly known (Mr. Egger was phoned by the police before  
Christmas of 2008). The Millionaire Mortgage plan was put on hold due to, as  
Daniel put it, his being treated as a “leper” by members of the financial  
community. However, even with this dire situation and Daniel, as he admitted,  
being out of business, Daniel continued to pitch “low-risk” Millionaire Mortgage  
agreements until February of 2009. As with the Plaza, Breadalbane, and  
Jakobstettel investments, virtually none of the approximately $3 million was  
invested in Millionaire Mortgage as promised. The money was siphoned away to  
pay for the three priority purposes as previously outlined. None of these details  
were disclosed to the 41 victims.  
-
820 -  
[2674]  
Daniel testified for many weeks. In the judgement, I have analyzed his  
evidence and cross-examination in great detail. In a nutshell, his testimony was  
that he did not think he was doing anything wrong. He was entitled to take  
investor money and do intercompany loans. It was all legal so long as it was  
documented.  
[2675]  
Daniel testified in cross-examination that he did not tell any of the  
investors that their money was being directed to his companies that had cashflow  
problems. Daniel testified that he did not tell the 41 victims that their investments  
were not going to be spent as promised but were instead to be diverted to the  
three priority purposes. Daniel testified that he did not tell them that because he  
did not know in advance. In the context of all the other evidence at trial, that  
evidence is not believable. It is a blatant lie.  
[2676]  
Further, Daniel testified that he intended to use the money as told to  
the clients and made decisions to divert it afterward. This as well, in the context  
of all the other evidence adduced at trial, is not believable.  
[2677]  
Some examples of evidence provide excellent illustrations of how  
absurd Daniel’s contention is that decisions regarding diversions of investor  
money were not made until after the investment money had been deposited. I will  
refer to just three of them.  
-
821 -  
EXAMPLE 1  
In November of 2007, Daniel had collected $2.15 million for the Plaza purchase.  
However, he did not purchase the Plaza and the money was all siphoned away.  
Daniel was in negotiations with his ex-wife (her evidence is summarized in the  
judgment). She was a credible witness who was not cross examined at all—  
which turned out to be an exception to the usual prolonged cross-examinations  
that did little to damage the Crown witnesses. Ms. Reeve’s evidence was that  
Daniel was terrified of an audit of his businesses and got angry when she  
mentioned it. We can now see why. Daniel had just taken $2.15 million for the  
purchase of the Plaza and he had no Plaza to show for it. An audit was avoided  
by the separation agreement signed in November of 2007. Ms. Reeve signed it  
on November 26, 2007. The agreement obligated Daniel to pay $3 million in  
support and equalization payments with a $500,000 payment due on November  
30, 2007. Daniel had no money to pay that $500,000 as his companies were  
losing money and the Plaza money was all gone. Daniel got $800,000 from an  
alleged victim, Pat Westerhout, for a “low-risk’ investment in MM, on November  
28, 2007. The next day, November 29, Daniel signed the separation agreement.  
On December 4, 2007, Ms. Reeve received her first $500,000 from Ms.  
Westerhout’s money. Daniel initially testified that the $500,000 was put into the  
books as a shareholder loan to Daniel (Daniel provided two other explanations as  
well) but his own defence witness, Mr. Nagel, a forensic accountant, contradicted  
 
-
822 -  
that. Mr. Nagel testified that the $500,000 was put in the books as a shareholder  
loan to Ms. Reeve. Daniel had testified in examination-in-chief that the plan was  
to put these payments in as a shareholder loan to Ms. Reeve and then later write  
them off. This is clearly dishonest. Daniel, later in cross-examination, tried to  
explain that these shareholder loans were bona fide loans to Ms. Reeve but that  
testimony is clearly an unsubstantiated and outrageous falsehood in the  
circumstances. Ms. Reeve’s evidence, and the documentation supporting her  
evidence, clearly establish the $2 million paid to her was not a shareholder loan  
but spousal support and equalization payments pursuant to the separation  
agreement.  
EXAMPLE 2  
[2678]  
In January of 2008, Daniel did deposit $263,506.50 for the purchase of  
the Park Plaza Hotel suite. However, almost all of that money came from Peter  
Steenbergen for a supposed investment in MM. That deposit disappeared in May  
of 2008 when it was forfeited for Daniel’s failing to close the Plaza deal. On June  
10, 2008 Daniel requested the return of two thirds of his deposit but that was  
turned down. That month, Daniel contacted Mr. Steenbergen and told him he  
was buying a hotel in New York. By that time, the Plaza deal was dead and the  
carcass was buried. However on June 27, 2008, Mr. Steenbergen entered into  
an agreement with Reeve Hotels and gave a cheque to Reeve Hotels for  
$50,000 on the understanding that his money was to be used to purchase a New  
 
-
823 -  
York hotel property. Mr. Steenbergen did not get the agreement until January  
009 and testified that it was a challenge to get it. Of course, the money was  
2
diverted, with $45,047.90 going to Ms. Reeve and none of it to the investment as  
promised.  
EXAMPLE 3  
[2679]  
This example is the most egregious of the three detailed here. Andrea  
Morgan testified that on September 28, 2008, she spoke to Nancy Herlick who  
told her Daniel was a pathological liar, mortgaged to the hilt, and committing  
frauds. The evidence at this trial completely confirms that assessment. Ms.  
Morgan had invested approximately $176,000 in the Breadalbane Inn in April  
2
008. On September 29, 2008, Ms. Morgan told Daniel that the Breadalbane was  
a bogus deal and she wanted her money back. Daniel gave her a draft of  
200,000 payable on October 31, 2008. By this time, Daniel was already well into  
$
his cash crunch as many of the bookkeepers had left, while David and many  
employees were about to depart, leaving DPR with no revenue stream but facing  
mounting debt and expense obligations. As indicated in the “Analysis” portion of  
this judgment, Daniel, as October wore on, was aware that he would be unable to  
pay this $200,000 to Ms. Morgan by October 31, 2008, as promised. Accordingly,  
Daniel borrowed $100,000 from Ms. Reeve (now this was one of the few real  
loans made regarding Ms. Reeve but she was paid back shortly after). Daniel  
also approached two unsophisticated investors. He convinced Ms. Harrop, an  
 
-
824 -  
elderly lady with limited income, to cash in her RRSPs and Mr. Thiessen, a  
Mexican immigrant with nominal education, to cash in his investments as well.  
The Harrop/Thiessen money was deposited on October 31, 2008. The Letter of  
Directions from these two investors are identical and both Ms. Harrop and Mr.  
Thiessen testified to irregularities in their dealings with Daniel. Daniel phoned Ms.  
Morgan on the morning of October 31, 2008 and told her not to cash the  
$200,000 draft and to meet her at the bank at 4 p.m. later that day. She told  
Daniel that if the cheque did not go through, she would call the police. Daniel  
provided her with a cheque for $186,000 which did go through. The $186,000  
mainly came from the $100,000 loan from Ms. Reeve and the cheques cashed  
on October 31, 2008 from Ms. Harrop and Mr. Thiessen. The Harrop/Thiessen  
cheques were made out to Jakobstettel but their agreements were eventually  
made out to Millionaire Mortgage when they received their agreements many  
months later. Neither Ms. Harrop nor Ms. Thiessen saw a nickel on their  
“investments.” The Harrop transaction is very troubling as Daniel admitted he  
knew that Ms. Harrop was a confused elderly lady and the cashing of her RRSPs  
caused her to receive a huge tax hit in 2008, which she could not afford to pay.  
She also lost her old age security benefits. Basically, Daniel betrayed her trust in  
order to stave off a police complaint. He merely delayed the inevitable police  
investigation by a month or two.  
-
825 -  
[2680]  
These are three examples that totally refute any contention that Daniel  
intended to use the money as promised to the clients and then made decisions to  
divert if afterward. Over and over again – 70 times over two years with 41 victims  
–
the same pattern emerges. The evidence is overwhelming that Daniel was  
aware of the cashflow problems facing his company but he refused to disclose  
them to his investors or tell his investors that he would take their money for  
purposes other than “low-risk” investments. The evidence is also overwhelming  
that Daniel promised to invest in low-risk or no-risk investments, but once the  
investor deposit was made, the money was almost immediately diverted to the  
three priority purposes previously outlined. This now brings me to the expert  
accounting evidence.  
[2681]  
The judgement also summarizes the Crown and Defence expert  
accounting evidence. Basically, as indicated in the judgment, after a careful  
analysis, I found the Crown’s GT Report to be credible and reliable, subject to  
adjustments to allow for Mr. Nagel’s (the defence expert) criticisms (which did not  
detract from the overall result).  
[2682]  
In order to reconcile the GT Report and the Nagel Report, I have  
prepared 9 schedules that are referred to in the judgment and are attached to  
this judgment.  
-
826 -  
As indicated in my analysis of the accounting evidence in the judgment  
see paragraphs 2305 to 2354), the overall conclusion from the expert  
accounting evidence is as follows:  
[2683]  
(
As confirmed by the GT Report and my schedules, the  
Reeve companies used the alleged 41 victims’ investment  
monies not as intended toward low- or no-risk real estate and  
commercial investments but diverted that money for three  
main purposes:  
1
. Shareholder loans to Daniel and shareholder loans  
mainly to Cheryl and Daniel Reeve, for the purposes  
of satisfying Daniel’s spousal support and  
equalization obligations;  
2
3
. Expenses incurred by the various Reeve companies;  
and  
. Repayments to the alleged victims and other  
individual investors.  
[2684] The judgment has a law section that refers to the W. (D.) decision and  
the leading cases on the law of fraud.  
[2685]  
Pursuant to W. (D.), I have considered Daniel’s evidence and do not  
believe it. Further, I have considered his evidence in the context of the rest of the  
trial evidence as a whole and have concluded that Daniel and the defence  
evidence does not raise a reasonable doubt. I then proceeded to consider the  
trial evidence that I did accept to determine whether the Crown had proven its  
case beyond a reasonable doubt.  
-
827 -  
[2686]  
In criminal law trials, the Crown must prove conduct (actus reus) and  
knowledge (mens rea) beyond a reasonable doubt. This is true of criminal fraud  
as well.  
[2687]  
Regarding the actus reus, the Crown has to prove beyond a  
reasonable doubt the conduct (a prohibited act – consisting of deceit, falsehood  
and other fraudulent means and deprivation), caused deprivation which may  
consist of loss or placing the victim’s pecuniary interests at risk.  
[2688]  
Regarding “deceit, falsehood and other fraudulent means,” all  
examples of the prohibited act are present in the facts of this case. Daniel told  
the 41 alleged victims that their investments would go into “no-risk,” “low-risk,”  
and/or “guaranteed” investments. With regard to the Breadalbane Inn, Daniel told  
his brother and some investors that the investment monies were going into a  
trust account. All of this was deceitful and false. Daniel’s intention was to divert  
the 70 investments made by the 41 victims into the three priority purposes, which  
did not relate to the investments at all. Regarding “fraudulent means,” Daniel  
diverted corporate funds for personal purposes, did not disclose important details  
of what was going to happen with the investor money, exploited the weaknesses  
of people such as Ms. Harrop, and made unauthorized diversions and  
arrogations of investment funds.  
-
828 -  
Regarding “deprivation,” Daniel put almost $12 million of the 41 victims’  
investments at risk, resulting in a loss of approximately $10 million.  
[2689]  
[2690]  
Regarding knowledge or mens rea, the Crown must prove that Daniel  
had subjective knowledge of the prohibited act and that the prohibited act could  
cause, as a consequence, the deprivation of another.  
[2691]  
As indicated earlier, Daniel was the sole shareholder of all of the  
Reeve companies. He was the one to benefit from all the diversion of investor  
monies. He negotiated all the 70 agreements involving the 41 alleged victims. He  
had intimate knowledge of the workings of the Reeve companies. He made the  
promises that the investments were going into low-risk, no-risk, and guaranteed  
investments. In the case of the Breadalbane, some investors were told that the  
money was going into a trust account. It was Daniel who directed that his spouse  
be paid from investor monies and falsely directed that large portions of it be  
marked in the books dishonestly as shareholder loans to Ms. Reeve to be written  
off at some later point.  
[2692]  
I have reviewed in the judgment the evidence of the bookkeepers,  
which, paired with other evidence, leads to the inescapable conclusion that  
Daniel knew what money was coming in and directed how it was to be paid out,  
especially after the cash crunch that commenced in November of 2007 and grew  
in strength in 2008 and 2009. The bookkeepers testified that any sums over  
-
829 -  
$5,000 had to be authorized by Daniel by at least March of 2008. Daniel knew  
that virtually none of the millions of dollars collected for the Plaza, Breadalbane,  
Jakobstettel and Millionaire Mortgage were being invested as intended. He knew  
almost all of it was being diverted to maintain his lifestyle, pay spousal support  
and equalization payments to Ms. Reeve, expenses for his failing companies,  
and the Ponzi scheme distributions to the 41 victims and other investors. And of  
course, none of this was disclosed to the victims.  
[2693]  
Further, Daniel was the only constant throughout 2007 to 2009 and  
knew his companies were losing money while accumulating enormous debts at  
very, very high interest rates. The bookkeepers were aware that the investment  
money could never be paid back and told Daniel as much. They quit so as to  
distance themselves from Daniel’s conduct. A ferocious cash crunch, which I  
infer Daniel knew was inevitable, flooded in like a tsunami in the summer and fall  
of 2008 and into 2009 at a time when there was a diminishing stream of income.  
Yet through it all, Daniel continued to promote “low-risk” investments with interest  
rates of up to 60 to 80 percent in the final year of some agreements, from which I  
infer that Daniel knew he could never pay and did not care whether he ever did.  
He made numerous payment schedules to clients that were not paid and could  
not be paid. His purpose was to prolong his Ponzi schemes for as long as  
possible and it is a reasonable inference that he knew he could never repay  
clients’ money and did not care about what happened to his clients’ money.  
-
830 -  
[2694]  
To put it simply, Daniel knew everything that was going on: the  
investments, the diversions, the lies, deceptions and non-disclosures to the 41  
victims, in addition to the losses the victims were incurring and were going to  
further incur. The evidence is overwhelming that Daniel knew that his conduct  
had put their money at risk. In the end, the 41 victims suffered the inevitable  
Armageddon and lost approximately $10 million.  
[2695]  
I conclude that the Crown has proven both the actus reus and mens  
rea of fraud over $5,000 beyond a reasonable doubt. Further, the Crown has  
proven theft over $5,000 beyond a reasonable doubt as well.  
[2696]  
What was the motive for Daniel’s crimes? Perhaps only Daniel knows.  
However, Daniel was used to, as his brother put it, a “large” lifestyle. He had a  
driver and a stretch limo, plus a fleet of automobiles: a $100,000 BMW 740, two  
Escalades, a Land Rover, and a Porsche. Renovations were being done at his  
homes including a six-car garage, exercise rooms and a $70,000 to $80,000  
bathroom renovation complete with installation of marble. Daniel lost his financial  
advisor licence in early 2007 and developed a number of Ponzi schemes in an  
attempt to maintain that lifestyle. Even as he was disbursing the victims’ monies  
in ways that ensured that they could never be repaid, Daniel continued to pursue  
his gold-plated tastes. Daniel testified that he received $165,000 in payroll over  
the indictment period. Further, over the indictment period from January 1, 2007  
until September 30, 2009, Daniel took out $1,345,526.74 in shareholder loans  
-
831 -  
from the Reeve companies. Deducting the shareholder loans attributable to  
support and equalization payments to Ms. Reeve from Daniel Reeve shareholder  
loans (approximately $658,500), Daniel personally received a total of  
approximately $687,026.74 in shareholder loans, on which he paid no tax for that  
two-year and nine-month period. This is in addition to the approximate $1.34  
million that was paid to Ms. Reeve for support/equalization payments dishonestly  
put in the books as shareholder loans. Further, on June 30, 2008, when the  
sweeping tsunami of debts could be seen rushing in on the horizon and all the  
millions on the Plaza and Breadalbane were spent, along with the millions raised  
for non-existent investments on the Jakobstettel and MM, Daniel had obtained a  
new girlfriend, Annie Smith. Daniel and Annie put in an offer for a $1 million  
home known as the Bayfield property, which was a house on a lake – see the  
evidence of Henry Israel. Daniel put down a $10,000 deposit. On July 30, 2008,  
Daniel collected $200,000 from Anne Colquhoun for an investment in the  
Bayfield property. Just like all the other “low-risk” property investments, that  
$200,000 disappeared as well. The house was to close on December 1, 2008 but  
did not. Daniel lost his $10,000 deposit. But so what? It was not really his money.  
[2697]  
This trial established an overwhelming case of fraud and theft  
perpetrated by a devious, clever, calculating, cold-hearted man who has  
absolutely no remorse for the many lives that he ruined.  
-
832 -  
In the result, Daniel is found guilty beyond a reasonable doubt of fraud  
over $5,000 and theft over $5,000 as charged in the indictment.  
[2698]  
___________________________  
Justice T. Skarica  
Released: October 13, 2017  
-
833 -  
Schedules  
Schedules commence on the next page. Each section is paginated  
individually.  
 
-
1 -  
Schedule A – Chronology of Investors and Absence of Any Repayment  
No Repayments  
as per Schedule  
3A Nagel Report  
Approximate Date  
of Investments  
#
2007 Investors  
Investment  
(
Marked by )  
Jakobstettel  
Plaza  
Oct. 17, 2006  
Sept. 1, 2007  
1
Glen Brubacher  
Emerald Met  
Plaza  
Jan. 8, 2007  
Aug. 20, 21, 30,  
2007  
2
Rene Brossard  
Estate of Isabella  
Brossard, Helene  
and Isabel Brossard  
Oct. 3, 2007  
Feb. 2, 2007  
3
4
Wilma Jordan  
Jakobstettel  
DPR Loan  
MM  
Apr. 10, 17, 2007  
Nov. 18, 2007  
Apr. 11, 2008  
June 18, 2008  
Pat Westerhout  
Breadalbane  
Jakobstettel  
Jakobstettel  
Breadalbane  
June 1, 2007  
June 2, 2008  
5
6
7
Barry Cunningham  
Josephine DeSalvo  
Heather Gardner  
Jakobstettel  
Breadalbane  
June 18, 2007  
March 15, 2008  
Jakobstettel  
Plaza  
June 28, 2007  
July 12, 2007  
 
-
2 -  
Aug. 3, 2007  
Breadalbane  
Plaza  
June 27, 2008  
8
9
Amos Lichty  
Sept. 5, 2007  
Jakobstettel  
Plaza  
Sept. 12, 2007  
Sept. 20, 2007  
Anne Colquhoun  
Bayfield  
July 30, 2008  
1
0
Laura Kerr  
Chin Tan  
Plaza  
Plaza  
Sept. 14, 2007  
Sept. 14, 2007  
11  
Jakobstettel  
Plaza  
Nov. 1, 2007  
Nov. 1, 2007  
12  
Claudette Taylor  
Cheryl Reeve – Separation Agreement – Nov. 26 - 29, 2007  
Re: Spousal Support/Equalization Payments  
Para. 5.8 - $3 Million to be Paid in $500,000 installments – Nov. 30, 2007 - Aug.1, 2008  
LEGEND:  
MM – Millionaire Mortgage  
No repayments  
made per  
Schedule 3A of  
Nagel Report  
Approximate  
Date of  
Investments  
#
2008 Investors  
Investment  
(
Marked by )  
MM  
MM  
Jan. 8, 2008  
Jan. 16, 2008  
June 27, 2008  
1
3
Peter Steenbergen  
Michelle Keddie  
Plaza  
MM  
Feb. 5, 2008  
May 1, 2008  
14  
Breadalbane  
-
3 -  
1
5
6
Warren Boldt  
Breadalbane  
Jakobstettel  
Mar. 3, 2008  
Mar. 4, 2008  
Mar. 10, 2008*  
1
Marina Ognjanovski  
1
7
Ronald DeKoning  
Breadalbane  
Breadalbane  
*Daniel said it  
was purchased  
Mar. 10, 2008  
1
8
9
Brian Crozier  
Mar. 10, 2008  
Breadalbane  
Breadalbane  
Mar. 28, 2008  
May 2, 2008  
1
Dr. Ira Bernstein  
Breadalbane  
Jakobstettel  
MM  
Apr. 3, 2008  
July 10, 2008  
Oct. 15, 2008  
20  
Mark McGuire  
Celebrity Management  
Jakobstettel  
MM  
Apr. 28, 2008  
Aug. 18, 2008  
Dec. 31, 2008  
2
2
2
1
2
3
Gary Raycroft  
Lorna Eadie  
Paul Meleg  
Doug Thiel  
Breadalbane  
May 12, 2008  
May 23, 2008  
Celebrity Management  
/
Reeve Hotels /  
Breadalbane  
MM  
July 7, 2008  
2
4
5
Breadalbane  
May 26, 2008  
Lynette & Robert  
Caiger  
2
MM  
June 1, 2008  
MM  
July 7, 2008  
Aug. 8, 2008  
26  
Kevin Hillman  
Jakobstettel  
-
4 -  
2
7
8
Cherrin Meleg  
Theresa Kaup  
MM  
July 7, 2008  
2
Jakobstettel  
July 14, 2008  
Jakobstettel  
MM  
July 21, 2008  
Sept. 12, 2008  
29  
Eva Bernachi  
30  
31  
32  
33  
34  
35  
36  
Wayne Schroeder  
Andrew Eplen  
Craig Mason  
Jakobstettel  
Aug. 22, 2008  
Aug. 27, 2008  
Sept. 2, 2008  
Sept. 6, 2008  
Oct. 31, 2008  
Oct. 31, 2008  
Nov. 3, 2008  
MM (Costa Rica)  
Jakobstettel  
MM  
Pilita Galano  
Jeanette Harrop  
Isaac Thiessen  
Brad Ashman  
MM  
MM  
MM  
Sherrill (Martin)  
Stevenson  
37  
MM (Wealth Institute)  
Nov. 10, 2008  
3
8
9
Carin Smith  
MM  
MM  
Nov. 14, 2008  
Dec. 31, 2008  
3
Paul & Lisa Schnarr  
Amending Separation Agreement – Jan. 15, 2009  
$1 Million Spousal Support/ Equalization Still Owing  
4
0
1
Steve Manuel  
Linda Chaffe  
MM  
MM  
Jan. 19, 2009  
Feb. 6, 2009  
4
Conclusion – Post-Separation Agreement Investors  
All of the 19 alleged victims who never received any payments on their investments made their  
initial investments after the signing of the separation agreement, dated November 26, 2007,  
between Daniel and Cheryl Reeve.  
-
1 -  
Schedule B – Repayments (Pre-Separation Agreement) to Investors 1-12  
Chronology  
NOTE: Trial evidence and exhibits were compared to App. C. of GT Report. Where trial  
evidence differs from App. C. of GT Report, values most beneficial to accused are  
selected.  
LEGEND:  
MM – Millionaire Mortgage  
Approx. Date of  
Investments  
#
2007 Investors  
Investment  
Repayments  
Interest payment  
(not counted) of  
Glen Brubacher  
Jakobstettel  
Oct. 17, 2006  
$
111,700  
1
Confirmed by App.  
C. of GT Report, p.  
3
Interest payment  
of $86,400  
Plaza  
Sept. 1, 2007  
Jan. 8, 2007  
Rene Brossard  
Emerald Met  
$14,000  
Note: App. C. of. GT  
Report, p. 2,  
$190,000  
Aug. 20, 21, 30,  
Plaza  
2007  
indicates total of  
TOTAL: $204,000  
$192,000  
repayment.  
Trial evidence was  
$
14,000 interest  
2
paid on Emerald  
Met plus $170,000  
return of  
Estate of Isabella  
Brossard, Helene  
and Isabel Brossard  
Not included in 41  
alleged victims  
Oct. 3, 2007  
principal/interest  
plus possibly  
another $20,000.  
Higher trial amount  
of $204,000  
selected.  
 
-
2 -  
Wilma Jordan  
3
- confirmed by App.  
C. of GT Report, p.  
7
Jakobstettel  
Feb. 2, 2007  
$23,000  
Pat Westerhout  
DPR Loan  
MM  
Apr. 10, 17, 2007  
Nov. 28, 2007  
Apr. 11, 2008  
$200,000  
$500,000  
$8,000  
App. C. of GT  
Report at p. 13  
makes no mention  
of $200,000  
repayment of DPR  
loan or renewal of  
Breadalbane  
$0  
4
Renewed 2006  
investment  
2006 Jakobstettel  
loan or the $8,000  
paid on interest for  
Breadalbane.  
Jakobstettel  
June 18, 2008  
Ms. Westerhout  
testified to these  
additional amounts.  
TOTAL: $708,000  
$3,000  
Jakobstettel  
Breadalbane  
June 1, 2007  
June 2, 2008  
Barry Cunningham  
$
50,000  
TOTAL:  
53,000  
$9,166.64  
100,000  
5
6
7
- confirmed by App.  
C. of GT Report, p.  
5
$
Jakobstettel  
Breadalbane  
June 18, 2007  
March 15, 2008  
Josephine DeSalvo  
$
- confirmed by App.  
C. of GT Report, p.  
5
TOTAL:  
$
109,166.64  
Jakobstettel  
Plaza  
June 28, 2007  
July 12, 2007  
Aug. 3, 2007  
June 27, 2008  
$0  
$43,000  
$0  
Heather Gardner  
-
confirmed by App.  
C. of GT Report, p.  
6
Breadalbane  
-
Ex. 267 – Nagel  
-
3 -  
exhibit says  
repayment =  
34,000, but see  
TOTAL:  
43,000  
$
cross-exam. re App.  
D. of GT Report  
$
Amos Lichty  
8
9
- confirmed by App.  
C. of GT Report, p.  
8
Plaza  
Sept. 5, 2007  
$22,500  
Jakobstettel  
Plaza  
Sept. 12, 2007  
Sept. 20, 2007  
$40,000  
$0  
Anne Colquhoun  
$0  
-
confirmed by App.  
C. of GT Report, p.  
4
Bayfield  
Plaza  
July 30, 2008  
Sept. 14, 2007  
Sept. 14, 2007  
TOTAL:  
$40,000  
Laura Kerr  
$21,000  
10  
- confirmed by App.  
C. of GT Report, p.  
8
($18,000 interest  
and $3,000  
returned)  
Chin Tan  
11  
- confirmed by App.  
C. of. GT Report, p.  
Plaza  
$37,000  
12  
Claudette Taylor  
Jakobstettel  
Plaza  
Nov. 1, 2007  
Nov. 1, 2007  
$
121,000  
on both  
12  
- confirmed by App.  
C. of GT Report, p.  
(
investments)  
12  
Summary – Pre-Separation Agreement Investors  
Total interest/principal payment pre-  
separation agreement  
$1,468,066.60  
-
1 -  
Schedule C – Investments and Losses of Investors (Pre-Separation  
Agreement) 1-12 Chronology  
NOTE: Trial evidence and exhibits were compared to App. C. of GT Report. Where trial  
evidence differs from App. C. of GT Report, values most beneficial to accused are  
selected.  
NOTE: Investment amounts are reduced by interest payments to calculate losses.  
LEGEND:  
MM – Millionaire Mortgage  
Conservative Investments  
Approx. Date  
of  
Investments  
and Losses (Excluding  
Interest Losses)  
2
007  
#
Investment  
Investors  
Investments  
Losses  
$400,000  
(
outside of  
Jakobstettel  
Oct. 17, 2006  
Sept. 1, 2007  
$400,000  
indictment  
period – not  
counted)  
Glen  
Brubacher  
1
-
confirmed by  
$350,000  
($86,400  
interest paid)  
App. C. of GT  
Report, p. 3  
$350,000  
Plaza  
Total  
investment is  
Total loss is  
$263,600  
$
350,000  
Rene Brossard  
$106,000  
Note: App. C.  
of. GT Report,  
p. 2, indicates  
total of  
Emerald Met  
Jan. 8, 2007  
Aug. 20, 21,  
$120,000  
($14,000  
interest  
payment)  
2
$192,000.  
$410,000  
$600,000  
Trial evidence  
was $14,000  
interest paid  
on Emerald  
($190,000  
paid back)  
Plaza  
30, 2007  
Total  
Total loss is  
 
-
2 -  
Met plus  
investment is  
$720,000  
$516,000  
$170,000  
return of  
principal /  
interest plus  
possibly  
Estate of  
Isabella  
Brossard,  
Helene and  
Isabel  
Another  
$
20,000 may  
or may not be  
repayment.  
Not included in 41 alleged  
victims  
Oct. 3, 2007  
Brossard  
Higher  
repayment of  
$204,000  
selected.  
Wilma Jordan  
$73,000  
3
- confirmed by  
App. C. of GT  
Report, p. 7  
Jakobstettel  
Feb. 2, 2007  
Apr. 10, 17,  
$96,000  
(
$23,000  
interest)  
$0  
DPR Loan  
MM  
$200,000  
$800,000  
2007  
($200,000  
returned)  
$
300,000  
Nov. 18, 2007  
Apr. 11, 2008  
(
$500,000  
paid back)  
Pat  
Westerhout  
$
229,286.46  
(
See Schedule  
B for difference  
between Pat  
Westerhout  
Breadalbane  
$237,286.46  
(
$8,000  
4
interest)  
$
200,000  
testimony and  
App. C of GT  
Report.)  
$200,000  
(renewed  
2006  
agreement)  
Jakobstettel  
June 18, 2008  
Total  
investment is  
1,437,286.46  
Total loss is  
$729,286.46  
$
-
3 -  
$197,000  
Jakobstettel  
Breadalbane  
June 1, 2007  
$200,000  
(
$3,000  
interest paid)  
Barry  
Cunningham  
$450,000  
5
$500,000  
-
confirmed by  
App. C. of GT  
Report, p. 5  
($50,000  
returned)  
June 2, 2008  
Total  
investment is  
700,000  
Total loss is  
$647,000  
$
$190,833.36  
Jakobstettel  
Breadalbane  
June 18, 2007  
March 15,  
$200,000  
$100,000  
(
$9,166.64  
interest paid)  
Josephine  
DeSalvo  
$0  
6
-
confirmed by  
App. C. of GT  
Report, p. 5  
(
$100,000  
returned)  
2008  
Total  
investment is  
Total loss is  
$190,833.36  
$
300,000  
Jakobstettel  
Plaza  
June 28, 2007  
$200,000  
$200,000  
$200,000  
$157,000  
July 12, 2007  
Aug. 3, 2007  
Heather  
Gardner  
($43,000  
interest  
payment)  
7
-
confirmed by  
App. C. of GT  
Report, p. 6  
$375,000  
$375,000  
Breadalbane  
June 27, 2008  
Sept. 5, 2007  
Total  
investment is  
775,000  
Total loss  
$
Is $732,000  
Amos Lichty  
$77,500  
8
- confirmed by  
App. C. of GT  
Report, p. 8  
Plaza  
$100,000  
(
$22,500  
interest paid)  
-
4 -  
$60,000  
Jakobstettel  
Plaza  
Sept. 12, 2007  
Sept. 20, 2007  
$100,000  
$200,000  
(
$40,000  
interest paid)  
$200,000  
Anne  
Colquhoun  
$200,000  
$200,000  
9
-
confirmed by  
App. C. of GT  
Report, p. 4  
Total  
loss  
is  
Total  
investment  
is  
Bayfield  
July 30, 2008  
$500,000  
$460,000  
$79,000  
Laura Kerr  
(
$18,000  
interest and  
3,000  
returned)  
10  
- confirmed by  
App. C. of GT  
Report, p. 8  
Plaza  
Sept. 14, 2007  
$100,000  
$
Chin Tan  
$163,000  
1
1
- confirmed by  
App. C. of. GT  
Report, p. 12  
Plaza  
Jakobstettel  
Plaza  
Sept. 14, 2007  
Nov. 1, 2007  
Nov. 1, 2007  
$200,000  
$300,000  
(
$37,000  
interest paid)  
$121,000  
interest paid  
on both  
Claudette  
Taylor  
$400,000  
12  
-
confirmed by  
App. C. of GT  
Report, p. 12  
Total  
Total loss is  
$
investment is  
700,000  
579,000  
$
-
5 -  
Summary – Investments and Losses of Investors (Pre-Separation Agreement)  
Total interest/principal payment pre-  
$1,468,066.60  
separation agreement  
Total investments  
Total losses  
$5,978,286.46  
$4,510,219.82  
%
%
Losses/investments – 75%  
Repayment of principal/interest – 25%  
-
1 -  
Schedule D – Repayments to Investors (Post-Separation Agreement) 13-41  
Chronology  
NOTE: Trial evidence and exhibits were compared to App. C. of GT Report. Where trial  
evidence differs from App. C. of GT Report, values most beneficial to accused are  
selected.  
LEGEND:  
MM – Millionaire Mortgage  
Cheryl Reeve – Separation Agreement – Nov. 26 - 29, 2007  
Re: Spousal Support/Equalization Payments  
Para. 5.8 - $3 Million to be Paid in $500,000 installments – Nov. 30, 2007 - Aug.1, 2008  
2
008 Investors  
No Repayments  
Made as Per  
Schedule 3B Nagel  
Report, Unless  
Otherwise Specified  
(
Note: Where trial  
evidence differs  
from App. C. of GT  
Report, value that  
is most beneficial  
to accused is  
Approximate  
Date of  
Investments  
#
Investment  
(
Non-Payment  
Marked by )  
selected)  
MM  
MM  
Jan. 8, 2008  
Jan. 16, 2008  
13  
Peter Steenbergen  
Plaza  
MM  
June 27, 2008  
Feb. 5, 2008  
- confirmed by App. C.  
of GT Report, p. 11,  
except for $6.50  
3
interest payments of  
5,000  
$
No repayment on  
Breadalbane  
14  
Michelle Keddie  
Breadalbane  
May 1, 2008  
-
both items confirmed  
by App. C. of GT  
Report, p. 8  
 
-
2 -  
7
payments of $5,000  
$35,000  
=
15  
Warren Boldt  
Breadalbane  
Mar. 3, 2008  
-
confirmed by App. C.  
of GT Report, p. 2  
Trial testimony:  
10 monthly payments  
of $7,000  
=
$70,000 repayment  
-
App. C. of GT  
Report,  
16  
Marina Ognjanovski  
Jakobstettel  
Mar. 4, 2008  
p. 10 - $85,000  
repayment  
$85,000 repayment  
selected  
Breadalbane  
-
p. 5 of App. C. of GT  
Report indicates  
repayment of  
$
187,000  
Mar. 10, 2008*  
invested and  
$
12,438.73 on Mar.  
$
187,000 loss  
produces better  
result for accused  
as this is  
*
Reeve said  
10, 2008 of $200,000  
investment  
17  
Ronald DeKoning  
Breadalbane was  
purchased Mar.  
10, 2008  
Trial evidence:  
equivalent to  
$187,000 investment  
$200,000  
and $187,000 loss  
investment with  
$13,000 returned  
1
8
9
Brian Crozier  
Breadalbane  
Mar. 10, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 1  
Breadalbane  
Breadalbane  
Mar. 28, 2008  
May 2, 2008  
1
Dr. Ira Bernstein  
confirmed by App. C.  
of GT Report, p. 1  
-
3 -  
Breadalbane  
Jakobstettel  
Apr. 3, 2008  
July 10, 2008  
Received no  
repayments as per  
trial testimony  
-
App. C. of GT  
Report, p. 9 - Feb.  
2009 - payment  
20  
Mark McGuire  
of $1,565 for  
approval/setup fees  
MM  
Oct. 15, 2008  
$1,565 repayment  
selected  
Celebrity  
Management  
Apr. 28, 2008  
Aug. 18, 2008  
No repayment  
No repayment  
Jakobstettel  
4
interest payments of  
21  
Gary Raycroft  
$3,125 = $12,500 as  
per trial testimony  
MM  
Dec. 31, 2008  
P. 10 of App. C. of GT  
Report says $4,735  
$12,500 selected  
1
interest payment of  
$1,800 as per trial  
testimony  
-
confirmed by App. C.  
of GT Report,  
22  
Lorna Eadie  
Breadalbane  
May 12, 2008  
p. 6, except  
investment  
understated by $0.49  
–
see App. D., p. 1  
$1,800.49 selected as  
repayment  
Celebrity  
Management/  
Reeve Hotels/  
Breadalbane  
23  
Paul Meleg  
May 23, 2008  
-
4 -  
MM  
July 7, 2008  
-
both confirmed App.  
C. of GT Report, p. 10  
2
4
5
Doug Thiel  
Breadalbane  
May 26, 2008  
-
confirmed by App. C.  
of GT Report, p. 13  
Lynette & Robert  
Caiger  
2
MM  
MM  
June 1, 2008  
July 7, 2008  
- confirmed by App. C.  
of GT Report, p. 3  
26  
Kevin Hillman  
Jakobstettel  
Aug. 8, 2008  
July 7, 2008  
- both confirmed by  
App. C. of GT Report,  
p. 7  
2
7
8
Cherrin Meleg  
Theresa Kaup  
MM  
-
-
confirmed by App. C.  
of GT Report, p. 9  
2
Jakobstettel  
Jakobstettel  
July 14, 2008  
July 21, 2008  
confirmed by App. C.  
of GT Report, p. 7  
Non-payment  
$100,000 repayment  
of principal  
2
9
0
Eva Bernachi  
One $4,000 interest  
payment  
MM  
Sept. 12, 2008  
Aug. 22, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 1  
3
Wayne Schroeder  
Jakobstettel  
confirmed by App. C.  
of GT Report, p. 11  
-
5 -  
3
1
2
Andrew Eplen  
Craig Mason  
MM (Costa Rica)  
Jakobstettel  
Aug. 27, 2008  
Sept. 2, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 6  
3
confirmed by App. C.  
of GT Report, p. 9  
Testified she received  
nothing  
-
p. 6 of App. C. of GT  
Report says she got  
$2,100 on Jan. 5,  
33  
Pilita Galano  
MM  
Sept. 6, 2008  
2009  
$2,100 selected as  
repayment  
-
-
-
confirmed by App. C.  
of GT Report, p. 6  
3
4
5
Jeanette Harrop  
Isaac Thiessen  
MM  
MM  
Oct. 31, 2008  
Oct. 31, 2008  
confirmed by App. C.  
of GT Report, p. 7  
3
confirmed by App. C.  
of GT Report, p. 13  
Received $20,000  
principal back in Jan.  
009 due to  
2
repayment on  
mortgage  
3
6
7
Brad Ashman  
MM  
Nov. 3, 2008  
-
No interest paid,  
confirmed by App. C.  
of GT Report at p. 1  
Sherrill (Martin)  
Stevenson  
MM (Wealth  
Institute)  
3
Nov. 10, 2008  
- confirmed by App. C.  
of GT Report, p. 12  
-
6 -  
3
8
9
Carin Smith  
MM  
MM  
Nov. 14, 2008  
Dec. 31, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 11  
3
Paul & Lisa Schnarr  
confirmed by App. C.  
of GT Report, p. 11  
Amending Separation Agreement – Jan. 15, 2009  
1 Million Spousal Support/ Equalization Still Owing  
$
4
0
1
Steve Manuel  
Linda Chaffe  
MM  
MM  
Jan. 19, 2009  
Feb. 6, 2009  
- confirmed by  
App. C. of GT  
Report, p. 9  
4
- confirmed by  
App. C. of GT  
Report, p. 3  
Summary – Post-Separation Agreement Investors  
Total interest payment post-  
separation agreement  
$156,965.49  
Total repayment of principal  
$
120,000.00  
276,965.49  
Total repayments  
$
-
1 -  
Schedule E – Investments and Losses of Investors (Post-Separation  
Agreement) 13-41 Chronology  
NOTE: Trial evidence and exhibits were compared to App. C. of GT Report. Where trial  
evidence differs from App. C. of GT Report, values most beneficial to accused are  
selected.  
NOTE: Investment amounts are reduced by interest payments to calculate losses.  
LEGEND:  
MM – Millionaire Mortgage  
Cheryl Reeve – Separation Agreement – Nov. 26 – 29, 2007  
Re: Spousal Support/Equalization Payments  
Para. 5.8 - $3 Million to be Paid in $500,000 installments – Nov. 30, 2007 - Aug.1, 2008  
Conservative Investments  
and Losses (Excluding  
Approx. Date  
of Investments  
#
2008 Investors  
Investment  
Interest Losses)  
Investments  
Losses  
MM  
MM  
Jan. 8, 2008  
$200,000  
$249,437.90  
$50,000  
$200,000  
$249,437.90  
$50,000  
Peter Steenbergen  
Jan. 16, 2008  
-
confirmed by App.  
13  
C. of GT Report, p.  
11  
Plaza  
June 27, 2008  
Total  
investment is  
499,437.90  
Total loss is  
(
except for $6.50)  
$499,437.90  
$
$
$
90,000 -  
15,000  
Michelle Keddie  
MM  
Feb. 5, 2008  
May 1, 2008  
$90,000  
-
confirmed by App.  
C. of GT Report, p.  
8
=
$75,000  
14  
$100,000  
$100,000  
-
Keddie received  
15,000 interest on  
MM investment  
Breadalbane  
Total  
$
Total loss is  
$175,000  
investment is  
190,000  
$
 
-
2 -  
Warren Boldt  
$300,000  
- $35,000  
$300,000  
-
confirmed by App.  
C. of GT Report, p.  
2
15  
Breadalbane  
Mar. 3, 2008  
Total  
Total loss is  
$265,000  
investment is  
-
7 x $5,000 interest  
paid  
$
300,000  
400,000  
Marina Ognjanovski  
$
400,000  
$85,000  
$
-
testimony at trial  
-
was $368,333.30  
was owing (includes  
overdue interest)  
16  
Jakobstettel  
Mar. 4, 2008  
-
App. C. of GT  
Report, p. 10 says  
Total  
investment is  
400,000  
$
85,000 was repaid  
not $70,000 as per  
trial testimony  
Total loss is  
$315,000  
$
Ronald DeKoning  
-
testimony at trial  
was $187,000 was  
invested and  
$187,000 was lost  
Mar. 10, 2008*  
-
App. C. of GT  
Report, p. 5  
Total  
investment is  
187,000  
*Reeve said  
Breadalbane  
was purchased  
Mar. 10, 2008  
Total loss is  
$187,000  
17  
Breadalbane  
indicates $200,000  
and $12,438.73  
repaid on March 10,  
$
2
008 which would  
have made loss  
187,561.27  
$
-
see Exhibit 24-12C  
bank record  
Brian Crozier  
Total  
investment is  
$159,601.95  
Total loss is  
18  
- confirmed by App.  
C. of GT Report, p.  
4
Breadalbane  
Mar. 10, 2008  
$159,601.95  
-
3 -  
Breadalbane  
Breadalbane  
Mar. 28, 2008  
$494,807.70  
$494,807.70  
$189,698.78  
Dr. Ira Bernstein  
$189,698.78  
19  
- confirmed by App.  
C. of GT Report, p.  
1
May 2, 2008  
Total  
Total loss is  
investment is  
684,506.48  
$684,506.48  
$
Breadalbane  
Jakobstettel  
Apr. 3, 2008  
July 10, 2008  
$169,590.39  
$171,932.54  
$169,590.39  
$171,932.54  
Mark McGuire  
$173,736.85  
-
App. C. of GT  
Report, p. 9, says  
1,565 appraisal  
20  
$173,736.85  
$515,259.78  
- $1,565  
$
fees were paid on  
Feb. 9, 2009  
MM  
Oct. 15, 2008  
Total  
investment is  
515,259.78  
Total loss is  
$513,694.78  
$
Celebrity  
Management  
Apr. 28, 2008  
Aug. 18, 2008  
$100,000  
$100,000  
$100,000  
Gary Raycroft  
Jakobstettel  
$100,000  
-
App. C. of GT  
Report, p. 10 says  
4,735 repaid  
$
$250,000  
21  
-
trial testimony: 4  
$250,000  
$
450,000  
$12,500  
interest payments:  
MM  
Dec. 31, 2008  
-
4
x $3,125 =  
12,500  
$
Total  
investment is  
450,000  
Total loss is  
437,500  
$
$
$
244,235.49  
$1,800.49  
Lorna Eadie  
$244,235.49  
-
22  
- trial testimony  
indicates  
Breadalbane  
May 12, 2008  
$
244,235.49  
Total  
investment is  
244,235.49  
Total loss is  
242,435.00  
invested and $1,800  
repaid as interest  
$
$
-
4 -  
-
confirmed by App.  
C. of GT Report  
except for $0.49  
(
App. C. says  
$244,235.00  
invested)  
Celebrity  
Management/  
Reeve Hotels/  
Breadalbane  
May 23, 2008  
July 7, 2008  
$200,000  
$200,000  
Paul Meleg  
23  
- confirmed by App.  
C. of GT Report, p.  
$68,676.44  
$68,676.44  
Total loss is  
10  
MM  
Total  
investment is  
268,676.44  
$
268,676.44  
$
Doug Thiel  
Total  
investment is  
$200,000  
Total loss is  
$200,000  
2
4
5
- confirmed by App.  
C. of GT Report, p.  
Breadalbane  
May 26, 2008  
June 1, 2008  
13  
Lynette & Robert  
Caiger  
Total  
investment is  
Total loss is  
$100,000  
2
MM  
-
confirmed by App.  
C. of GT Report, p.  
3
$
100,000  
MM  
July 7, 2008  
Aug. 8, 2008  
$41,031  
$41,031  
Kevin Hillman  
$
144,360.44  
$144,360.44  
26  
- both confirmed by  
App. C. of GT  
Report, p. 7  
Jakobstettel  
Total  
investment is  
185,391.44  
Total loss is  
185,391.44  
$
$
Cherrin Meleg  
Total  
investment is  
$43,337.03  
Total loss is  
43,337.03  
2
7
8
- confirmed by App.  
C. of GT Report, p.  
9
MM  
July 7, 2008  
$
Theresa Kaup  
Total loss is  
100,000  
Total  
investment is  
2
Jakobstettel  
July 14, 2008  
$
-
confirmed by App.  
-
5 -  
C. of GT Report, p.  
7
$100,000  
Eva Bernachi  
Jakobstettel  
July 21, 2008  
$305,469.65  
$305,469.65  
-
trial testimony:  
$100,000 principal  
and $4,000 interest  
paid  
$300,000  
$196,000  
29  
MM  
Sept. 12, 2008  
-
confirmed by App.  
Total  
investment is  
605,469.65  
Total loss is  
C. of GT Report, p.  
1
$501,469.65  
$
Wayne Schroeder  
Total  
Total loss is  
59,524.74  
30  
31  
32  
33  
- confirmed by App.  
C. of GT Report, p.  
6
Jakobstettel  
Aug. 22, 2008  
Aug. 27, 2008  
Sept. 2, 2008  
investment is  
$59,524.74  
$
Andrew Eplen  
Total  
investment is  
$78,400  
MM (Costa  
Rica)  
Total loss is  
$78,400  
- confirmed by App.  
C. of GT Report, p.  
6
Craig Mason  
Total  
investment is  
$100,000  
Total loss is  
- confirmed by App.  
C. of GT Report, p.  
9
Jakobstettel  
$100,000  
$74,000  
Pilita Galano  
$74,000  
- trial testimony: no  
interest received  
-
$2,100  
MM  
Sept. 6, 2008  
Total  
investment is  
Total loss is  
71,900  
-
App. C. of GT  
$
Report, p. 6: $2,100  
$
74,000  
Jeanette Harrop  
3
4
5
Total  
Total loss is  
62,714.24  
-
confirmed by App.  
MM  
MM  
Oct. 31, 2008  
Oct. 31, 2008  
investment is  
$62,714.24  
$
C. of GT Report, p.  
7
Total  
investment is  
3
Isaac Thiessen  
Total loss is  
-
6 -  
$40,890.24  
$40,890.24  
-
confirmed by App.  
C. of GT Report, p.  
13  
Brad Ashman  
$
150,000  
$20,000  
$150,000  
-
$20,000 repaid in  
Jan. 5, 2009  
-
36  
MM  
Nov. 3, 2008  
Total  
investment is  
-
confirmed by App.  
Total loss is  
130,000  
C. of GT Report at  
p. 1  
$
$
150,000  
Sherrill (Martin)  
Stevenson  
Total  
investment is  
MM (Wealth  
Institute)  
Total loss is  
$75,000  
3
7
8
Nov. 10, 2008  
-
confirmed by App.  
C. of GT Report, p.  
$
75,000  
12  
Carin Smith  
3
Total  
investment is  
$70,000  
Total loss is  
-
confirmed by App.  
MM  
MM  
Nov. 14, 2008  
Dec. 31, 2008  
$70,000  
C. of GT Report, p.  
11  
Paul & Lisa Schnarr  
Total  
investment is  
$75,000  
Total loss is  
75,000  
39  
- confirmed by App.  
C. of GT Report, p.  
$
11  
Amending Separation Agreement – Jan. 15, 2009  
1 Million Spousal Support / Equalization Payments Still Owing  
$
Steve Manuel  
4
0
1
Total  
Total loss is  
50,000  
-
confirmed by App.  
MM  
MM  
Jan. 19, 2009  
Feb. 6, 2009  
investment is  
$50,000  
$
C. of GT Report, p.  
9
Linda Chaffe  
Total  
investment is  
$64,996.70  
Total loss is  
64,996.70  
4
- confirmed by App.  
C. of GT Report, p.  
3
$
-
7 -  
Summary – Post-Separation Agreement Investors  
Total interest payment post-separation  
$156,965.49  
agreement  
Total repayment of principal  
$120,000.00  
$276,965.49  
Total repayments  
Total Investments: $6,033,442.08  
Total Losses: $5,756,476.59  
See Schedule B  
%
%
Losses/Investments – 95%  
Repayment of principal/interest – 5%  
-
1 -  
Schedule F – Investments and Significant Uses of Investments (Pre-  
Separation Agreement) 1-12 Chronology  
NOTE: Trial evidence and exhibits were compared to App. G of GT Report and evidence of  
Nagel in cross-examination. Where trial evidence differs from App. G of GT Report, values  
most beneficial to accused are selected.  
NOTE: Investment amounts are reduced by interest payments to calculate losses.  
LEGEND:  
MM – Millionaire Mortgage  
CJ – Celebrity Jakobstettel  
O/D – Overdraft  
CRA – Canada Revenue Agency  
Conservative Investments and  
Losses (Excluding Interest Losses)  
Approx. Date  
GT Report – Appendix G and Nagel  
#
2007 Investors  
Investment  
of  
Evidence  
Investments  
Investments  
and Losses  
Use  
Investment -  
$400,000  
Loss -  
$400,000  
Jakobstettel  
Oct. 17, 2006  
(
outside of  
Glen Brubacher  
indictment  
period – not  
counted)  
1
- confirmed by  
App. C of GT  
Report, p. 3  
Investment -  
$
350,000  
*$350,000 comingled  
with $200,000 of  
Brossard money –  
see Chart 2 of  
Brossard re Use of  
Combined Funds  
Loss -  
Plaza  
Sept. 1, 2007  
$
350,000 -  
86,400  
interest paid)  
$263,600  
$
(
=
 
-
2 -  
Total  
investment is  
$350,000  
Total loss is  
263,600  
$
CHART 1  
Investment -  
$120,000  
- DPR O/D of  
$25,219.52  
Loss -  
Emerald Met  
Jan. 8, 2007  
$106,000  
- Midtown Business  
Centre - $75,000  
(
$14,000  
interest  
- Remainder  
transfers to Reeve  
companies  
Rene Brossard  
payment)  
Note: App. C of.  
GT Report, p. 2,  
indicates total of  
CHART 2  
-
$200,000  
$192,000.  
comingled with  
$350,000 of  
Brubacher money  
Trial evidence  
was $14,000  
interest paid on  
Emerald Met  
plus $170,000  
return of  
principal /  
interest plus  
possibly another  
Investment -  
-
Money used for  
inter-company  
transfers to pay  
402,421.82  
expenses of DPR  
Waterloo and  
$600,000  
2
Loss -  
$
$410,000  
(
$190,000 paid  
back)  
Emerald Met,  
$4,383.53 to  
$
20,000 may or  
may not be  
repayment.  
Aug. 20, 21,  
30, 2007  
Plaza  
Millionaire Travel,  
and approx. $37,000  
paid to individuals  
and alleged victims  
including Hoffman’s -  
$1,000  
Higher  
repayment of  
$204,000  
selected.  
CHART 3  
Total  
investment is  
- $400,000 to DPR to  
add to $150,562.62  
of  
$
720,000  
Total loss is  
516,000  
Brubacher/Brossard  
$
-
$250,000 to CJ  
-
3 -  
-
$300,000 to  
Emerald Met to pay  
expenses  
-
From CJ, CJ then  
paid:  
1
2
3
. $216,000 to  
Hoffman’s  
. $15,000 to Pat  
Westerhout  
. Various amounts  
to others  
Estate of  
Isabella  
Brossard,  
Helene and  
Isabel  
Oct. 3, 2007  
Not included in 41 alleged victims  
Brossard  
CHART 1  
$6,000 to CJ to pay  
-
off O/D of $4,574.53  
CHART 2  
-
$90,000 to CJ  
which paid:  
Investment -  
$96,000  
Wilma Jordan  
1
2
3
. $59,000 to Daniel  
3
- confirmed by  
App. C of GT  
Report, p. 7  
Jakobstettel  
Feb. 2, 2007  
Loss - $73,000  
Reeve with  
$58,902.12  
Jordan money  
($23,000  
interest paid)  
. $1,500 to C&D  
Reeve with  
$1,402.12 Jordan  
money  
. $24,000 to DPR  
O/D with  
$23,902.12  
Apr. 10, 17,  
007  
Investment -  
$200,000  
4
Pat Westerhout  
DPR Loan  
2
-
4 -  
(
See Schedule B  
for difference  
between Pat  
Westerhout  
testimony and  
App. C)  
Loss - $0  
($200,000  
returned)  
CHART 1  
DPR  
$800,000  
Dec. 4, 2007  
-
$800,000 to DPR all  
with O/D of  
$
29,346.55  
DPR pays:  
. O/D of  
-
1
$29,346.55 from  
Westerhout  
money  
Investment -  
2. $500,000 to C.  
Reeve with  
$800,000  
$
470,653.45  
Loss -  
300,000  
MM  
Nov. 28, 2007  
Westerhout  
$
money - It is  
entered as a loan  
to C. Reeve  
(
$500,000 paid  
back)  
(
asset); later Mr.  
Nagel changed  
his testimony to  
$500,000 to C.  
Reeve  
3. $248,000  
transferred to CJ  
–
all Westerhout  
money  
4
. CJ had, prior to  
transfer, balance  
of $62.23  
5. CJ pays:  
a) $193,385.29 to  
other individuals  
-
5 -  
with $192,600.12  
of Westerhout  
money. Largest  
payment was to  
Helen Brossard  
for $167,006.50  
with $166,944.27  
Westerhout  
money  
b) $24,006.50 to  
Brossards with  
$23,944.27  
Westerhout  
money  
c) $1,000 to  
Wilma Jordan  
with $214.83  
Westerhout  
money  
d) $4,000 to  
Brubacher with  
$3,164.83  
Westerhout  
money  
CHART 2  
Reeve Hotels  
$237,286.46  
Apr. 11, 2008  
Investment -  
$237,286.46  
-
$237,286.46 to  
Reeve Hotels A/C  
with balance of .09  
Loss -  
229,286.46  
$
Breadalbane  
Apr. 11, 2008  
-
$237,000 to DPR  
(
$8,000  
A/C with $236,999.91  
Westerhout money  
interest)  
-
DPR pays:  
1. O/D of  
$
$
29,376.24 with  
29,376.15  
Westerhout  
money  
-
6 -  
2
. $13,900 to  
Millionaire  
Executive  
Services – all  
Westerhout  
money  
3. $2,100 to DPR  
Windsor  
4
. $202,000 to CJ  
with $191,623.67  
Westerhout  
money  
5
. CJ had balance  
of $174.31 before  
transfer from DPR  
6. CJ pays:  
a) $100,000 to  
Grand River  
Contracting with  
$87,413.68  
Westerhout  
money  
b) $82,500 to  
Terry, Sheryl  
Stevenson with  
$69,913.68  
Westerhout  
money  
Investment -  
$200,000  
Loss -  
$200,000  
(
renewed 2006  
agreement)  
Jakobstettel  
June 18, 2008  
Total  
investment is  
$1,437,286.46  
Total loss is  
$729,286.46  
-
7 -  
CHART 1  
-
$33,307.71 to DPR  
O/D  
-
$7,500 to David  
Reeve  
-
$100,000 to DPR  
Windsor, which paid:  
1
. $41,911.61, of  
which was 90%  
Cunningham  
money  
Investment -  
$200,000  
Loss -  
197,000  
Jakobstettel  
June 1, 2007  
$
2. $6,500 to Cheryl  
Reeve  
(
$3,000  
interest paid) 3. S/H loan of  
$25,000 to Dan  
Reeve, of which  
Barry  
Cunningham and  
Sharon Hepburn  
$20,000  
Cunningham  
money  
5
-
confirmed by  
-
$18,000 to Emerald  
App. C of GT  
Report, p. 5  
Met and $16,025.69  
of Cunningham  
money paid  
individual Gloria  
Spencer  
CHART 2  
Except for $17.01,  
following from  
Cunningham money:  
Investment -  
$500,000  
1. $6,000 to Taylor  
Loss -  
450,000  
Breadalbane  
June 2, 2008  
2. $5,400 to  
Brubachers  
$
(
$50,000  
3
. $3,000 to  
individual  
returned)  
Sherman who had  
deposited  
$
2
100,000 in Oct.  
007  
-
8 -  
4. $1,500 to A. Lichty  
5
. $484,000 to DPR  
Financial which  
paid:  
a. $19,224.79 O/D  
b. $108,000 to C.  
Reeve  
c. $9,000 to Daniel  
Reeve – S/H loan  
d. $200,000 to Pat  
Westerhout  
e. $13,500 to D.  
Hatch, D. Metcalfe  
and L. Hoffman  
(
$13,500)  
f. $1,499 to  
Shoemaker Mill  
g. $6,882.92 to  
Receiver General  
h. $35,000 to CJ  
which paid Marina  
Ognjanovski  
$
$
7,500, of which  
2,608.08 was  
Cunningham  
money  
Total  
investment is  
$700,000  
Total loss is  
647,000  
$
CHART 1  
Jakobstettel  
June 18, 2007  
Investment -  
Josephine  
DeSalvo  
$200,000  
6
Jakobstettel  
June 18, 2007  
Loss -  
-
confirmed by  
App. C of GT  
Report, p. 5  
$190,833.36  
$200,000  
(
$9,166.64  
-
9 -  
interest paid)  
-
$200,000  
transferred to  
Emerald Met, which  
paid:  
1. $111,800 to  
individual H.  
Brossard of which  
$109,627.14 is  
DeSalvo money  
2
3
. Transferred  
$
109,627.14 to  
DPR of which  
88,000 was  
$
DeSalvo money  
. DPR paid off:  
a. O/D of  
$28,815.72 with  
DeSalvo money  
b. $20,000 to  
David Reeve (De  
Salvo money)  
c. $1,000 to  
individual L.  
Hoffman (DeSalvo  
money)  
CHART 2  
Breadalbane  
March 15, 2008  
$
100,000  
Investment -  
100,000  
$
-
$100,000  
March 15,  
008  
transferred to DPR  
where it was  
Breadalbane  
Loss - $0  
2
comingled with  
43,627.74 of Marina  
Ognjanovski money  
(
$100,000  
$
returned)  
-
$5,000 to Cheryl  
Reeve – small  
portion from De  
Salvo/Ognjanovski  
-
10 -  
money  
-
$68,000 to David  
Reeve, of which  
$62,879.80 came  
from De  
Salvo/Ognjanovski  
money  
-
Remainder to  
transfers to Reeve  
Corp.  
Total  
investment is  
$300,000  
Total loss is  
190,833.36  
$
CHART 1  
CJ A/C receives  
$50,000  
June 28, 2007  
-
$50,000 transferred  
to DPR with  
Investment -  
$
45,148.48 of  
$200,000  
Gardner money  
Jakobstettel  
June 28, 2007  
Loss -  
-
DPR paid:  
$200,000  
Heather Gardner  
a. DPR O/D of  
7
- confirmed by  
App. C of GT  
Report, p. 6  
$16,629.66 with  
Gardner money  
b. $50,000 to  
CRA with  
$29,518.82  
Gardner money  
Investment -  
CHART 2  
CJ A/C receives  
$150,000  
$200,000  
July 12, 2007  
Aug. 3, 2007  
Loss -  
Plaza  
$157,000  
(
$43,000  
interest  
July 6, 2007  
-
11 -  
payment)  
-
$125,000 to Helene  
Brossard with  
$122,943.08 Gardner  
money  
CHART 3  
DPR A/C receives  
$100,000 (and other  
deposits of $816.58)  
-
$21,786.75 O/D  
paid with $20,970.17  
Gardner money  
-
$10,200 to DPR  
Windsor with  
$9,383.42 Gardner  
money and DPR  
Windsor paid  
$9,205.53 expenses  
-
$10,000 to  
Millionaire Travel  
MT) with $9,183.42  
Gardner money and  
MT paid expenses  
and other individuals  
Investment -  
(
$375,000  
Breadalbane  
June 27, 2008  
Loss -  
$375,000  
-
$4,500 to Executive  
Services (ES) with  
$3,683.42 Gardner  
money and ES paid  
expenses of  
$4,689.47  
-
$1,500 to Emerald  
Met (EM) with  
$683.42 Gardner  
money and EM paid  
$1,468.94 expenses  
-
$
$20,000 to CJ with  
19,183.42 Gardner  
money. JK paid:  
1. $6,500 to Cheryl  
Reeve with  
$5,683.42 Gardner  
-
12 -  
money  
2. $3,000 to Daniel  
Reeve with  
$2,183.42 Gardner  
money  
-
$1,330 left  
NOTE:  
This chart using the  
Nagel method  
reduces all of money  
transfers by $816.98  
despite in reality  
$
816.58 could only  
be in one of the  
transfers. All  
methods, whether  
FIFO or this method  
are subject to  
criticisms of distortion  
CHART 4  
DPR A/C receives  
$63,000  
August 3, 2007  
Total  
investment is  
-
$27,679.97 O/D  
$775,000  
paid by Gardner  
money  
Total loss is  
732,000  
$
-
$60,000 transferred  
to CJ A/C with  
$33,432.97 Gardner  
money. CJ paid  
$
60,000 to Helene  
Brossard with  
33,290.31 Gardner  
money  
$
-
13 -  
CHART 5  
DPR A/C receives  
$
37,000  
August 13, 2007  
$26,738.48 of  
-
Gardner money may  
have paid off DPR  
O/D  
-
$10,000 of Gardner  
money paid to  
individual H.  
Southwood  
CHART 6  
Reeve Hotels  
receives  
$
100,000  
May 20, 2008  
$100,000  
-
transferred to DPR  
which paid:  
1. DPR O/D of  
$
$
32,549.48 with  
32,485.52  
Gardner money  
Reeve Hotels had  
(
prior $63.96  
balance)  
2. $26,000  
transferred to DPR  
Windsor;  
$25,629.49  
overdraft paid off  
by Gardner money  
3. $2,100 to CJ with  
$
2,036.04 Gardner  
money; CJ paid  
2,372.39 to  
individual  
$
-
14 -  
4
. $69,000 paid to  
Cheryl Reeve (not  
as loan) with  
$39,281.56 of  
Gardner money  
CHART 7  
Reeve Hotels  
receives $275,000  
July 2, 2008  
Had balance of  
+
14.82  
-
$248,000  
transferred to DPR  
with $247,985.18  
Gardner money  
-
DPR paid:  
1. O/D of $4,163.27  
with $4,148.45  
Gardner money  
-
15 -  
2
3
4
5
6
. $9,000 to Gardner  
with $8,985.15  
Gardner money  
. $5,400 to Glendra  
Farms with $5,385  
Gardner money  
. $1,500 to A. Lichty  
with $1,485.18  
Gardner money  
. $6,000 to C. Taylor  
with $5,985.18  
Gardner money  
. $3,000 to S.  
Sherman with  
$2,985.18 Gardner  
money  
7. $1,666 to J.  
Reibling with  
$1,651.18 Gardner  
money  
8
. $55,000 paid to CJ  
with $54,985.18  
Gardner money  
9. CJ paid (except for  
$14.82):  
a. $6,500 to  
Marina  
Ognjanovski  
b. $1,000 to Wilma  
Jordan  
c. $4,000 to  
Brubachers  
d. $4,500 to C.  
Taylor  
e. $1,000 to Daniel  
Reeve  
f. $170,464.25 to  
Grand River  
-
16 -  
Contracting  
NOTE:  
This chart is a good  
example of another  
flaw with the Nagel  
approach. With an  
investment of  
$275,000, $14.82 is  
so small as to be  
negligible and the  
deposit could have  
been rounded off to  
$275,000, but  
instead the $14.82 is  
carried through in  
multiple transactions  
with absolute zero  
impact on the overall  
result.  
CHART 1  
-
$100,000 into  
Reeve Hotels with  
475 balance  
$
-
$100,000  
transferred to DPR  
with $99,525 Lichty  
money to comingle  
with Caron deposit of  
Investment -  
100,000  
Amos Lichty  
$
25,000  
8
- confirmed by  
App. C of GT  
Report, p. 8  
Plaza  
Sept. 5, 2007 Loss - $77,500  
- DPR O/D of  
$24,089 paid off by  
$23,610 Lichty/Caron  
money  
($22,500  
interest paid)  
-
$10,000 to Daniel  
Reeve S/H loan, by  
Lichty/Caron money  
-
$12,000 to Pat  
Westerhout by  
Lichty/Caron money  
-
17 -  
CHART 1  
Investment -  
00,000  
1
-
At least $12,000 of  
Jakobstettel  
Sept. 12, 2007  
$20,000 Colquhoun  
Loss - $60,000 money to Brubachers  
(
$40,000  
- At least $8,000 of  
$16,000 Colquhoun  
money to Hoffmans  
interest paid)  
CHART 2  
-
-
$22,570.20 to pay  
off DPR O/D  
$8,200 of $10,000  
to Reeve S/H loan  
-
$7,200 of $9,054 to  
Reeve VISA  
Investment -  
Anne Colquhoun  
$200,000  
Plaza  
Sept. 20, 2007  
- $58,000 of $59,700  
to Emerald Met,  
9
- confirmed by  
App. C of GT  
Report, p. 4  
Loss -  
200,000  
$
which paid $59,640  
to Isabel and Helene  
Brossard, of which at  
least $59,640 from  
Colquhoun  
-
Remainder to other  
Reeve companies to  
pay expenses and  
other individuals  
Investment -  
CHART 3  
$200,000  
-
$29,000 to DPR  
O/D  
Loss -  
200,000  
$
Bayfield  
July 30, 2008  
- $50,000 to Grand  
River Contracting  
Total  
investment is  
500,000  
$
-
$100,000 to  
Cunningham/  
Hepburn  
Total loss is  
460,000  
$
-
18 -  
CHART 1  
Investment -  
100,000  
$
-
$100,000 to DPR  
Laura Kerr  
with $99,525 of Kerr  
money  
Loss - $79,000  
10  
- confirmed by  
App. C of GT  
Report, p. 8  
Plaza  
Sept. 14, 2007  
($18,000  
interest and  
-
Money comingled  
and disbursed per  
Tab 23 of App. C of  
GT Report  
$3,000  
returned)  
CHART 1  
-
$200,000 to CJ A/C  
with $14,262.91  
balance  
-
$20,000 to H.  
Investment -  
Southwood with  
$5,737.09 Tan  
money  
$200,000  
Chin Tan  
Loss -  
-
confirmed by  
Plaza  
Sept. 14, 2007  
$
163,000  
11  
App. C of. GT  
Report, p. 12  
- $190,000 to DPR  
A/C with balance  
(
$37,000  
$
12,323.56 with  
interest paid)  
$
175,737.09 of Tan  
money  
-
DPR disbursed  
remainder to Reeve  
corporations and  
DPR expenses  
CHART 1  
-
$300,000 to CJ with  
A/C balance of  
Investment -  
$300,000  
$8,314.20  
Claudette Taylor  
Loss -  
121,000 total  
interest paid  
on both  
investments  
-
$200,000 to DPR  
$
A/C with $191,685.80  
Taylor money  
12  
- confirmed by  
App. C of GT  
Report, p. 12  
Jakobstettel  
Nov. 1, 2007  
-
$200,000 to DPR  
Windsor with  
122,782.23 Taylor  
money  
(
no principal  
paid)  
$
-
$
DPR Windsor pays  
200,000 expenses  
-
19 -  
and $2,761.04 to  
individuals  
CHART 2  
-
$400,000 to Reeve  
Hotels with A/C  
balance of $445.00  
-
$400,000 to DPR  
with $399,555 Taylor  
money  
-
DPR pays:  
Investment -  
$
400,000  
1
. O/D of $9,133.48  
with $8,688.48  
Taylor money  
Loss -  
$
121,000 total  
Plaza  
Nov. 1, 2007  
interest paid  
on both  
investments  
2
. $10,000 to Daniel  
Reeve S/H Loan  
with $9,555 Taylor  
money  
(
no principal  
paid)  
3
. $200,000 to Grand  
River Contracting  
with $199,555  
Taylor money  
4
. $48,800 to  
Exchange  
Business  
Communications  
with $48,355  
Taylor money  
-
20 -  
5. $25,500 to S.  
Haney with  
$25,050 Taylor  
money  
Total  
investment is  
$700,000  
Total loss is  
579,000  
$
Summary – Investments and Losses of Investors (Pre-Separation Agreement)  
Total interest/principal payment pre-  
$1,468,066.60  
$5,978,286.46  
$4,510,219.82  
separation agreement  
Total investments  
Total losses  
%
%
Losses/Investments – 75%  
Repayment of principal/interest – 25%  
-
1 –  
Schedule G – Investments and Significant Uses of Investments of Investors  
Post-Separation Agreement) 13-41 Chronology and Evidence of Edward  
(
Nagel in Cross-Examination  
NOTE: Trial evidence and exhibits were compared to App. G of GT Report. Where trial  
evidence differs from App. G of GT Report, values most beneficial to accused are selected.  
NOTE: Investment amounts are reduced by interest payments to calculate losses.  
LEGEND:  
MM – Millionaire Mortgage  
CJ – Celebrity Jakobstettel  
O/D – Overdraft  
CRA – Canada Revenue Agency  
Cheryl Reeve – Separation Agreement – Nov. 26 – 29, 2007  
Re: Spousal Support/Equalization Payments  
Para. 5.8 - $3 Million to be Paid in $500,000 installments – Nov. 30, 2007 – Aug. 1, 2008  
Conservative Investments and Use of  
Investments  
Approx.  
Date of  
Investments  
2
008  
GT Report – Appendix G and Nagel  
#
Investment  
Evidence  
Investors  
Investments  
Use  
and Losses  
CHART 1  
Peter  
Steenbergen  
MM deposit of $200,000  
-
investment /  
losses  
Investment -  
Jan. 8, 2008  
$200,000  
13  
MM  
Jan. 8, 2008  
- $200,000 to MM A/C  
with prior balance of  
confirmed by  
App. C of GT  
Report, p. 11  
$422.25  
Loss -$200,00  
-
$214,617.93 to DPR  
(
except for  
6.50)  
A/C with $199,577.75  
Steenbergen money  
$
 
-
2 –  
-
DPR paid:  
1. O/D of $20,081.48  
with $5,040.82  
Steenbergen money  
2
. $181,028.18 to  
Midtown Business  
Centre for rent,  
mortgage leasehold  
improvements with  
$165,988  
Steenbergen money  
CHART 2  
MM deposit of  
$249,437.90  
Jan. 16, 2008  
-
$249,437.90 to MM  
Investment -  
A/C with prior $1,067.78  
balance  
$249,437.90  
MM  
Jan. 16, 2008  
Loss -  
249,437.90  
-
$250,000 to Daniel  
Reeve A/C with  
$
$248,932.22  
Steenbergen money  
-
$263,506.50 from  
Daniel Reeve A/C to  
Kramer, Levis, Naftalis  
for Plaza investment  
with $244,441.35  
Steenbergen money  
CHART 3  
(
Related to Cherrin  
Investment -  
50,000  
Meleg chart at Tab 28  
of App. C of GT Report)  
$
June 27,  
008  
Plaza  
Loss -  
50,000  
Reeve Hotels deposit of  
2
$
$50,000  
June 27, 2008  
-
$50,000 to Reeve  
Hotels A/C with prior  
-
3 –  
$78.69 balance  
-
$50,000 to Daniel  
Reeve A/C with  
$49,921.31  
Steenbergen money;  
Reeve A/C had balance  
of $1,873.41  
-
$53,000 to Daniel  
Reeve from Cherrin  
Meleg/Livingston -  
$48,708.28  
-
$100,000 to Cheryl  
Reeve with at least  
45,047.90 of  
Steenbergen money  
$
Total  
investment is  
$499,437.90  
Total loss is  
$499,437.90  
Investment -  
CHART 1  
$
90,000  
-
At least $89,509.36 to  
Cheryl Reeve  
Loss -  
MM  
Feb. 5, 2008  
$90,000  
-
$15,000  
- Recorded in books as  
paying off Home Trust  
mortgage  
Michelle  
Keddie  
$
75,000  
-
confirmed  
CHART 2  
by App. C of  
GT Report,  
p. 8  
-
$29,973.81 to R.  
Brossard  
14  
-
Keddie  
received  
15,000  
-
$37,134.06 to key  
Investment -  
$100,000  
individual R. Pigeon  
$
interest on  
MM  
investment  
Breadalbane  
May 1, 2008  
-
Rest to pay O/D of  
DPR - $29,151.04  
Loss -  
$100,000  
NOTE:  
Reeve Hotels had prior  
balance of $26.19  
which was accounted  
-
4 –  
for above  
Total  
investment is  
$190,000  
Total loss is  
175,000  
$
CHART 1  
-
$31,473.05 to DPR  
O/D  
-
$800 to C. Taylor  
$18,000 to J. Hall  
-
Investment -  
$
300,000  
-
$100,000 to R.  
Brossard  
Warren Boldt  
confirmed  
by App. C of  
GT Report,  
p. 2  
Loss -  
$
300,000  
-
$30,000 to R.  
Brossard  
-
-
$35,000  
15  
Breadalbane Mar. 3, 2008  
-
$4,500 to C. Taylor  
$1,000 to W. Jordan  
-
-
7 x $5,000  
interest paid  
-
Remainder to  
transfers to Reeve  
companies  
Total  
investment is  
300,000  
$
Total loss is  
265,000  
$
CHART 1  
Marina  
Ognjanovski  
Investment -  
CJ A/C deposit of  
$400,000  
$300,000  
16  
-
testimony at  
trial was  
368,333.30  
Jakobstettel  
Mar. 4, 2008  
Loss -  
March 12, 2008  
$400,000  
$
was owing  
-
$300,000 to CJ A/C  
-
$85,000  
(
includes  
which had $462.48 prior  
balance  
overdue  
-
5 –  
interest)  
-
$100,000 to Helen  
Brossard with  
-
App. C of  
GT Report,  
p. 10 says  
$96,970.88 of M.  
Ognjanovski money  
$
85,000 was  
repaid not  
70,000 as  
per trial  
-
$200,000 to DPR with  
$199,537.52 M.  
$
Ognjanovski money  
testimony  
-
DPR paid:  
1
. O/D of $32,616.83  
with $32,154.35 M.  
Ognjanovski money  
2
. $20,000 to Daniel  
Reeve (S/H Loan)  
with $18,487.52 M.  
Ognjanovski money  
3. $15,000 to individual  
H. Southwood with  
$14,537.52 M.  
Ognjanovski money  
4. $100,000 to Grand  
River Contracting with  
$99,537.52 M.  
Ognjanovski money  
(
p. 6 – GT Report–  
renovations at  
Jakobstettel)  
CHART 2  
CJ A/C deposit of  
$100,000  
Total  
investment is  
March 13, 2008  
$
400,000  
-
-
$100,000 to CJ which  
had A/C balance of  
$4,276.06  
Total loss is  
315,000  
$
$100,000 to DPR with  
$95,732.94 M.  
Ognjanovski money  
-
6 –  
-
DPR paid:  
1
. O/D of $26,104.31  
with $21,837.25 M.  
Ognjanovski money  
2
. $30,000 to King St.  
Management for  
leasehold  
improvements with  
$25,732.94 M.  
Ognjanovski money  
CHART 1  
JK deposit of $94,000  
March 7, 2008  
Ronald  
DeKoning  
- $94,000 to JK A/C  
with balance of  
$6,040.16  
-
testimony at  
trial was  
$
187,000  
- $94,000 to Sutherland  
Mark law firm with at  
least $87,959.84 of  
DeKoning money  
was invested  
and  
$187,000  
was lost  
Mar. 10,  
008*  
2
- This money and Chart  
2 money went to pay off  
a Home Trust mortgage  
at 46 Cambridge Street,  
Cambridge  
Total  
investment is  
-
App. C of  
GT Report,  
*Reeve said  
$
187,000  
17  
p. 5 indicates Breadalbane Breadalbane  
$200,000  
was  
purchased  
Mar. 10,  
2008  
Total loss is  
187,000  
and  
12,438.73  
$
$
CHART 2  
repaid on  
March 10,  
008 which  
would have  
made loss  
Reeve Hotels deposit of  
$106,000  
2
March 10, 2008  
$187,561.27  
-
$106,000 to Reeve  
-
2
see Exhibit  
4-12C bank  
record  
Hotels A/C with prior  
balance of $385  
-
$106,000 to  
Sutherland Mark law  
firm with at least  
$105,615 of DeKoning  
money  
-
7 –  
CHART 1  
-
$53,561.95 to DPR  
O/D  
Brian Crozier  
confirmed  
by App. C of  
GT Report,  
p. 4  
Total  
investment is  
$159,601.95  
- $100,000 to Mark  
Sutherland lawyer to  
pay Home Trust  
mortgage at 46  
-
Mar. 10,  
2008  
18  
Breadalbane  
Total loss is  
$159,601.95  
Cambridge Street  
-
$5,000 to Daniel  
Reeve S/H loan from  
comingling of  
DeKoning/Crozier  
deposits  
CHART 1  
Reeve Hotels deposit of  
$494,807.70  
March 28, 2008  
-
$494,807.70 to Reeve  
Hotels which had prior  
balance of $85.00  
-
$494,800 to DPR with  
$
494,715 Bernstein  
Dr. Ira  
Bernstein  
money  
Investment -  
$
494,807.70  
-
DPR paid:  
Mar. 28,  
19  
- confirmed  
by App. C of  
GT Report,  
p. 1  
Breadalbane  
2008  
Loss -  
1
2
3
. O/D of $18,909.79,  
all with Bernstein  
money  
$494,807.70  
. $100,000 to Karen  
Gingrich with $99,915  
Bernstein money  
. $400,006.50 to  
Grand River  
Contracting with  
$373,986.14  
Bernstein money  
(
paid by $300,000 by  
DPR and $100,006.50  
-
8 –  
by CJ after transfer by  
DPR)  
CHART 2  
Reeve Hotels deposit of  
$189,678.78  
May 2, 2008  
Investment -  
- $189,678.78 to Reeve  
Hotels with prior  
$189,698.78  
balance of $235.18  
Loss -  
189,698.78  
$
- $189,800 to DPR with  
$189,443.60 Bernstein  
Breadalbane  
May 2, 2008  
money  
-
DPR pays $200,000 to  
C. Reeve with  
$178,617.18 Bernstein  
money  
Total  
investment is  
684,506.48  
$
Total loss is  
684,506.48  
$
CHART 1  
-
$169,590.39 to Reeve  
Hotels with prior  
balance of $47.70  
Mark  
McGuire  
-
$
$169,000 to DPR with  
168,952.30 of McGuire  
money  
Investment -  
-
App. C of  
GT Report,  
p. 9, says  
$169,590.39  
20  
Breadalbane  
Apr. 3, 2008  
-
DPR paid O/D of  
29,360.04 with  
$1,565  
$
appraisal  
Loss -  
$
29,312.34 of McGuire  
$169,590.39  
money  
fees were  
paid on Feb.  
-
$4,000 to Daniel  
9, 2009  
Reeve with $3,952.30  
McGuire money (S/H  
Loan)  
-
$100,000 to Pat  
-
9 –  
Westerhout with  
99,952.30 McGuire  
money  
$
-
$10,800 to Brubachers  
with $5,443.63 McGuire  
money as David Reeve  
deposited $5,308.67  
Investment -  
$171,932.54  
CHART 2  
Jakobstettel July 10, 2008  
Loss -  
(See Kaup Chart)  
$171,932.54  
CHART 3  
-
$173,736.85 to MM  
A/C with prior balance  
of $125.92  
-
$65,000 to A. Lippert  
with $64,874.08  
McGuire money  
-
$1,000 to M.  
Ognjanovski with  
Investment -  
$874.08 McGuire  
$173,736.85  
money  
Loss -  
173,736.85  
-
$4,000 to P.  
$
Westerhout with  
$3,874.08 McGuire  
money  
MM  
Oct. 15, 2008  
-
$20,000 transferred to  
CJ with $19,874.08  
McGuire money  
-
CJ paid Brubachers  
$9,500 with $540.63  
McGuire money  
Total  
investment is  
515,259.78  
$
Total loss is:  
515,259.78  
$
-
10 –  
-
$1,565___  
513,694.78  
$
CHART 1  
CJ deposit of $100,000  
April 29, 2008  
-
$100,000 to CJ A/C  
with prior $2,729.35  
balance  
-
$100,000 to DPR with  
$97,270.65 Raycroft  
money  
Investment -  
Celebrity  
Management  
c.o.b.as  
$100,000  
- DPR paid:  
Apr. 28, 2008  
Gary  
Raycroft  
Loss -  
$100,000  
Jakobstettel  
1. O/D of $24,900.34  
with $22,170.99  
Raycroft money  
-
App. C of  
GT Report,  
p. 10 says  
2
. Remaining monies  
paid for expenses of  
Reeve companies and  
other individuals,  
$4,735  
repaid  
21  
including Brubachers  
-
trial  
(
$8,000) and M.  
testimony: 4  
interest  
Ognjanovski ($7,000)  
payments:  
4
x $3,125 =  
12,500  
CHART 2  
$
CJ deposit of $100,000  
August 18, 2008  
Investment -  
-
$100,000 to CJ with  
$100,000  
Aug. 18,  
008  
prior $2,094.54 balance  
Jakobstettel  
2
Loss -  
100,000  
-
$54,000 to DPR  
DPR paid:  
$
-
1
. O/D of $29,938.61  
with $27,844.07  
Raycroft money  
-
11 –  
2. $20,000 to David  
Reeve with  
$17,844.07 Raycroft  
money  
-
$3,000 to Daniel  
Reeve with $905.46  
Raycroft money  
-
$15,063.74 to CRA  
with $12,969.20  
Raycroft money  
-
$30,000 to J. Hall with  
$12,905.46 Raycroft  
money  
CHART 3  
CJ deposit of $250,000  
January 2, 2009  
-
$250,000 to MM with  
prior $48.23 balance  
-
$15,000 to C. Reeve  
with $14,951.77  
Raycroft money or  
Gardner/Raycroft  
money  
Investment -  
$
250,000  
-
$20,000 credit memo  
by Heather Gardner  
Dec. 31,  
008  
MM  
2
Loss -  
means of $142,000 to  
alleged victims, either  
$250,000  
$141,951.77 or  
$121,951.77 came from  
Raycroft money  
-
Following paid to  
alleged victims:  
1
2
3
. $10,000 to  
Brubachers  
. $30,000 to H.  
Gardner  
. $25,000 to A.  
-
12 –  
Colquhoun  
4
5
-
. $7,000 to M.  
Ognjanovski  
. $70,000 to J. De  
Salvo  
$110,000 paid to other  
individuals with either  
$
109,951.77 or  
89,951.77 of Raycroft  
money, depending on  
$
Gardner $20,000 credit  
memo  
Total  
investment is  
$450,000  
Total loss is  
$
450,000  
$12,500  
437,500  
-
$
CHART 1  
-
$244,000 transferred  
to DPR  
Lorna Eadie  
trial  
testimony  
indicates  
-
-
DPR paid:  
1. O/D of $29,151.54  
with Eadie money  
$244,235.49  
invested and  
1,800  
Investment -  
$244,235.49  
$
2
. $100,000 to C.  
Reeve with Eadie  
money  
22  
repaid as  
interest  
Breadalbane May 12, 2008  
Loss -  
$244,235.49  
-
confirmed  
3
. Transfer $45,000 to  
DPR Windsor which  
paid Robert Pigeon  
by App. C of  
GT Report  
except for  
- $1,800.49  
$44,499.01 with  
$
0.49 (App.  
C says  
$44,196.78 of Eadie  
money  
$244,235.00  
invested)  
4. $75,000 to Pat  
Westerhout with  
$46,592.48 of Eadie  
-
13 –  
money  
5
. $16,729.79 to CRA  
. $6,500 to CJ of Eadie  
money used to pay:  
6
a) $5,000 to  
individual H.  
Southwood  
b) $1,446.27 in  
expenses  
Total  
investment is  
$244,235.49  
Total loss is  
$242,435.00  
CHART 1  
-
$200,000 to CJ with  
prior balance of  
$5,341.50  
-
$166,000 to DPR  
DPR paid O/D of  
-
$
27,675.76 with  
Celebrity  
Management  
Paul Meleg  
confirmed  
by App. C of  
GT Report,  
p. 10  
$23,334.06 Meleg  
money  
Investment -  
$200,000  
/
Reeve  
-
23  
Hotels /  
Breadalbane  
May 23, 2008  
- $90,000 to Grand  
Loss -  
200,000  
River Contracting with  
$84,658.50 Meleg  
money  
$
-
$30,000 to individual  
Ezra Jantzi with  
$24,658.80 Meleg  
money  
-
$21,000 to C. Reeve  
with $7,982.94 Meleg  
money  
-
14 –  
CHART 2  
-
$68,676.44 to MM  
which had prior  
$1,249.44 balance  
-
$4,032.90 cash W/D  
with $2,783.46 Meleg  
money  
Investment -  
$
68,676.44  
-
$20,000 to DPR with  
18,750.56 Meleg  
$
Loss -  
money to reduce DPR  
O/D of $27,510.43  
$68,676.44  
MM  
July 7, 2008  
-
$20,000 to S. Huntley  
with $18,750 Meleg  
money  
-
$2,000 to A. Morgan  
with at least $750.56  
Meleg money  
Total  
investment is  
268,676.44  
$
Total loss is  
$268,676.44  
CHART 1  
Reeve Hotels deposit of  
$200,000  
May 22, 2008  
Total  
Doug Thiel  
investment is  
-
$200,000 to Reeve  
$200,000  
Hotels with prior $38.96  
balance  
-
confirmed  
by App. C of  
GT Report,  
p. 13  
24  
Breadalbane May 26, 2008  
Total loss is  
$200,000  
-
$200,000 transferred  
to DPR A/C with  
$199,961.04 Thiel  
money  
-
DPR pays:  
1. O/D of $60,645.94  
with $60,606.98 Thiel  
-
15 –  
money  
. $10,000 to C. Reeve  
2
with $9,852.17 Thiel  
money  
-
Payment to C.  
Reeve is loan in  
accounting  
records or asset  
3. $102,270 to David  
Reeve with at least  
102,122.17 of Thiel  
money  
$
4. $10,000 to Daniel  
Reeve as S/H loan with  
at least $9,852.17 of  
Thiel money  
5. $23,564.57 to alleged  
victims/individuals with  
at least $23,147.83  
Thiel money. Alleged  
victim W. Boldt received  
$5,000 with at least  
$4,852.17 Thiel money  
CHART 1  
Lynette &  
Robert  
Caiger  
-
$20,000-$25,000 to C.  
Total  
investment is  
Reeve “loan”  
$
100,000  
25  
MM  
June 1, 2008  
- $40,000 to Grand  
River Contracting  
-
confirmed  
by App. C of  
GT Report,  
p. 3  
Total loss  
is$100,000  
-
Remainder to  
transfers to Reeve  
Corporations  
CHART 1  
Kevin  
Hillman  
Investment -  
$41,031  
-
$12,000 to CJ with  
$557.02 Hillman money  
26  
- both  
MM  
July 7, 2008  
Loss -  
confirmed by  
App. C of GT  
Report, p. 7  
$41,031  
-
$30,500 to DPR which  
paid off O/D of  
26,781.10 with at least  
$
-
16 –  
$10,057.02 of Hillman  
money  
NOTE:  
This again shows  
weakness of Nagel  
approach. Of $41,031  
invested, less than  
$11,000 accounted for.  
CHART 2  
Investment -  
- $100,000 to C. Reeve  
with $98,437.13 of  
Hillman money  
$144,360.44  
Loss -  
$144,360.44  
- Payment to C. Reeve  
but in accounting  
Jakobstettel  
Aug. 8, 2008  
records as asset  
Total  
investment is  
185,391.44  
$
Total loss is  
$185,391.44  
CHART 1  
(
See related chart –  
Tab 35, Chart 3 of App.  
C, GT Report, relating  
to Steenbergen)  
-
$43,337.03 comingled  
with Livingstone,  
40,484.65 to MM A/C  
Cherrin  
Meleg  
Total  
investment is  
$
$
43,337.03  
27  
- confirmed  
by App. C of  
GT Report,  
p. 9  
MM  
July 7, 2008  
-
$79,027.88 of  
Total loss is  
43,337.03  
Livingstone/Meleg  
money to DPR  
$
-
DPR pays:  
1. O/D of $26,585.28  
2. $53,000 to Daniel  
Reeve A/C with  
$48,708.29 from  
-
17 –  
Livingstone/Meleg  
3
. $100,000 paid by  
Daniel Reeve A/C to  
Cheryl Reeve from  
Livingstone/Meleg,  
$48,708.29 and  
$45,647.90  
Steenbergen money  
CHART 1  
CJ deposit of $100,000  
(
+$625 prior balance)  
July 14, 2008  
-
M. McGuire deposits  
$171,932.54 same day  
-
Kaup deposit raises  
CJ balance to  
$
272,551.58  
Theresa  
Kaup  
Total  
investment is  
- $100,000 to C. Reeve  
with $99,374.96 from  
Kaup/McGuire money.  
$100,000 recorded as  
loan similar to asset.  
28  
$
100,000  
-
confirmed  
Jakobstettel July 14, 2008  
by App. C of  
GT Report,  
p. 7  
Total loss is  
100,000  
$
-
$115,000 to N. Herlick  
with $114,374.96 of  
Kaup/McGuire money  
-
$25,000 to Brossards  
with $21,668.48 of  
Kaup/McGuire money  
-
$30,000 to pay off  
DPR O/D of $26,338.32  
with $29,374.96 of  
Kaup/McGuire money  
CHART 1  
Eva Bernachi  
Investment -  
$
305,469.65  
CJ $305,469.65 deposit  
on July 21, 2008  
-
trial  
testimony:  
100,000  
principal and  
29  
Jakobstettel July 21, 2008  
Loss -  
$
$305,469.65  
-
$305,469.65 to CJ A/C  
with prior $54.20  
-
18 –  
$4,000  
balance  
interest paid  
-
$50,000 to C. Reeve  
with $49,945.80  
-
confirmed  
by App. C of  
GT Report,  
p. 1  
Bernachi money  
- $15,000 to E. Jantzi  
with $14,945.80  
Bernachi money re  
Reeve Hotels  
-
$1,000 cash  
withdrawal with $945.80  
Bernachi money  
-
$220,000 to DPR A/C  
with $214,745.80  
Bernachi money  
-
DPR pays:  
O/D of $29,906.66 with  
24,652.40 Bernachi  
money  
$
$115,000 to Pat  
Westerhout with  
$109,745.80 Bernachi  
money  
$75,000 to Keith Austin  
with $64,839.14  
Bernachi money  
CHART 2  
MM deposit of $300,000  
Sept. 12, 2008  
Investment -  
-
$300,000 to MM A/C  
with prior balance of  
$300,000  
Sept. 12,  
008  
MM  
$253.87  
2
Loss -  
$196,000  
-
$100,000 to C. Reeve  
with at least $99,764.13  
Bernachi money and  
placed in accounting  
records as loan (asset)  
-
$15,007.50 to D.  
-
19 –  
Martin with $14,746.13  
Bernachi money  
-
$80,007.50 to K.  
Austin with $79,746.13  
Bernachi money  
-
$48,000 to DPR A/C  
with $47,746.13  
Bernachi money  
-
$27,000 to DPR  
Windsor with  
$26,746.13 Bernachi  
money  
Total  
investment is  
$605,469.65  
Total loss is  
$501,469.65  
CHART 1  
-
$59,524.74 to CJ A/C  
with prior balance of  
$1,147.67  
-
$3,000 to C. Reeve  
with $1,852.33  
Wayne  
Schroeder  
Total  
investment is  
$59,524.74  
Schroeder money  
Aug. 22,  
008  
- $47,000 to DPR A/C  
with $45,852.33  
Schroeder money  
30  
- confirmed  
by App. C of  
GT Report,  
p. 6  
Jakobstettel  
2
Total loss is  
59,524.74  
$
-
DPR pays:  
1. O/D of $29,768.35  
with $28,620.68  
Schroeder money  
2. Remainder to  
expenses of DPR  
-
20 –  
Andrew  
Eplen  
CHART 1  
Total  
investment is  
$78,400  
- At least $40,376.44 to  
DPR which paid  
$21,275.15 payroll  
expenses, of which was  
paid by at least 90% by  
Eplen money  
-
confirmed  
MM (Costa  
Rica)  
Aug. 27,  
2008  
31  
by App. C of  
GT Report,  
p. 6  
Total loss is  
$78,400  
CHART 1  
Total  
investment is  
100,000  
-
$100,000 to CJ  
Craig Mason  
account which had  
25,027.32 in account  
$
$
-
confirmed  
32  
Jakobstettel Sept. 2, 2008  
by App. C of  
GT Report,  
p. 9  
Total loss is  
$100,000  
-
$100,000 paid to  
Grand River  
Contracting with at least  
$74,972.68 from Mason  
money  
CHART 1  
-
$9,600 to David  
Investment -  
Reeve with $9,046  
Galano money  
$74,000  
Pilita Galano  
Loss - 74,000  
- $64,700 to DPR with  
-
trial  
$64,146.13 from  
testimony: no  
interest  
-
$2,100  
Total  
Galano  
33  
MM  
Sept. 6, 2008  
received  
-
DPR O/D of  
$27,486.13 paid off  
-
App. C of  
GT Report,  
p. 6: $2,100  
investment is  
74,000  
$
Total loss is  
$71,900  
Jeanette  
Harrop  
CHART 1  
Total  
investment is  
62,714.24  
34  
- $47,606.87 Harrop  
money comingled with  
$40,890.24 from I.  
Thiessen and $100,000  
from C. Reeve  
$
-
confirmed  
MM  
Oct. 31, 2008  
by App. C of  
GT Report,  
p. 7  
Total loss is  
62,714.24  
$
-
21 –  
-
$83,191.41 from  
Thiessen/Harrop to pay  
$
186,000 to A. Morgan,  
or 94.7% of total  
Thiessen/Harrop  
investment  
CHART 2  
-
$15,107.37 Harrop  
money to CJ A/C  
-
$4,500 paid to C.  
Taylor with $946.51  
Harrop money  
-
$5,000 to M. Keddie  
with at least $1,446.51  
from Harrop  
Isaac  
Thiessen  
Total  
investment is  
$
40,890.24  
(See CHART 1 of  
Jeanette Harrop)  
35  
- confirmed  
by App. C of  
GT Report,  
p. 13  
MM  
Oct. 31, 2008  
Total loss is  
40,890.24  
$
CHART 1  
MM deposit of $150,000  
Nov. 2, 2008  
Brad  
Ashman  
- $150,000 to MM A/C  
with prior -$239.23 O/D  
Investment -  
$150,000  
-
$20,000  
- $239.23 O/D paid – all  
repaid in Jan.  
5, 2009  
Ashman money  
36  
MM  
Nov. 3, 2008  
Loss -  
$
150,000  
- $35,666 paid to other  
individuals and alleged  
victims with all Ashman  
money – $27,000 to  
Chin Tan and $7,000 to  
Marina Ognjanovski  
-
confirmed  
by App. C of  
GT Report at  
p. 1  
- $20,000  
-
$20,876.75 to  
Direction Inc. – all  
Ashman money  
-
22 –  
-
$7,709.86 to  
employees Linzie  
Brown, Lee Ann  
Ruggle, Barb Menard,  
Sarah Snow, Brent  
DeKoning – all Ashman  
money  
-
$7,000 to CJ – all  
Ashman money  
-
$4,000 to Millionaire  
Media – all Ashman  
money  
-
$11,743.38 to Ritz  
Carleton with  
10,743.48 Ashman  
money  
$
-
$21,805.57 to Midtown  
Business  
Centre with $20,805.57  
Ashman money  
-
$4,000 to Reeve credit  
card with $3,000  
Ashman money  
Total  
investment is  
$150,000  
Total loss is  
$130,000  
CHART 1  
-
$75,000 to Wealth  
Institute with prior  
Sherrill  
(
Martin)  
Total  
investment is  
$75,000  
$58,695 balance  
Stevenson  
MM (Wealth  
Institute)  
mortgage  
Nov. 10,  
2008  
37  
-
$115,000 paid to C.  
-
confirmed  
by App. C of  
GT Report,  
p. 12  
Reeve ($75,000) and K.  
Austin ($40,000) with  
Total loss is  
$75,000  
$
56,365 Stevenson  
money  
-
$75,000 to C. Reeve  
-
23 –  
with at least $16,305  
Stevenson money  
CHART 1  
-
$70,000 to MM with  
prior balance of $9.19  
-
$10,000 to A.  
Colquhoun with  
9,990.81 Smith money  
Carin Smith  
confirmed  
by App. C of  
GT Report,  
p. 11  
Total  
investment is  
$70,000  
$
-
Nov. 14,  
2008  
38  
MM  
- $10,000 to K. Hall with  
9,990.81 Smith money  
$
Total loss is  
$70,000  
-
$10,000 to K. Austin  
with $9,990.81 Smith  
money  
-
$25,412.03 to Paul  
Pilzner with $25,402.94  
Smith money  
CHART 1  
-
$75,000 to MM A/C  
which had prior  
$1,795.73 balance  
-
$10,000 to A. Smith  
(
Daniel’s girlfriend and  
employee) with  
$
8,204.27 Schnarr  
Paul & Lisa  
Schnarr  
money  
Total  
investment is  
$75,000  
-
$29,000 to alleged  
Dec. 31,  
39  
- confirmed  
by App. C of  
GT Report,  
p. 11  
MM  
victims with $27,304.27  
of Schnarr money –  
2008  
Total loss is  
$
2,000 to W. Jordan,  
20,000 to B. Ashman,  
2,100 to P. Galano,  
and $5,000 to W. Boldt  
$
75,000  
$
$
-
$32,266.43 to other  
individuals with  
$30,470.70 Schnarr  
money; Tony Herlick,  
Daniel’s driver, got  
$15,000 with  
$13,204.27 Schnarr  
-
24 –  
money  
Amending Separation Agreement – Jan. 15, 2009  
$1 Million Spousal Support/ Equalization Still Owing  
CHART 1  
-
$50,000 deposited into  
MM account to  
comingle with balance  
of $6,060.99  
Steve  
Manuel  
-
$15,000 paid to M.  
Ognjanovski and  
Total  
investment is  
$5,000 to R. Pigeon  
with at least $8,939.01  
of Manuel money paid  
to M. Ognjanovski  
-
confirmed  
$50,000  
40  
by App. C of  
GT Report,  
p. 9  
MM  
Jan. 19, 2009  
Total loss is  
50,000  
$
-
$25,499.50 to Daniel  
Reeve (not in loan A/C)  
with $19,438.51 from  
Manuel money  
-
$5,000 to C. Reeve  
which could have come  
from Manuel money  
CHART 1  
-
$5,000 to C. Reeve  
Linda Chaffe  
Total  
investment is  
$64,996.70  
-
$1,565.82 to M.  
McGuire  
-
confirmed  
41  
MM  
Feb. 6, 2009  
by App. C of  
GT Report,  
p. 3  
-
Remainder to  
Total loss is  
$64,996.70  
transfers to Reeve  
corporations which  
used money to pay  
expenses and other  
individuals  
-
25 –  
Summary – Post-Separation Agreement Investors  
Total interest payment post-separation  
$156,965.49  
agreement  
Total repayment of principal  
$120,000.00  
$276,965.49  
Total repayments  
See Schedule B  
Total Investments: $6,033,442.08  
Total Losses: $5,756,476.59  
%
%
Losses/Investments – 95%  
Repayment of principal/interest – 5%  
-
1 -  
Schedule H – No Copies of Corporate Bonds Provided to Investors (Post-  
Separation Agreement) 13-41 Chronology  
NOTE: Trial evidence and exhibits were compared to App. C. of GT Report. Where trial  
evidence differs from App. C. of GT Report, values most beneficial to accused are  
selected.  
LEGEND:  
MM – Millionaire Mortgage  
Cheryl Reeve – Separation Agreement – Nov. 26 – 29, 2007  
Re: Spousal Support/Equalization Payments  
Para. 5.8 - $3 Million to be Paid in $500,000 installments – Nov. 30, 2007 - Aug.1, 2008  
2
008 Investors  
No Repayments  
Made as Per  
Schedule 3B Nagel  
Report, Unless  
Otherwise Specified  
(
Note: Where trial  
evidence differs  
from App. C. of GT  
Report, value that  
is most beneficial  
to accused is  
Investment  
Approx. Date of  
Investments  
#
Copies of  
Corporate  
Bonds Provided  
(
Non-Payment  
Marked by )  
selected)  
MM  
MM  
Jan. 8, 2008  
Jan. 16, 2008  
Plaza  
13  
Peter Steenbergen  
-
No copy of  
June 27, 2008  
- confirmed by App. C.  
of GT Report, p. 11,  
except for $6.50  
corporate bond  
provided until  
January 2009  
3
interest payments of  
5,000  
MM  
Feb. 5, 2008  
May 1, 2008  
$
14  
Michelle Keddie  
No repayment on  
Breadalbane  
Breadalbane  
 
-
2 -  
–
both items confirmed  
by App. C. of GT  
Report, p. 8  
7
payments of $5,000  
=
$35,000  
15  
Warren Boldt  
Breadalbane  
Mar. 3, 2008  
-
confirmed by App. C.  
of GT Report, p. 2  
Trial testimony:  
10 monthly payments  
of $7,000  
=
$70,000 repayment  
App. C. of GT  
16  
Marina Ognjanovski  
Jakobstettel  
Breadalbane  
Mar. 4, 2008  
-
Report, p. 10 -  
$85,000 repayment  
$85,000 repayment  
selected  
-
p. 5 of App. C. of GT  
Report indicates  
repayment of  
$
187,000  
invested and  
Mar. 10, 2008*  
$
187,000 loss  
produces better  
result for accused  
as this is  
$12,438.73 on Mar.  
10, 2008 of $200,000  
investment  
*Reeve said  
Breadalbane was  
purchased Mar.  
17  
Ronald DeKoning  
10, 2008  
Trial evidence:  
$187,000 investment  
and $187,000 loss  
equivalent to  
$200,000  
investment with  
$13,000 returned  
1
8
9
Brian Crozier  
Breadalbane  
Mar. 10, 2008  
-
confirmed by App. C.  
of GT Report, p. 1  
Breadalbane  
Breadalbane  
Mar. 28, 2008  
May 2, 2008  
1
Dr. Ira Bernstein  
-
confirmed by App. C.  
of GT Report, p. 1  
-
3 -  
Breadalbane  
Jakobstettel  
Apr. 3, 2008  
July 10, 2008  
Received no  
repayments as per  
trial testimony  
-
App. C. of GT  
Report, p. 9 - Feb.  
009 – payment of  
20  
Mark McGuire  
2
$
1,565 for approval/  
MM  
Oct. 15, 2008  
setup fees  
$1,565 repayment  
selected  
Celebrity  
Management  
Apr. 28, 2008  
Aug. 18, 2008  
No repayment  
No repayment  
Jakobstettel  
4
interest payments of  
21  
Gary Raycroft  
$3,125 = $12,500 as  
per trial testimony  
MM  
Dec. 31, 2008  
P. 10 of App. C. of GT  
Report says $4,735  
$12,500 selected  
1
interest payment of  
$1,800 as per trial  
testimony  
-
confirmed by App. C.  
of GT Report,  
22  
Lorna Eadie  
Breadalbane  
May 12, 2008  
p. 6, except  
investment  
understated by $0.49  
–
see App. D., p. 1  
$1,800.49 selected as  
repayment  
Celebrity  
Management/  
Reeve Hotels/  
Breadalbane  
23  
Paul Meleg  
May 23, 2008  
-
4 -  
MM  
July 7, 2008  
-
both confirmed App.  
C. of GT Report, p. 10  
-
confirmed by App. C.  
of GT Report, p. 13  
2
4
5
Doug Thiel  
Breadalbane  
MM  
May 26, 2008  
Lynette & Robert  
Caiger  
(No copy of  
corporate bond  
provided until  
2
June 1, 2008  
- confirmed by App. C.  
of GT Report, p. 3  
November 2008)  
MM  
July 7, 2008  
Aug. 8, 2008  
Jakobstettel  
26  
Kevin Hillman  
No copy of  
corporate bond  
provided  
-
both confirmed by  
App. C. of GT Report,  
p. 7  
2
7
8
Cherrin Meleg  
Theresa Kaup  
MM  
July 7, 2008  
-
confirmed by App. C.  
of GT Report, p. 9  
2
Jakobstettel  
Jakobstettel  
July 14, 2008  
July 21, 2008  
-
confirmed by App. C.  
of GT Report, p. 7  
Non-payment  
$100,000 repayment  
of principal  
29  
Eva Bernachi  
One $4,000 interest  
payment  
MM  
Sept. 12, 2008  
-
confirmed by App. C.  
of GT Report, p. 1  
-
5 -  
Jakobstettel  
30  
Wayne Schroeder  
No copy of  
corporate bond  
provided  
Aug. 22, 2008  
-
confirmed by App. C.  
of GT Report, p. 11  
3
1
2
Andrew Eplen  
Craig Mason  
MM (Costa Rica)  
Jakobstettel  
Aug. 27, 2008  
Sept. 2, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 6  
3
confirmed by App. C.  
of GT Report, p. 9  
Testified she received  
nothing  
-
p. 6 of App. C. of GT  
Report says she got  
MM  
$2,100 on Jan. 5,  
33  
Pilita Galano  
No copy of  
corporate bond  
provided  
Sept. 6, 2008  
2009  
$2,100 selected as  
repayment  
-
-
confirmed by App. C.  
of GT Report, p. 6  
MM  
No copy of  
corporate bond  
provided until  
Feb. 2009  
34  
confirmed by App. C.  
of GT Report, p. 7  
Jeanette Harrop  
Oct. 31, 2008  
-
18C of exhibit  
stick  
MM  
35  
Isaac Thiessen  
Oct. 31, 2008  
No copy of  
- confirmed by App. C.  
of GT Report, p. 13  
corporate bond  
provided until  
Feb. 2009  
-
6 -  
-
41D of exhibit  
stick  
Received $20,000  
principal back in Jan.  
2009 due to  
MM  
repayment on  
3
6
7
Brad Ashman  
No copy of  
Nov. 3, 2008  
mortgage  
corporate bond  
provided  
- No interest paid,  
confirmed by App. C.  
of GT Report at p. 1  
MM (Wealth  
Institute)  
Sherrill (Martin)  
Stevenson  
3
Nov. 10, 2008  
No copy of  
corporate bond  
provided  
- confirmed by App. C.  
of GT Report, p. 12  
MM  
3
8
9
Carin Smith  
No copy of  
corporate bond  
provided  
Nov. 14, 2008  
Dec. 31, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 11  
3
Paul & Lisa Schnarr  
MM  
confirmed by App. C.  
of GT Report, p. 11  
Amended Separation Agreement – Jan. 15, 2009  
1 Million Spousal Support/ Equalization Still Owing  
$
4
0
1
Steve Manuel  
Linda Chaffe  
MM  
MM  
Jan. 19, 2009  
Feb. 6, 2009  
-
-
confirmed by App. C.  
of GT Report, p. 9  
4
No copy of  
corporate bond  
provided  
confirmed by App. C.  
of GT Report, p. 3  
-
7 -  
Summary – Post-Separation Agreement Investors  
Total interest payment post-separation  
$156,965.49  
agreement  
Total repayment of principal  
$120,000.00  
$276,965.49  
Total repayments  
-
1 -  
Schedule I – Reimbursement of Deferred Sales Charges and Withholding  
Tax and Rate of Return in Final Year (Post-Separation Agreement) 13-41  
Chronology  
NOTE: Trial evidence and exhibits were compared to App. C. of GT Report. Where trial  
evidence differs from App. C. of GT Report, values most beneficial to accused are  
selected.  
LEGEND:  
MM – Millionaire Mortgage  
Cheryl Reeve – Separation Agreement – Nov. 26 – 29, 2007  
Re: Spousal Support/Equalization Payments  
Para. 5.8 - $3 Million to be Paid in $500,000 installments – Nov. 30, 2007 - Aug.1, 2008  
2
008 Investors  
No Repayments  
Made as Per  
Schedule 3B Nagel  
Investment  
(
Note: Where trial  
evidence differs  
from App. C. of GT  
Report, value that  
is most beneficial  
to accused is  
Reimbursement of  
DSC Fees and  
W/H Tax and Rate  
of Return in Final  
Year  
Approx. Date  
Report, Unless  
of Investments Otherwise Specified  
#
(
Non-Payment  
Marked by )  
selected)  
MM  
MM  
Jan. 8, 2008  
Jan. 16, 2008  
13  
Peter Steenbergen  
Plaza  
June 27, 2008 - confirmed by App. C.  
of GT Report, p. 11,  
except for $6.50  
MM  
-
$97,691.65 bond  
3
interest payments of  
5,000  
given on $90,000  
payment.  
14  
Michelle Keddie  
Feb. 5, 2008  
$
-
2
2 year bond pays  
2% first year and  
 
-
2 -  
30% second year  
No repayment on  
Breadalbane  
Breadalbane  
May 1, 2008  
Mar. 3, 2008  
–
both items confirmed  
by App. C. of GT  
Report, p. 8  
7
payments of $5,000  
=
$35,000  
15  
Warren Boldt  
Breadalbane  
-
confirmed by App. C.  
of GT Report, p. 2  
Trial testimony:  
10 monthly payments  
of $7,000  
=
$70,000 repayment  
App. C. of GT  
16  
Marina Ognjanovski  
Jakobstettel  
Mar. 4, 2008  
-
Report, p. 10 -  
$85,000 repayment  
$85,000 repayment  
selected  
Breadalbane  
187,000 invested  
and $187,000 loss  
produces better  
result for accused  
as this is equivalent  
to $200,000  
-
p. 5 of App. C. of GT  
Report indicates  
repayment of  
Mar. 10, 2008*  
$
$12,438.73 on Mar.  
*Reeve said  
10, 2008 of $200,000  
investment  
17  
Ronald DeKoning  
Breadalbane  
was purchased  
Mar. 10, 2008  
Trial evidence:  
187,000 investment  
and $187,000 loss  
$
investment with  
$13,000 returned  
Breadalbane  
-
bond for  
$
161,325.09  
18  
Brian Crozier  
Mar. 10, 2008  
-
confirmed by App. C.  
of GT Report, p. 1  
despite payment of  
just $159,601.95  
-
on Dec. 9, 2008,  
-
3 -  
Daniel signs  
agreement to pay  
extra $47,880.59  
on this investment  
for withholding  
taxes  
Breadalbane  
Breadalbane  
Mar. 28, 2008  
May 2, 2008  
19  
Dr. Ira Bernstein  
-
confirmed by App. C.  
of GT Report, p. 1  
Breadalbane  
Jakobstettel  
Apr. 3, 2008  
July 10, 2008  
Received no  
repayments as per  
trial testimony  
-
App. C. of GT  
Report, p. 9 - Feb.  
2009 - payment  
20  
Mark McGuire  
of $1,565 for  
MM  
Oct. 15, 2008  
approval/setup fees  
$1,565 repayment  
selected  
Celebrity  
Management  
Apr. 28, 2008  
Aug. 18, 2008  
No repayment  
No repayment  
Jakobstettel  
4
interest payments of  
21  
Gary Raycroft  
$3,125 = $12,500 as  
per trial testimony  
MM  
Dec. 31, 2008  
P. 10 of App. C. of GT  
Report says $4,735  
$12,500 selected  
Breadalbane  
1
interest payment of  
22  
$
1,800 as per trial  
Lorna Eadie  
- 2 bonds provided  
of $150,000  
May 12, 2008  
testimony  
=
$300,000  
-
confirmed by App. C.  
-
4 -  
of GT Report,  
-
Eadie paid  
$
244,000 for 2  
p. 6, except  
investment  
understated by $0.49  
bonds and given  
extra $56,000 in  
bonds  
–
see App. D., p. 1  
$1,800.49 selected as  
repayment  
Celebrity  
Management/  
Reeve Hotels/  
Breadalbane  
May 23, 2008  
July 7, 2008  
MM  
23  
Paul Meleg  
-
16% interest for 2  
years  
-
both confirmed App.  
rd  
C. of GT Report, p. 10  
-
60% interest in 3  
year  
2
4
5
Doug Thiel  
Breadalbane  
May 26, 2008  
June 1, 2008  
-
confirmed by App. C.  
of GT Report, p. 13  
Lynette & Robert  
Caiger  
2
MM  
MM  
- confirmed by App. C.  
of GT Report, p. 3  
-
In final year 3,  
interest rate is 80-  
4%  
8
July 7, 2008  
-
Bond in amount of  
26  
Kevin Hillman  
$51,031.78 instead  
of $41,031.78  
provided  
Jakobstettel  
Aug. 8, 2008  
-
both confirmed by  
App. C. of GT Report,  
-
5 -  
p. 7  
MM  
-
18% for 2 years  
2
7
8
Cherrin Meleg  
Theresa Kaup  
July 7, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 9  
rd  
-
65% interest in 3  
year  
2
Jakobstettel  
July 14, 2008  
July 21, 2008  
confirmed by App. C.  
of GT Report, p. 7  
Jakobstettel  
MM  
Non-payment  
$100,000 repayment  
of principal  
2
9
0
Eva Bernachi  
- Jakobstettel bond  
promises to pay  
DSC fees and pre-  
paid taxes on July  
One $4,000 interest  
payment  
Sept. 12, 2008  
Aug. 22, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 1  
21, 2011  
3
Wayne Schroeder  
Jakobstettel  
confirmed by App. C.  
of GT Report, p. 11  
MM (Costa Rica)  
-
Interest of 16%  
paid on  
$111,978.01 for 5  
years instead of  
31  
Andrew Eplen  
Aug. 27, 2008  
$78,400 provided  
- confirmed by App. C.  
of GT Report, p. 6  
-
Bond final year:  
65.7% interest  
above criminal  
interest rate  
Jakobstettel  
-
Bond says 16%  
interest  
32  
Craig Mason  
Sept. 2, 2008  
-
confirmed by App. C.  
of GT Report, p. 9  
-
In reality, years 1-  
-
6 -  
4
-
= 23% interest  
Year 5 = 66%  
interest  
-
Mason receives 3  
times original  
investment over 5  
years  
Testified she received  
nothing  
-
p. 6 of App. C. of GT  
Report says she got  
$2,100 on Jan. 5,  
33  
Pilita Galano  
MM  
Sept. 6, 2008  
2009  
$2,100 selected as  
repayment  
-
-
confirmed by App. C.  
of GT Report, p. 6  
3
4
5
Jeanette Harrop  
Isaac Thiessen  
MM  
MM  
Oct. 31, 2008  
Oct. 31, 2008  
confirmed by App. C.  
of GT Report, p. 7  
-
received $50,000  
bond for  
3
- confirmed by App. C.  
of GT Report, p. 13  
$
40,890.24  
investment  
Received $20,000  
principal back in Jan.  
2009 due to  
repayment on  
mortgage  
3
6
7
Brad Ashman  
MM  
Nov. 3, 2008  
Nov. 10, 2008  
-
No interest paid,  
confirmed by App. C.  
of GT Report at p. 1  
Sherrill (Martin)  
Stevenson  
MM (Wealth  
Institute)  
3
-
confirmed by App. C.  
-
7 -  
of GT Report, p. 12  
3
8
9
Carin Smith  
MM  
MM  
Nov. 14, 2008  
Dec. 31, 2008  
-
-
confirmed by App. C.  
of GT Report, p. 11  
3
Paul & Lisa Schnarr  
confirmed by App. C.  
of GT Report, p. 11  
Amending Separation Agreement – Jan. 15, 2009  
1 Million Spousal Support/ Equalization Still Owing  
$
4
0
1
Steve Manuel  
Linda Chaffe  
MM  
MM  
Jan. 19, 2009  
Feb. 6, 2009  
- confirmed by  
App. C. of GT  
Report, p. 9  
4
- confirmed by  
App. C. of GT  
Report, p. 3  
Summary – Post-Separation Agreement Investors  
Total interest payment post-separation  
agreement  
$156,965.49  
$120,000.00  
$276,965.49  
Total repayment of principal  
Total repayments  
-
1 -  
Schedule J – Glossary of Terms and Acronyms  
Term or Acronym  
Meaning  
CFP  
CPP  
Certified Financial Planner designation  
Canada Pension Plan  
CRA  
Canada Revenue Agency  
One of Daniel Reeve’s companies  
Deferred Sales Charges  
DPR Financial  
DSC  
FA  
Financial advisor  
FIFO  
FISCO  
FP  
First In, First Out  
Financial Services Commission of Ontario  
Financial plan  
GIC  
Guaranteed Investment Certificate  
Guaranteed Investment Fund  
Goods and services tax  
GIF  
GST  
GT Report  
HST  
Grant Thornton forensic accounting report (Crown Report)  
Harmonized sales tax  
IFA  
International Forensic Accounting  
Last In, Last Out  
LILO  
LOC  
Line of credit  
MER  
MFs  
Management Expense Ratio  
Mutual funds  
MGA  
MM  
Daniel’s licencing/regulatory body – Managing General Agency  
Millionaire Mortgage  
NSF  
Not Sufficient Funds  
PA  
Power of attorney  
 
-
2 -  
RIF  
RRIF  
RRSP  
RSP  
Retirement Income Fund  
Registered Retirement Income Fund  
Registered Retirement Savings Plan  
Registered Savings Plan  
SFs  
Segregated funds  
T-SWP  
VTB  
A form of mutual fund paying back interest and principal over time  
Vendor take-back (Mortgage)  
WHA  
WRPS  
Workhorse account  
Waterloo Regional Police Service  
CITATION: R. v. Reeve, 2017 ONSC 5376  
COURT FILE NO.: CR-13-8029  
DATE: 20171013  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
B E T W E E N:  
Her Majesty the Queen  
Applicant  
and –  
Daniel Reeve  
Respondent  
REASONS FOR JUDGMENT  
Justice T. Skarica  
Released: October 13, 2017  


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