No due process for Canadian businessman?
According to this story in a Dominican Republic newspaper dated May 2, 2017, a Canadian business executive from Ontario who appears to majority own a chain of casinos and sports betting offices in the Dominican Republic called the Dream Casinos has been incarcerated in the Dominican Republic for over two years without a trial.
Antonio Carbone was arrested on January 25, 2015, in the Dominican Republic and charged with attempting to murder a Dominican foreign national named Fernando Baez Guerrero, by allegedly setting fire to Baez’ car on December 1, 2014.
The litigation is complicated with many moving parts.
Before Mr. Carbone was arrested in the Dominican Republic, he was named as a defendant in an Ontario civil litigation in respect of Dream Casinos. The plaintiff is a billionaire Canadian businessman named Michael DeGroot, who alleged that one or more defendants borrowed $110 million from him to build the Dream Casinos business which was not repaid when due. Several of the parties filed other lawsuits against each other and there are now many pieces of litigation in Ontario as well as in the Dominican Republic.
Dominican Republic prosecutor handling Carbone case says her judicial system is corrupt
The criminal complaint against Mr. Carbone was filed by a prosecutor in the Dominican Republic named Yeni Berenice Reynoso. Shortly after filing the criminal complaint, she told the media that in 90% of the organized criminal cases, their police or army are involved in and perform contract killings. If Ms. Reynoso is to be believed, what she effectively stated was that in some cases in the Dominican Republic, the police will kill a defendant for a pay-off. On another occasion, she told the media that she is ashamed to be part of her judicial system because it is corrupt.
According to Canadian government exit records that allegedly were provided in a Dominican Republic proceeding, Mr. Carbone was not in the Dominican Republic on December 1, 2014. Further, according to interviews by The Fifth Estate (reported here), the allegations against Mr. Carbone in the Dominican Republic are based on what turned out to be unreliable evidence, namely inconsistent statements of alleged facts that were later contradicted.
Who legally owns the Dream casinos?
According to corporate records filed in Canada for the Ontario litigation, 85% of the shares in the casino chain referred to as Dream Casinos Corporation Inc. are beneficially owned by Antonio Carbone and his bother, Francesco Carbone. A third person, named Andrew Pajak, owns a 15% stake in the casino chain. Mr. Pajak gave sworn testimony in an Ontario proceeding corroborating that legal and beneficial ownership structure. Also according to evidence from a Court-appointed expert, a fourth person, named Edward Kremblewski holds no shares of the Corporation and has no interest in the casino assets but has exclusively managed the financial affairs of the Dream casinos since November 2011. According to a second Court-appointed expert, the person named Kremblewski has been the sole manager in charge of all of the affairs of the corporation in Canada and the Dominican Republic since late 2013. All four are from Toronto.
Much of the testimony in the Ontario proceedings are at odds but there appears to be agreement among all parties in Ontario about share ownership and agreement among all parties that by mid-2013, the Carbone brothers were effectively forcibly exited from management of the casinos. There is also consistency among all sides that the Carbone brothers did not sell their 85% stake in the company or its assets. The affairs of Dream casinos have been in legal and corporate limbo since mid-2013.
The gist of the facts that seem to emerge from the pleadings in Ontario seem to be that the Carbone brothers put sweat equity into building the business; Mr. DeGroot put in the financial equity; and somewhere in between those two pillars who founded the enterprise, the funds invested and the assets and property acquired with their joint efforts allegedly disappeared and allegedly no one, it seems, can say where either the money or the assets went.
Which is odd because the shares and all the assets are frozen by Ontario court orders, so no transfers could occur of any assets. Because the Corporation’s shares are frozen, no votes of shareholders could occur to approve the dissipation of any assets in any event. The corporate entities are not, it would seem, authorized to instruct corporate counsel to defend the corporate entities.
Cash moved from Dominican Republic to Canada
Kremblewski allegedly lives in the Dominican Republic, returning to Toronto regularly according to evidence filed in Ontario.
The financial information connected to the Ontario litigation is interesting. To wit, the minority shareholder, Mr. Pajak, gave a statement under oath in Ontario that Kremblewski has taken thousands of dollars in cash from one or more of the corporate-owned casinos in the Dominican Republic and imported it to Canada. When subsequently asked what was purchased with such cash, Mr. Pajak deposed that such purchases included a toilet plunger at Canadian Tire and coffee at Walmart.
According to Mr. Pajak’s testimony, Kremblewski self-authorized the payment to himself of a commission of 2.5% from the profits from the Dream Casinos in the Dominican Republic. Mr. Pajak’s evidence was that that amount was $195,000 just for October 2013. Therefore, in addition to his salary, if the numbers remained constant, that would theoretically mean Kremblewski received upwards of approximately $14 million since 2011, pursuant to what Mr. Pajak deposed seems to be an alleged verbal agreement. Mr. Pajak further deposed that, with respect to the alleged verbal agreement that Kremblewski is entitled to receive 2.5% of the profits, the Carbone brothers are the only ones who can confirm its existence or not. If they cannot so confirm, presumably the $14 million allegedly paid in compensation based on calculating what Mr. Pajak deposed was paid for one month, will have to be paid back to the corporation. Mr. Pajak then provided evidence of a tax filing by Kremblewski to the effect that in 2011, Kremblewski declared to the government that he had received fees of only $17,500.
In a separate and earlier Court proceeding, Mr. Pajak apparently testified before an Ontario judge that Mr. Carbone was “honest and hardworking” and so integral to his businesses that his [previous] business could not have grown to the extent it had without his work. No evidence has been deposed to explain what happened in Canada that caused a rift between Mr. DeGroot, Pajak and the Carbone brothers.
Witnesses that changed their stories
Back in the Dominican Republic, the gist of the criminal allegations against Mr. Carbone that have landed him in jail stem from evidence from the sworn statements of two men – one made by a Dominican person named Juan Isidro Infante Sepulveda and the other made by Fernando Baez. Mr. Baez was a junior employee of Mr. Carbone.
Ms. Reynoso’s theory of the case is that Antonio Carbono attempted to assassinate his employee, Baez, to take control of Dream Corporation. However, as Mr. Pajak deposed in Ontario, Mr. Carbone already owned 85% of Dream Corporation with his brother. Her argument is effectively that getting rid of an employee who owns no part of your company will yield you back your own company.
First witness given $1 million of Dream Corporation asset
According to Reynoso, Infante gave a sworn statement that he heard Mr. Carbone plotting to kill Baez and heard him say he had hired two hit men to do the job. He also allegedly gave a sworn statement that he was later with Mr. Carbone and heard him celebrating the burning of Baez’s car on the night of December 1, 2014, in the Dominican Republic.
Apparently, Infante has a criminal record and as such, his evidence is not to be accepted quickly because experience has shown such people not to be reliable (R. v. Corbett, SCC). And indeed, Infante changed his story.
He told CBC’s The Fifth Estate that he never discussed a murder plot with Mr. Carbone at any time, and never heard any of the Carbone brothers discussing a murder plot against Baez. Infante also told The Fifth Estate that he is no longer sure on what date he is alleged to have seen and heard Mr. Carbone allegedly celebrating the alleged car fire.
It is also alleged that Infante acquired from Dream Corporation, title to 30% of a $4 million condo building in the Dominican Republic shortly after he gave his statement in 2015, deposing to the facts above. This too is unusual because of the existence of an Ontario court orders that froze all of the assets of Dream Corporation wherever situated and prohibited the dealing in them absent shareholder approval.
Mr. Carbone was in Canada on the day of the alleged car bomb
In the Dominican Republic, Mr. Carbone claims that he was in Canada on December 1, 2014, the day a bomb allegedly exploded in the vehicle of Baez that allegedly was an attempt to murder him.
In February 2016, the Canadian government through the CBSA, released records in respect of Antonio Carbone for his international travel that show that Mr. Carbone arrived at Pearson International Airport and entered Canada on the evening of November 29, 2014. They also show the airline on which he traveled, as well as the immigration officer who processed him through customs. Canada did not back then, create exit records but the evidence filed shows that Mr. Carbone had a WestJet boarding pass evidencing that he departed from Canada on December 2, 2014, and entered the Dominican Republic on December 2, 2014, the day after there was an alleged attempt on the life of Baez.
Second witness given $500,000
The Fifth Estate also discovered problems with the sworn statements of Baez.
He swore that on December 1, 2014, as he arrived home and climbed out of his car after work, a bomb exploded in his car. In this newspaper story, Baez is quoted as saying that as he was exiting his car, there was an explosion in his car and then boom – “flames”. Apparently, despite exiting a car violently exploding by a bomb, Baez suffered no personal injuries and did not require medical attention (see this brochure from the CDC on the extent of injuries that occur to a human hit by a car bomb).
Then Baez, like Infante, changed his story.
He spoke with CBC’s The Fifth Estate in the Dominican Republic and admitted that he was not in the car when it exploded by a bomb, and he did not narrowly escaped with his life, as he alleged. His new version of events is that he was not in the car. He hadn’t even driven that car that day. In fact, he was in a penthouse, many floors above when the car allegedly blew up.
The CBC’s The Fifth Estate says they obtained a copy of an audio recording wherein Baez discusses being paid $500,000 by Mr. Pajak to act against the Carbone brothers that was recorded prior to the arrest of Mr. Carbone. Baez told The Fifth Estate that he did indeed receive that exact sum of money. The National Post noted that there was allegedly a plan to acquire evidence to harm the Carbone brothers and land them in jail, and the offered price was, coincidentally, $500,000.
It seems to appear that there are two people involved who allegedly financially benefited from providing evidence in a criminal proceeding who changed their stories.
Prosecutor changes the facts
Here it appears that the prosecution facts changed as well. The time changed a lot – now the alleged car bombing happened in the early morning of December 1, 2014 (as opposed to late at night when Baez was allegedly returning from work). The damage changed a lot – now, it is alleged that the entire car was destroyed. And here, the prosecutor says that the evidence shows that Antonio Carbone threw an explosive device into the car just as Baez was leaving it, which is contradicted by Baez later saying he was not in the car. If Mr. Carbone threw the bomb into the car as Baez was exiting it, that means that Mr. Carbone was standing right beside the car, close enough to throw in a bomb. Ms. Reynoso informed the Court that by throwing a lit bomb into a parked car, Mr. Carbone was attempting to murder Baez.
On January 28, 2015, on the basis of the above facts, the Dominican Republic sought and obtained a pre-trial remand order to have Mr. Carbone incarcerated in the Dominican Republic for a term of one year because he was a flight risk.
The prosecution obtained the pre-trial incarceration order from a judge named Margarita Cristo Cristo. Ms. Reynoso later alleged that Judge Cristo Cristo was corrupt and that her rulings were for sale for payments of US cash, and in one case, she alleged that Judge Cristo Cristo accepted a bribe of US$2 million to rule in favour of a defendant. Does this mean that the order in this case was bought?
No arrest warrant to detain Mr. Carbone at international airport
According to documents filed in the Dominican Republic courts, Mr. Carbone seems to have been held in the Dominican Republic unlawfully. That is because he was arrested at the Punta Cana International Airport at 7:30pm. There was no warrant for his arrest at 7:30pm. A warrant for his arrest was only applied for at 10:30pm and issued at 10:51pm. It appears that they detained him without legal authority.
According to Court documents filed in the Dominican Republic, the arrest warrant was obtained by a prosecutor named Ysidro Vasquez Pena, who was arrested months later for corruption in connection with allegations that he too accepts bribes for issuing judicial orders and engages in extortion. He is accused of accepting US$250,000 from people to avoid being prosecuted by him for serious crimes or to sign orders of alleged criminality to incarcerate people. Does this mean that the order in this case was bought?
Second trial for shares
There is a second lawsuit in the Dominican Republic – Mr. Pajak is allegedly suing Mr. Carbone, among others, for allegedly fraudulently trying to take over Dream casinos, which seems inconsistent with his Ontario evidence where he deposed that he is a mere 15% shareholder of Dream Corporation – the remainder of which he deposed, is held by the Carbone brothers. And given that there are Ontario Court Orders that froze all of the assets, there would be nothing accessible to take over or control.
Third trial for alleged B&E
There is a third litigation in the Dominican Republic in which several people are charged with allegedly breaking and entering the Dream casinos head office in the Dominican Republic, some allegedly with weapons in December 2013. A hearing for that case took place on April 26, 2017, or was supposed to have taken place, based on complaints filed by what the Dominican Court referred to as two “victims” who were in the office working together during the break in – Kremblewski and a person named Gianpietro Tiberio. Tiberio is a Canadian who is alleged to be a member of the Montreal Mafia and alleged to be part of the Rizzuto clan. The Quebec Charbonneau Commission noted Tiberio’s alleged Mafia affiliation, noting he was one of their “soldiers”. According to an article in the Globe & Mail, Kremblewski informed The Fifth Estate that Tiberio worked with him in the Dominican Republic at Dream casinos in 2013. The government of the Dominican Republic, in its Notice of Hearing for this case, listed Tiberio as a person who would be testifying in Court on behalf of Dream casinos, as the corporate victim, meaning he is presumably representing the Canadian corporation in the Dominican Republic.
Ontario civil litigation
The Dominican Republic litigations have moved much faster than the Ontario litigations. None of the parties sought any orders to stay litigation in one country or the other, which means that duplicate and possibly inconsistent orders may flow from two countries over the same disputes, the same parties and the same assets and enforcement may be defeated as a result.
Some of the eye-popping allegations from the pleadings in the Ontario litigations are as follows:
- Dream Corporation was lent $110 million by Mr. DeGroot to build the casino chain in the Dominican Republic and some of the money allegedly is not accounted for while it was under the watch of a registered CPA whom a Court appointed expert subsequently suggested could not, or did not, prepare a balance sheet;
- After the money allegedly disappeared, Kremblewski informed The Fifth Estate that the Mafia from the Montreal Rizzuto clan was working with him at the Dream casinos in the Dominican Republic. The Fifth Estate broadcast video footage of both Vito Rizzuto, the former godfather of Montreal Mafia at one of the casinos and of Tiberio milling around a Dream casino property;
- Mr. DeGroot seems to have taken no action to recover funds allegedly lost or to install competent financial advisors or casino managers, as recommended by a Court appointed casino expert, to oversee the operations in the Dominican Republic;
- The Globe & Mail article about the case referred to a report by a Court-appointed receiver that evidenced millions of dollars of corporate funds that were used to pay for dental work, hair cuts, private club memberships, a girlfriend to travel to Russia and to buy lingerie; and
- The casino chain founded by the Carbone brothers continues to earn $2-3 million per month according to an Ontario Court appointed expert report and profits from such revenues apparently is not being dividended out to the shareholders of the Corporation or making its way back to the Corporation and appearing on its financial statements, or being used to pay back any of the outstanding loans to Mr. DeGroot.
And there was a private jet too, which was allegedly sold and the proceeds of which may or may not have been used to pay down the loans to Mr. DeGroot. The expert reports filed in Ontario have not yet disclosed the flight manifests and who flew on the jet, when and to where. What if Tiberio or Rizzuto show up on the flight manifest of the corporate jet?
Stay away for your own safety
It almost seems as if Mr. DeGroot was also exited from Dream Casinos at the same time as the Carbone brothers, or shortly thereafter, which may explain why, in the civil litigations in Ontario, there seems to be so little visibility over its operations in the Dominican Republic after mid-2013.
The Dream Casinos in the Dominican Republic have suffered from allegations online that they are operate with some element of criminally at one of its properties. For example, there are public posts like the one below on a popular travel website from 2014 continuing to this date, that describe ways in which tourists say they are ripped off at the Dream casino in Punta Cana. One of them describes being extorted at gunpoint to pay gambling debts they didn’t incur. Others describe how foreign tourists were illegally detained and intimidated for hours while the extortions took place. It is unfortunate for many reasons, including that this is a Canadian company and it harms the Canada brand and the reputations of Canadian business people around the world.
For your own personal safety, if you’re going on vacation, you may want to stay away from the Dominican Republic and certainly never invest there.