A Victoria businessman is being sued by one of ÎÚÑ»´«Ã½'s largest liquor store chains for his role in an alleged conspiracy to defraud the public company of millions of dollars.
Liquor Barn Income Fund claims John Robert Owen was a key player who profited in a complex scheme that saw several defendants, including the company's former chief executive and operating officers, purchase Island-based liquor stores and pubs through intermediary companies and sell them to Liquor Barn at inflated prices.
Liquor Barn claims the defendants secretly divided the profits among themselves.
The suit filed in ÎÚÑ»´«Ã½ Supreme Court in Vancouver also names Victoria attorney Stewart Johnson and associate Danielle Topliss, who handled several of the liquor store transactions on behalf of Owen and his Edson, Alta.-based partner, Floyd Becker.
Liquor Barn alleges the lawyers "knowingly assisted" in the breaches of fiduciary duty owed to Liquor Barn by former CEO John Mather and chief operating officer Jeff Wong.
The case surrounds the acquisition and resale of nine pubs and liquor stores -- seven of them on Vancouver Island -- between late 2006 and May 2007.
It was just before Edmonton-based Liquor Barn, then headed by Mather, became the target of a hostile takeover bid by Liquor Depot, the main brand of publicly traded income trust Liquor Stores Income Fund.
The takeover of 58 Liquor Barn retail stores was successful, effective June 8, 2007, and the alleged fraud was discovered after Liquor Stores Income Fund found irregularities in Liquor Barn's books.
The suit claims Mather, who was removed as CEO on June 12, 2007, and former chief operating officer Wong, the alleged front man of the acquisition and resale scheme, destroyed documents and deleted computer files to cover their tracks.
None of the allegations have been proven in court.
The properties listed in the statement of claim include the Jolly Miner Cold Beer and Wine Store in Nanaimo, Oak & Carriage in Duncan, Rod & Gun in Parksville, Ladysmith Liquor Store and Lantzville Inn. Others include the C&S Liquor Store at the Days Inn in Victoria, Arlington Beer and Liquor Mart in Port Alberni as well as liquor stores in Surrey and Spruce Grove, Alta.
It is alleged that in some of the purchases, Wong, with the knowledge and consent of Mather, negotiated the price with the sellers and then negotiated the inflated resale price and other terms of purchase of the liquor stores from the intermediary companies on behalf of Liquor Barn.
In other deals, Wong, Becker and Owen told the liquor store owners they were representing Liquor Barn when they were acting as intermediaries.
Liquor Barn is seeking unspecified damages, including punitive damages, and wants a receiver appointed pending the outcome of the action to settle ownership issues.
Liquor Barn alleges that in most of the transactions Owen and Becker -- through their own companies represented by lawyers Johnson and Topliss -- purchased liquor stores, including land, buildings, licences and other assets, from third parties and then sold only portions of the businesses to Liquor Barn "at grossly inflated prices."
In some cases Liquor Barn leased back stores to the original vendors, who retained the primary liquor licences. In others, Liquor Barn alleges Becker and Owen stripped the value from the stores by borrowing against the equity.
It is further alleged that in the cases of the Jolly Miner, Oak & Carriage, Rod & Gun, Ladysmith and Lantzville locations, Becker and Owen acquired the land and buildings, liquor primary and various licences as well as the stores, but sold only the liquor store portions to Liquor Barn and kept the other assets.
In the cases of the Days Inn in Victoria and Arlington store in Port Alberni, Owen and Becker, through their limited companies, acquired only the liquor stores, but more than doubled the price when selling to Liquor Barn. The Days Inn was bought for $720,000 and resold for $2.4 million while Arlington was bought for $2.2 million and sold to Liquor Barn for $4.5 million.
Liquor Barn claims that with one exception the purchases and resales occurred simultaneously in what the company describes as "a deliberate, willful and systematic course of wrongful and fraudulent conduct to defraud Liquor Barn."
The Oak & Carriage in Duncan, for example, was acquired for $3.1 million, a price that included the land, pub, buildings, licences, rental units and liquor store. However, only the liquor store was sold to Liquor Barn for $2.74 million.
The Ladysmith Liquor Store, which included a hotel, restaurant, pub and other assets, was acquired for $3.5 million but only the liquor store was sold to the income trust for $5.4 million.
A spokesman for Liquor Stores Income Fund, which trades on the Toronto Stock Exchange, would not comment on the case, saying the statement of claim "speaks for itself." The company's Vancouver lawyer, Murray Clemons, also declined comment.
Mather, a dentist by trade and a Kelowna resident, was not immediately available for comment.
Johnson said in an interview he had "no such knowledge" of fraudulent activity and added that he finds the allegations "really frustrating because I've got a good reputation in this city and I want to retain that."
Johnson has long been active in the community, serving as president of Tourism Victoria and as the Greater Victoria Harbour Authority's first chairman when the federal government turned over control of several landmarks -- including the Inner Harbour and Ogden Point -- to a local board.
Johnson said both he and Topliss were served with a writ of summons on Monday evening.
He also said Owen is out of the country and as far as he knew had not been served. Sources say Owen is on vacation in Mexico.
Owen, 59, turned over the presidency of Victoria-based Owen Business Systems to his son, Keith, in March 2007. The company is a major player in point-of-sale systems used in bars, liquor stores and other retail outlets, and operates under the brand POS ÎÚÑ»´«Ã½ in Calgary, Edmonton, Vancouver and Nanaimo.
Owen and Becker were part of an ownership group that revived the Coldwell Banker real estate brand in September 2007, 12 years after Coldwell Banker disappeared from the region when the local branch went bankrupt.
