Lessons from the Antonio Carbone / Dream Casinos case – stay away from the Dominican Republic

By Christine Duhaime | May 2nd, 2017

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 majority owns the Dream Casinos, Antonio Carbone, who has been incarcerated in the Dominican Republic for over two years without a trial and without the benefit of due process, will remain incarcerated for what appears to be an indefinite period of time.

Mr. Carbone was arrested on January 25, 2015, in the Dominican Republic on an allegation of attempting to murder a Dominican foreign national, Fernando Baez Guerrero, by allegedly setting fire to Baez’ vehicle on December 1, 2014, however, according to Canadian government exit records, 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.

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.”

Who legally owns the Dream casinos?

According to corporate records filed in Canadian Courts, 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. The common denominator appears to be Kremblewski, who appears to control the direction of the finances of the enterprise on the ground in the Dominican Republic.

Although much of the Ontario testimony is at odds, there is agreement among everyone about share ownership and agreement that by mid-2013, the Carbone brothers were effectively forcibly exited from management of the casinos. There is consistency among all sides that the Carbone brothers did not sell their 85% stake in the company or its assets. The result is that the affairs of Dream casinos have been in legal and corporate limbo ever since mid-2013. The limbo state stems from a lawsuit commenced by a Toronto billionaire named Michael DeGroot against several parties over $110 million he advanced as a series of loans for Dream Casinos for which he obtained a security interest over the assets.

The gist of the facts that emerge from the lawsuits are 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 disappeared to. Which is odd because as noted above, the assets are frozen by Canadian Court Orders and have registered security interests over them, 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, even authorized to have retained corporate counsel.

Cash moved from Dominican Republic to Canada

Kremblewski lives in the Dominican Republic, returning to Toronto regularly according to Court filed evidence in Ontario.

The evidence filed thus far in the litigation are mind-boggling from a financial perspective. To wit, the minority shareholder, Mr. Pajak, gave statements under oath in Ontario that Kremblewski has taken thousands of dollars in cash from one or more casino in the Dominican Republic and imported it to Canada. When subsequently asked what was purchased with such bags of 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 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 in October 2013. Therefore, in addition to his salary and a paid condo, security staff, golf membership, if the numbers remained consistent, 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 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 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 disclosed to the government that he had received fees of only $17,500. In a separate and earlier Court proceeding, Mr. Pajak 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.

Witnesses that changed their stories

In the Dominican Republic, the gist of the criminal allegations against Mr. Carbone that have landed him in jail filed 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.  The corporate entity owned all of the assets in the Dominican Republic. It is hard to follow the logic 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. A criminal record, even in the Dominican Republic, indicates a person whose evidence is not to be accepted quickly because experience has shown such people not to be reliable (R. v. Corbett, SCC), a legal concept presumably familiar to Ms. Reynoso.

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 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 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

Mr. Carbone claims that he was in Canada on December 1, 2014, the day the car bomb that allegedly exploded the vehicle of Baez  took place 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 does not create exit records but Mr. Carbone has a WestJet boarding pass showing 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. Ms. Reynoso has declined to accept the evidence from the CBSA.

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 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 incapacitating injuries that occur to a human hit by a car bomb).

This picture, taken minutes after the explosion of a home-made car bomb in Pakistan, is what a car bombing looks like. A person in the position of Baez could not have walked away injury-free from a car bombing, if a car bombing even occurred.

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 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 by a bomb.

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.

So now it appears that there are two people involved alleged who financially benefited from providing evidence in a criminal proceeding who also changed their stories.

Prosecutor changes the facts 

Here it appears that the prosecution story is changing as well. Now the alleged car bombing happened in the early morning of December 1, 2014 (as opposed to late at night as first alleged when Baez was allegedly returning from work) and that the entire car was destroyed. And here, the prosecutor is alleging that Antonio Carbone threw an explosive device into the car just as Baez was leaving it – a fact 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 in at his home, that means that Mr. Carbone was standing right beside the car, close enough to throw in a bomb. Ms. Reynoso informed the Court that Mr. Carbone attempted to murder Baez. If true, it would mean that this was the sequence of events:

  • Baez parked his car;
  • Baez saw Antonio Carbone standing beside his parking spot;
  • Antonio Carbone was holding a lit (as in live) bomb that was ready to explode;
  • Baez left his car windows open;
  • Baez commenced to exit his car;
  • Mr. Carbone threw the lit bomb into the open window of the car;
  • The bomb then exploded on impact as Baez was exiting;
  • Neither Baez or Mr. Carbone were injured;
  • Baez said nothing to Mr. Carbone; and
  • Baez did not have Mr. Carbone arrested even though he was allegedly standing right beside him.

On January 28, 2015, on the basis of the above facts, the Dominican Republic sought and obtained a pre-trial order to have Mr. Carbone incarcerated in the Dominican Republic for a term of one year because he was allegedly a “flight risk.”

The prosecution obtained the pre-trial incarceration order from a judge named Margarita Cristo Cristo. Ms. Reynoso alleged in the media 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 the payee. We don’t know if this order was purchased. 

No arrest warrant to detain Mr. Carbone at international airport

According to documents filed in the Dominican Republic courts, Mr. Carbone has been held in the Dominican Republic unlawfully. That is because he was arrested at the Punta Cana International Airport at 7:30pm but 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 so that he would miss his flight.

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.

Second trial for shares

There is a second lawsuit in the Dominican Republic – Mr. Pajak is suing Mr. Carbone, among others, for allegedly fraudulently trying to take over Dream casinos, which seems inconsistent with his Ontario deposition 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 corporations in Ontario and the assets, there would be nothing available for anyone, including Mr. Carbone, to take over or control.

Third trial for alleged B&E

And there is a third litigation as well in which several people from the Dominican Republic 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 Vito Rizzuto clan. The Quebec Charbonneau Commission also 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 Mr. Tiberio did indeed work 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 Mr. Tiberio as a person who would be testifying in Court in this third trial on behalf of Dream casinos. The timeline seems to suggest that Mr. Tiberio is still in the picture, given that his name appears as a person to testify for the corporation as a victim of a corporate act.

Ontario civil litigation

These three cases in the Dominican Republic are a sub-set of a civil litigation in Ontario. Some of the eye-popping information from the Ontario litigation is as follows:

  • Dream Corporation was lent $110 million by Canadian billionaire Michael DeGroot to build a casino chain in the Dominican Republic and the money allegedly disappeared under the watch of a registered CPA whom a Court appointed expert subsequently stated had issues preparing a basic set of balance sheets;
  • After the money allegedly disappeared, Kremblewski acknowledged to The Fifth Estate that the Mafia from the Montreal Rizzuto clan were working with him at the Dream casinos in the Dominican Republic. The CBC broadcast video footage of both Vito Rizzuto, the former godfather of Montreal Mafia at one of the casinos and of Mr. Tiberio milling around the Dream casino properties;
  • Most the parties involved in the original loan are suing each other in Ontario on various charges related to the $110 million loan and the litigation has been protracted yet the original claimant, Mr. DeGroot, seems to have taken no further 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 to recover his loan. The loans are secured yet Mr. DeGroot has taken no action either to realize recovery of his security interests to recover the money he is alleged to have lost;
  • The Globe & Mail article about the case referred to a Court-appointed receiver report that evidenced millions of dollars of corporate funds that were used by one of these guys to pay for personal expenses like dental work, lingerie, designer clothing, hair cuts, private club membership, luxury cars, travel for a girlfriend to foreign countries, vacations and the like. Why Mr. DeGroot would not be moving to recover millions of dollars of those non-corporate expenses in what would be a super easy win is unknown; 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.

In no other place in the world that I am aware of, are casinos operated in this way with issues of integrity, as that term is used in the gambling sector, affecting the gambling industry, as in the Dominican Republic.

Stay away for your own safety

Since they forcibly exited the Carbone brothers and Mr. DeGroot from the operations of the Dream Casino in December 2013, it appears that Dream Casinos in the Dominican Republic have gone down hill and suffer from allegations that they are operated criminally. It may or may not be tied to the disclosure that the Mafia from Montreal became involved in its operations. To illustrate, there are voluminous public posts like the one below on the most popular travel website in the world from 2014 to today that describe the ways in which UK, American and Canadian tourists to the Dominican Republic 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 but also because this is a Canadian-run company and it harms the Canada brand and the reputations of Canadians around the world.

For your own personal safety, if you’re going on vacation, you may want to stay away from the Dominican Republic.

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