How Canadian billionaire’s US$111 million loan for casinos in the Dominican Republic turned into an ugly battle

By Christine Duhaime | December 28th, 2015

Mob & shady characters

The story of how Toronto billionaire Michael DeGroot allegedly lost US$111 million in connection with casinos in the Dominican Republic is a surreal story, and even more surreal is that some of the people the The Fifth Estate called the “shady cast of characters”, seem to have come out of it unscathed.

Mr. DeGroot is a well-known elderly Bay Street billionaire and philanthropist in Canada who founded Laidlaw.

In 2011, he was open to a new type of investment opportunity and was looking at casinos.

The Globe & Mail and The Fifth Estate investigated the story of how he came to be an investor in casinos in the Dominican Republic, and in this documentary called “The Mob and Michael DeGroot”, the Fifth Estate explains how, in 2011, Mr. DeGroot was approached by Toronto and Vaughn resident Andrew Pajak who introduced him to Antonio and Francesco Carbone, to invest in buying a series of old casinos, lottery businesses, nightclubs and such in the Dominican Republic under the umbrella of the Dream Group.

It’s not clear how Pajak knew DeGroot. Pajak allegedly has Mafia connections and was recorded saying that he moved money for the mob through real estate. In the recording below from the the Fifth Estate, he says: “I arranged to take care of a lot of the mob’s money … I don’t play fucking games.” And according to this report, Pajak had deeper connections – he is alleged to be a “mob associate in the 1st degree.”

According to The Fifth Estate, the Carbone brothers also allegedly had shady connections. They were alleged to be affiliated with an illegal online sports gambling website called Platinum Sports Book that the RCMP said had connections to the Mafia and the Hells Angels. The Carbone brothers deny they were connected to Platinum SB.

However, on a separate matter, they were charged and convicted of possession of illegal guns at a tobacco import business they owned and spent 60 days in jail in Toronto.

Pajak was friends with the Carbone brothers at that time. He submitted evidence before an Ontario Court Judge that the brothers worked for him in a gaming equipment related business, also in the Dominican Republic. In support of a light sentence for the gun possession charges against the Carbones, Pajak testified in Court that the Carbones were “honest and hardworking”, and so integral to his businesses that his [previous] business could not have grown to the extent it had, without the work of the Carbone brothers.

Spending sprees

According to Court filings, Pajak brought in a fourth person named Edward Kremblewski to be the CFO of the gambling businesses. Allegedly, Pajak and Kremblewski knew each other through the Polish community and since high school. Open source material indicates that Kremblewski was a member of the St. Casimir’s Church in Toronto and they both belong to the same golf club.

Together those four people – Pajak, the Carbone brothers and Kremblewski  – merged in connection with the gambling businesses in the Dominican Republic funded by significant investments from Mr. DeGroot.

$111 million unpaid & red flags of organized crime

The loan agreements pursuant to which Mr. DeGroot allegedly lent US$111 million to fund Dream Casinos required that the Dream Group disclose certain financial, operational and accounting records to Mr. DeGroot and pay him his portion of any profits, as well as repay funds advanced. Mr. DeGroot alleged that he didn’t receive complete or competent financial or operational records and allegedly, he never got his money back except for a small portion.

In late 2012, Mr. DeGroot eventually sued a number of corporations and individuals in Toronto to recover the debt owed and damages, alleging that they had defrauded him of US$111 million, including Antonio Carbone, Francesco Carbone, DC Entertainment Corporation, Dream Corporation Inc., Dream Casino Corporation, Dream Kisok Solutions Inc., Dream Group Holdings Corporation, Dream Lotto DCC, Andrew Pajak and Edward Kremblewski.

He is seeking $213 million in damages and a tracing of funds advanced under the loans.

A Court appointed monitor reported that investment funds from Mr. DeGroot were used for a private jet; luxury cars; personal expenses; a condo in St. Kitts; and office renovations. In just over one year (from 2011 – 2012), Dream Corporation allegedly went through US$111 million. The monitor stated that US$21 million disappeared.

Allegedly, $5 million was used to invest in a casino in Jamaica. But allegedly, the gambling regulator stated it had never heard of or licensed an entity funded by Mr. DeGroot and the casino that allegedly was to be bought, was shut down by the FBI.

Incompetent accounting 

The Court appointed monitor reported that the financial records of Dream Casinos were “grossly deficient and inconsistent” and not in keeping with known accounting standards.  An independent gaming consultant, Sonoco, tasked with completing a report of the assets of the Dream Group echoed KPMG’s findings. Kremblewski informed the monitor that he allegedly was told not to ever keep financial records of how the loan of US$111 million was used.

In 2014, when Sonoco asked Kremblewski why, as CFO he hadn’t created even a balance sheet for the casino properties, he “had no explanation.” Sonoco reported that under Kremblewski, “spending was out of control” and there were no controls in place.

More lawsuits

The Carbone brothers seem to have been ousted from Dream Corporation and the two remaining officers, Pajak and Kremblewski, operate the business.

The Carbone brothers are suing Pajak over an alleged attempt to take their shares in Dream Corporation without their authority and without paying them anything in respect of those shares.

Meanwhile Mr. DeGroot continues to sue them all to recover his money, and the defendants have launched lawsuits against each other.

Montreal Mafia at Dream Casino 

Journalists covering the story noted that there were “many red flags” that members of a transnational criminal organization may be involved in Dream Casinos and managing its affairs.

At one point, the well-known Montreal Mafia godfather Vito Rizzuto, considered the most powerful Mafia man in Canada before his death, visited the casino in the Dominican Republic with its current management. The video below shows some clips of his visit.

And as if there was not enough of a Mafia connection, Gianpietro Tiberio, referred to in the media in the Dominican Republic as the “representative of Mr. Pajak” and identified by the Quebec Charbonneau Commission as a member of the Montreal Mafia, worked at the casino in the Dominican Republic with Kremblewski (as noted in the Globe & Mail story).

As the Globe & Mail noted, it is suggested that the Montreal Mafia is in place running the Dream Casino in the Dominican Republic (see Globe & Mail story). And indeed, the media in the Dominican Republic reported, as Kremblewski had told the Globle & Mail, that Tiberio was working at Dream Casinos.

Tiberio appeared in a Court in the Dominican Republic, testifying as the owner of one of its subsidiaries here.

Everyone’s life is allegedly in danger

As it stands, no one seems safe in this case.

The Fifth Estate reported the existence of a tape that allegedly threatens the current management of Dream Group.  And there is a second tape that allegedly threatens the Carbone brothers.

In early 2015, Antonio Carbone was arrested in the Dominican Republic on charges of the alleged attempted murder of a low level employee in the Dominican Republic named Fernando Baez. The Fifth Estate reported that, despite his arrest, the evidence about which it was based was contradictory and tenuous.

Visitors says the Dream Casinos are extorting Canadian and American tourists at gunpoint

The Dream Casinos, as least as far as what tourists say in written reviews online, seem to be run-down. Here is a picture of one of the casinos. More pictures are available on this website and this website. Some of the reviews online that are posted from Canadian and American tourists who have visited Dream Casinos after the litigations commenced,  say that the casinos are operated by “criminals” and that tourists are ripped off. This review says: “These people should be in jail….they are nothing more than cons and criminals.”

At a second Dream Casinos location, tourists describe being forced and intimidated to pay large fictitious casino gambling debts:

  • In this review, a Canadian says Dream Casinos cheated her and her husband into incurring an alleged large gambling debt and forcibly tried to get them to pay $4,000 they didn’t owe at a criminal interest rate, and describes how they were made to feel intimidated and harassed for payment.
  • This woman’s boyfriend was physically beaten when he tried to leave with his winnings at Dream Casinos.
  • Here is a third story of an American couple on their honeymoon who were incarcerated in their hotel room, held at gunpoint and forced to pay $2,000.

The case is Michael DeGroot vs. DC Entertainment Corporation  filed at the Superior Court of Justice, CV 129886.

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