Registrar, Alcohol and Gaming Commission Ontario v. Northwest Protection Services Ltd., 2007 CanLII 41531

ALCOHOL AND GAMING COMMISSION OF ONTARIO

IN THE MATTER OF The :

Gaming Control Act, 1992, as amended

B E T W E E N:

Registrar, Alcohol and Gaming Commission Ontario

Registrar

-and-

Northwest Protection Services Ltd.

Applicant

DECISION

Panel: David C. Gavsie, Chair Kirsti Hunt, Vice-Chair

Decision Date: September 11, 2007

Hearing Location: Toronto, Ontario

Alcohol and Gaming Commission of Ontario 90 Sheppard Avenue East, Suite 300 Toronto ON M2N 0A4 Phone (416) 326-0366 Fax (416) 326-5566 Website: agco.gov.on.ca

Appearances

Registrar, Alcohol and Gaming Commission ) Ed Wren, Representative

Northwest Protection Services Ltd., Registrant ) Peter Henderson, Representative

Josh Sidworth, assisting

1. The Registrar of the Alcohol and Gaming Commission of Ontario issued a Notice of Proposed Order (NOPO) dated March 15, 2006 and a Notice of Further or Other Particulars dated December 22, 2006 to refuse to renew the registration as a non-gaming related supplier of Northwest Protection Services Ltd. operating as Northwest Protection Services Ltd. (“Northwest”) at 1951 Eglinton Avenue West, Suite 201, Toronto, Ontario, M6E 2J7, registration number 91428. A hearing was held before the Board of the Alcohol and Gaming Commission of Ontario on January 25, April 30 and June 25, 2007 in Toronto.

Decision

2. For the reasons below, the Board CONFIRMS the proposal not to renew the registration of Northwest as a non-gaming related supplier.

Preliminary Matters

3. The Board noted that the Registrar withdrew the allegations regarding civil litigation in paragraph 13 in the NOPO.

4. Registrar’s representative asked that the Joint Book of Documents be made Exhibit 1. Mr. Henderson objected to the inclusion of the summary evidence of Officer Taylor in Tab 21 which was not signed or sworn. Mr. Wren submitted that the Registrar provides summaries of evidence and statements of witnesses as part of disclosure in keeping with the Board Rules. The summary sets out what the witness will attest to at the hearing. It is not evidence. His evidence will be the viva voce evidence at the hearing.

5. The Board admitted the summary as part of Exhibit 1. It acknowledged that it is unsigned and un-sworn and will give it the appropriate weight at the end of the hearing based on all the evidence.

6. The Board ordered the exclusion of witness on consent of the parties.

Evidence for the Registrar

7. Det. Sgt. Alex Vita-Finzi of the O.P.P. is in the Corporate Investigations Department of the AGCO. He was assigned to do a due diligence investigation of Northwest by Det. Sgt. Ken Plant on August 17, 2004. He reviewed the file with the application and Personal Disclosure Form dated July 23, 2004 signed by Mr. McBean (Ex 1, Tab 7, p. 10, Tab 8, p. 13) which permitted him to conduct a personal history investigation. There were 2 key people in the company, D.B. McBean as the key employer and Elizabeth Teasdale. He did not require a due diligence check on Ms. Teasdale, just CPIC and Equifax background checks.

8. He e-mailed a preformatted questionnaire, that goes to any applicant he investigates, to Mr. McBean on August 19, 2004 advising him that additional information was required. The questionnaire goes to both gaming and non-gaming registrants, either a key employee, a director, or someone who financially or strategically has an integral role in the company. The information from it is to give him a clear financial picture of the applicant and/or the applicant corporation. It is in the investigator’s discretion whether to go beyond that information and he will do so if he finds inconsistencies. Det. Sgt. Vita-Finzi agreed the questionnaire is a time consuming and intrusive list of information to be completed. The applicant is assured the information will not be shared with anyone other than his supervisor and the registration officer. The questionnaire is later used for the interview of the applicant.

9. Det. Greg Poulis of the AGCO Unit gave Det. Sgt. Vita-Finzi insight into the security industry and what Northwest does. Northwest is a big company with 978 employees and provides security throughout Ontario. The company had 3 charges under the Private Investigators and Security Guards Act. Mr. McBean pled guilty to allowing an unlicensed security guard, and was fined $1000. The other charges were withdrawn.

10. On September 13, 2004, Det. Sgt. Vita-Finzi conducted an interview with Mr. McBean and received some of the requested banking information. He gave Mr. McBean a list of the additional outstanding banking information. He found Mr. McBean to be a friendly person. As they were talking about financial issues outside the application, Mr. McBean said, “You’re not going to share any of this information with Revenue Canada.” That was the first time an applicant had said something like this to him. He took it seriously but did not know if it was said in jest or how it was intended. He agreed that there was no mention of the comment in his notes or in his report.

11. Det. Sgt. Vita-Finzi asked Tom Schmidt of the Forensic Accounting Unit to look at the accounting information because he could not figure out where some of the money was coming from. He did not have a clear picture of the financials of Mr. McBean and his company, Landscape Stone. As a result, Mr. Schmidt spoke to Mr. McBean’s outside accountant, Geoff Becker.

12. On September 29, 2004 Det. Sgt. Vita-Finzi met with Mr. McBean and reviewed the information he still needed. On October 2, 2004, he asked Mr. McBean about additional information Mr. Schmidt had brought to his attention. Mr. McBean advised him that he had provided enough and would not give any more information. Det. Sgt. Vita-Finzi responded that, if so, he had the option of either withdrawing from the process or staying under the $100,000 threshold required for registration.

13. On November 2, 2004, he contacted Mr. McBean to advise that Mr. Becker had not provided the information asked for by Mr. Schmidt. Mr. McBean indicated that he sent Michael Doherty’s security licence back, said he would continue to run the company and would not provide any further information. Without the additional information, Det. Sgt. Vita-Finzi was unable to establish the source of income in Mr. McBean’s accounts. He submitted his due diligence investigation report (Ex1, Tab 15) to the Deputy Registrar. The derogatory information is in the synopsis. The November 15, 2004 memo from Tom Schmidt, attached to his report, identifies his concern (Ex. 1, Tab 14).

14. During the investigation the name Michael Doherty came up numerous times as playing a role in the company and having an important part in setting up events and security. He was identified as a director of the company on a TV clip during an interview with Mike Drummond.

15. The information provided by Mr. McBean was that Michael Doherty was an employee of Northwest and the third person in charge at the company. He handled the company’s Clear Channel account and had been associated with the company for many years. Mr. Doherty confirmed to him that he does work for Clear Channel, House of Blues. Det. Sgt. Vita-Finzi’s information was that Michael Doherty was an integral part of Northwest and was recognized throughout Canada as an event control person. As such he could influence the direction of the company. As a result, he concluded that Michael Doherty was a key employee of Northwest. Based on that information, a personal history report was requested for Mr. Doherty on October 19, 2004.

16. In response, he got a letter signed by Mr. Doherty saying that he was no longer able to fulfill his position in the company effective October 25, 2004 (Ex.1, Tab 12). He was not happy with the wording of the letter so, when he visited Mr. Doherty in hospital to confirm that he had indeed had a serious accident, he asked Mr. Doherty to write in longhand to make it clear that he was not working for the company. At a meeting on November 2, 2004, Mr. McBean advised him that he had sent Michael Doherty’s licence back to the Private Investigators and Security Guards and that Mr. Doherty was not going to return. Det. Sgt. Vita-Finzi received a fax on November 3, 2004 from Mr. McBean (Ex.1, Tab 13) stating that Mr. Doherty was not able to work because of medical reasons and has turned in his licence to the Ministry of Community Safety and Correctional Services. At this point, Det. Sgt. Vita-Finzi was satisfied that Mr. Doherty was no longer involved in Northwest.

17. Subsequently, he learned from a confidential source that Mr. Doherty was still working for Northwest. That contradicted the information he got in November 2004 that he was not working for Northwest. He did not share any confidential information regarding Mr. Doherty with Mr. Gomes, the gaming registration officer. The only information Mr. Gomes received was in the investigation report. His intelligence report on Mr. Doherty went to his OPP supervisor but not to the AGCO.

18. On February 20, 2006, he asked Det. Sgt. Dan Taylor to assist by contacting Northwest and asking to talk to Michael Doherty. The person he spoke to said that he was not there but he worked for the company and worked out of his residence.

19. After he submitted his report, Mr. Gomez sent a letter to Mr. McBean asking for the outstanding information by January 21, 2005 (Ex.1, Tab 16). On January 17, 2005, Mr. McBean stated that Det. Sgt. Vita-Finzi was happy with the information (Ex.1, Tab 17). Either there was a difference of opinion or Mr. McBean didn’t understand what the officer asked for originally. Mr. Gomez sent an e-mail (Ex. 1, Tab 18) to Mr. McBean stating that he was still waiting for information and gave him a new diary date of February 1, 2005. Det. Sgt Vita-Finzi received no additional information. The file was out of his hands but he would contact Ron Gomez to ask about the file. Eventually he asked for a meeting with Ron Gomez, Dan Taylor, his manager, Jeff Longhurst, and the then Deputy Registrar, Elaine Gugins. A decision was made that an NOPO would be sent out if no response was received to another request for information in 30 days time.

20. There is also a Notice of Further Particulars. Det. Sgt. O’Halloran provided information that he had a meeting regarding the Molson Indy and Michael Doherty represented Northwest as a supervisor. This was well after the October 25, 2004 date and after the letters saying he no longer worked for Northwest.

21. Det. Sgt. Vita-Finzi agreed that Mr. McBean was cooperative and provided the information required as did his accountant and banker but that was only until the issue of Mr. McBean’s personal bank accounts arose. He did not tell Mr. McBean that he didn’t have to provide information regarding the shareholder bank accounts.

22. Mr. Tom Schmidt is the Manager of Financial Investigations with the AGCO. As one of his duties, he assists corporate investigations regarding financial matters related to due diligence investigations. At the request of Det. Sgt. Vita-Finzi, he reviewed the file on Northwest. The file included financial information on Northwest, another company by the name of Landscape Stone, which was controlled by Mr. McBean or Northwest, and personal and company banking statements, tax returns and the information submitted with the application. Mr. Schmidt reviewed the information and asked for further financial information ( Ex. 2, Appendix 3-1) which was provided by Mr. Becker, the accountant for Northwest (Ex.2, Appendix 4). After reviewing that information, he had further questions and asked for more information (Ex.2, Appendix 7).

23. Mr. Schmidt described the process of his investigation and concluded that Mr. McBean had some income whose source he could not determine. His personal expenses were being paid out of a shareholder advance account of Northwest but that account increased. When asked why the account increased, Mr. Becker indicated that Mr. McBean was advancing funds to the company to offset the expenses paid on his behalf and he thought the source of those funds were from personal loans that Mr. McBean received. Mr. Schmidt asked Det. Sgt. Vita-Finzi to get schedules showing transactions going through the shareholder’s account and that information was denied. As a result, he could not determine the source of the funds going into the shareholder account and thus submitted his report (Ex. 2).

24. Mr. Ron Gomes, a Gaming Registration Officer with the AGCO, testified that the Northwest application dated July 23, 2004 (Ex.1, Tab 7) was assigned to him for review. He described the steps he takes with applications. The Personal Disclosure Form was received for Donald McBean (Ex.1, Tab 8) and there was also disclosure from Elizabeth Teasdale. The due diligence investigation was done by Det. Vita-Finzi.

25. Det. Sgt. Vita-Finzi contacted him to ask if he had any information about Michael Doherty being involved in the company or information that had not been forwarded to him. Mr. Doherty’s name had come up many times during his preliminary investigation in relation to events at Casino Rama. No Personal History Form had been submitted with the application for Mr. Doherty so on October 19, 2004 he requested one (Ex.1, Tab 11). He received a call from either Ms. Teasdale or Mr. McBean that Mr. Doherty was sick and would no longer be involved with Northwest and therefore would not require a Personal History Form. He got a response in writing that Mr. Doherty was no longer involved in the company (Ex.1, Tab 12) and a note from Mr. McBean on November 3, 2004 (Ex.1, Tab 13) that Michael Doherty is unable to work for medical reasons. That ended his involvement regarding the disclosure form.

26. He reviewed the investigation report (Ex.1, Tab 15) and since additional information was required, he sent a letter dated January 5, 2005 to Mr. McBean indicating that Mr. McBean had failed to provide the information requested by the investigator and giving him until January 21, 2005 to provide it. In a phone conversation, Mr. McBean advised him that in his dealings with Det. Vita-Finzi, he was led to believe that he had provided everything and that there was nothing more to provide and he confirmed that in writing (Ex.1, Tab 17). Det. Sgt. Vita-Finzi spoke with Mr. McBean and told him that the information requested still had to be provided and gave him a deadline of February 1, 2005 (Ex.1, Tab 18). Nothing was received.

27. He sent a further letter dated September 14, 2005 to Mr. McBean advising him that the file was still open and again requesting information on the shareholder account with a deadline of September 30, 2005 (Ex.1, Tab 20). Det. Sgt. Vita-Finzi indicated that the information was not received and nothing else would be received. Shortly after the September 30th deadline, he discussed the file with his manager, Jeff Longhurst, and advised him that he believed the information requested would not be provided. He left the file with Mr. Longhurst with a recommendation that an NOPO to refuse registration be issued.

28. By September 14, 2005, the AGCO had received a completed renewal invoice and requisite fee for the licence of Northwest He explained that 60 days prior to that date the AGCO system would have automatically generated an invoice passed on to the registrant advising that it be completed and the fee paid by the anniversary date. If that is done, the original licence is deemed to continue regardless of a renewal application in process.

29. Between that date and the issuance of the NOPO, Det. Sgt. Vita-Finzi requested a meeting regarding the file and after that meeting, an NOPO was issued but he did not know the specifics of how that occurs.

30. Det. Sgt. John Taylor of the OPP is in the Corporate Investigations Unit of the AGCO. He indicated that around September 2005, Det. Sgt. Vita-Finzi inquired about the status of the file on Northwest. He suggested that they meet with Mr. Gomez and Mr. Longhurst. At the meeting September 14, 2005, it was decided that a further letter be sent to request the information that had not been provided to Det. Vita-Finzi.

31. On February 20, 2006, Det. Sgt. Vita-Finzi wanted to confirm if Michael Doherty was still working for Northwest. Det. Sgt. Taylor called Northwest and a male answered, “Northwest Protection Services.” The officer asked if Michael Doherty worked for the company and said that he was representing some elite clients and Michael Doherty was the contact name he had been given. The person who identified himself as Jim Miller, turned out to be a retired RCMP officer, said that Michael Doherty worked for the company from his home and looked after large venues. He also stated that Michael Doherty had worked for the company a long time. The specifics of Det. Taylor’s statement are in Ex.1, Tab 21.

32. Det. Sgt. Brian O’Halloran of the OPP with AGCO Licensing Enforcement indicated that in 2005 and 2006, the Molson Indy Race had catered events in licensed areas throughout the venue including the area inside the track in 2005. He attended pre-event meetings of the host, caterer and security. Northwest was hired as security and Michael Doherty was presented as head of security and as the contact if there were any concerns. Don Peron, Director of Enforcement, visited the site again to see if all security concerns had been met. Mr. Doherty indicated that any vehicles driven in the licensed area would be escorted by their security, Northwest. On the day of the race, all security concerns were addressed with Mr. Doherty who sent people to take care of them.

33. The Catering Operations Plan (Ex 1, Tab 22) shows Michael Doherty as the Manager General Security. The officer could not remember meeting Rick Pacorek who was the main security liaison. His main dealings were with Mr. Doherty.

34. In 2006, Det. Sgt O’Halloran also attended a couple of pre-event meetings. At the meeting on June 26, 2006, Northwest was represented by Michael Doherty who brought a couple of his people with him. When the question of access to licensed areas the previous year was discussed, Mr. Doherty denied that any of his staff did that and indicated that it must have been volunteers that stopped them. Det. Sgt. O’Halloran told him that both volunteers and security staff wearing red shirts with Northwest Security written on them had stopped them. On July 6, 2006, during the pre-event walk through, Mr. Doherty was present on behalf of Northwest.

35. During the event, all concerns were brought to the attention of Maple Leaf Sports Entertainment and Northwest. Michael Doherty was identified as the head of security with Northwest. The officer indicated that the 2006 event went more smoothly than the previous year after all issues had been discussed. He agreed that the question of gaining access to licensed areas was addressed with Michael Doherty and he took the matter seriously for it was better in 2006. He agreed that there was no attempt to conceal Michael Doherty’s role or identity. He had no reason to doubt who Michael Doherty was for he was represented by Molson as head of security and with Northwest. His own involvement was strictly related to liquor enforcement.

36. Mr. Jeff Longhurst, a Deputy Registrar and Manager of Gaming Registration and Lotteries, oversees the issuance of registrations under the Gaming Control Act. His evidence was that Northwest was registered as a non-gaming related supplier in 2000. Any supplier that provides goods and services over $100,000 to the casinos or the OLG is required to be registered under the Act. In 2004, Northwest applied for renewal of registration. He assigned the file to Ron Gomes, a Gaming Registration Officer, who reviewed it and forwarded it to the Enforcement Branch for a due diligence investigation which is the normal procedure. A few months later the due diligence report was received. He recommended his then director, Elaine Gugins, refuse to renew the registration of Northwest.

37. The gaming and non-gaming investigations are similar but the gaming related investigations are slightly more in-depth. Typically, the disclosure for the company and personal disclosure is reviewed and interviews of individuals are conducted. The disclosure is broad so the Registrar can make a proper assessment that the applicant will act with honesty and integrity and in the public interest and within the law and with financial responsibility. The Registrar expects that if an application requires certain disclosure, it will be provided. It is not unusual for non-gaming suppliers to object because they are not used to the process. The Commission is willing to work with an applicant’s scope of the disclosure so it is relevant and within the scope of doing business in Ontario.

38. In this case, Mr. Gomes asked for a personal disclosure form from Michael Doherty because the investigation revealed that Mr. Doherty was involved with Northwest at Casino Rama. The Commission takes the word of the applicant as to who should provide personal disclosure and then relies on the investigator to verify. In this case, the application showed two directors and the investigation showed another person was involved in the business so a request was made for personal disclosure from him.

39. Disclosure is required for anyone who is directly or indirectly involved with the business at a casino. The gaming industry is susceptible to criminal activity, fraud and theft. It is a cash intensive industry and the public’s trust is easily shaken so the Commission must ensure that any person in the industry meets or exceeds the standards of honesty, integrity, acting within the law and in the public interest, be they gaming or non-gaming related.

40. Michael Doherty was not identified as working for Northwest but it is not unusual. It is suspicious, however, that when personal disclosure was requested for him, he happened to resign his position and turn in his security licence within days of the request. Subsequently, he was found to still be involved in the company. That he considered, as suspicious if not misleading.

41. Mr. Longhurst detailed what information he had or had not seen in the file and when. Essentially he had reviewed the file after the due diligence report was submitted and information requested was still outstanding. That was the first time that he learned that there were concerns about the application. He attended the meeting described by the other witnesses in the fall of 2005, and to expedite matters, a further request for information was to be made. He informed Elaine Gugins that if the information was not received, he would recommend that an NOPO to refuse to renew the registration be issued. The information was not received by the February 1, 2006 deadline.

42. From the reports in the file, he concluded that Mr. McBean had significant income that he had not reported for income tax purposes between the period of October 2003 and December 31, 2003. His personal expenses were not paid from the funds he was reporting for income tax. To determine what personal expenses were being paid by Northwest, Mr. Schmidt asked for the schedules for the shareholders advance account but they were not provided despite the requests made. Without that information, Mr. Longhurst could not make an informed decision to approve the application or not. The requests for that information were typical of an investigation but it was unusual for an applicant or a registrant to refuse to provide information requested. There was no reason given as to why that information was not provided.

43. On February 20, 2006, there was an anonymous phone call made to Northwest that determined that Mr. Doherty was still working for Northwest out of his home and looking after large events for them.

44. The NOPO to refuse registration (Ex 1, tab 1) was issued on March 15, 2006.

45. The Notice of Further Particulars dated Dec 7, 2006 (Ex 1, tab 2) contains further information on Mr. Doherty and his link to Northwest. Mr. Doherty had been registered as a charitable gaming assistant (Ex 3) in 1997 to work at the CNE but he let his registration expire the following year. He reapplied for registration as a gaming assistant in April 1999 to work as security at a charity casino but did not renew it in 2000. Mr. Longhurst explained that a personal history form requires a much greater level of disclosure than the disclosure for a gaming assistant and he detailed the differences. If Mr. Doherty applied today, it is not automatic that he would be registered again but would have to go through a due diligence investigation like all applicants.

46. Mr. Longhurst indicated that he would place significantly less importance on the conviction of Northwest for having an unlicensed security guard than he does for failing to facilitate an investigation and of itself there would be no NOPO.

47. During the application process, the registration of Northwest was still active. The Act has a provision that if a registrant pays the registration fee and provides an application for renewal before the expiry date of the registration, the registration is deemed to continue. There would be no restriction on Northwest doing business with the casinos.

48. A lawyer dealing with an NOPO can contact the licensing officer or Deputy Registrar to ask for more disclosure or if there is a change to the details of the investigation report, he can contact the investigator. That was not done in this case.

49. On cross-examination, Mr. Longhurst stated that on the first day of the hearing, he first learned that Michael Doherty had previously been registered as a gaming assistant. He did not know if Mr. Schmidt told Northwest why he was asking for the schedules for the shareholders account.

50. He added that there is always a due diligence investigation on renewal of registration which takes place every 4 years. An investigator can request more information than is on the personal history form if that information is needed by the Deputy Registrar to make an informed decision on the application. The information sought has to be relevant and, in this case, the investigator needed documented proof of the funds going in and out of the shareholder account. This information would have allowed the Deputy Registrar to assess whether the applicant was acting with financial responsibility.

Applicant’s Evidence

51. Mr. Donald Bruce McBean summarized his background in the security business. He started Crusaders Security Services in 1988 or 1989 which became Northwest Protection Services. It performs security at fixed locations and at events. They also have an investigation section and a mobile division. The events section is the second largest in North America. They provide security for the entertainers at every event at Casino Rama at the front and back stage, in the hotel and the buses for the performers. They have also done events at Casino Niagara. Their security relates to the entertainers, the casino’s own security does everything else and Northwest personnel back them up if necessary. They use 12 people, including a supervisor, at most. Mr. McBean dictates how much they charge. Paul Hudson is their on-site supervisor, Jim Miller is the director of operations at head office and they have a scheduler. Casino Rama’s on-site manager of entertainment tells them how many people are required for an event and Paul Hudson staffs the event.

52. Casino Rama has a glassed-in gaming area, a 5000 seat theatre for shows and the hotel itself (Ex 14). Northwest has nothing to do with the casino. It provides services within the entertainment venue which has its own access and stage. The only time their employees would go into the casino is if they work overtime, they would go to the food court to get food but the casino does not allow them to have “security” showing.

53. He received the application for renewal on July 23, 2004 and his executive assistant filled out the forms. The application proceeded in the normal course. Det. Sgt. Alex Vita-Finzi came in and asked him for some documents, personal banking and credit card information. He returned 2 or 3 weeks later and had questions about bank deposits and credit card info. The third time, he asked for the name of his accountant and banker. Mr. McBean provided their names and instructed them to be completely frank with the requests and he put no limit on what they disclosed. Det. Sgt. Vita-Finzi came back again and said that he was confused about the information and asked about deposits in his personal bank account which he explained. He seemed satisfied with what he got.

54. Det. Sgt. Vita-Finzi showed up every couple of weeks for the first few months and then, what had been cordial meetings, became less friendly. At the beginning the issue was Michael Doherty and he told Det. Sgt. Vita-Finzi that Michael Doherty had nothing to do with the casino.

55. At the 5th or 6th meeting, Det. Sgt. Vita-Finzi wanted information about the shareholder advance account. When Mr. McBean asked why he needed this information he was told he did not have to supply it. His accountant could not understand why the AGCO wanted the information. When he said no to further personal information, the letters started coming.

56. After replying to the letter of October 19, 2004 (Ex 1, Tab 11) about Michael Doherty, he thought it was a dead issue. He sent his response to the January 5, 2005 letter (Ex.1, Tab 16), because he felt that the only outstanding issue had been Michael Doherty and it had been solved (Ex.1, Tab 17). Det. Sgt. Vita-Finzi told him before Christmas that everything looked fine and that there should be no problems.

57. Sometime in February or after, he had a conversation with Det. Sgt. Vita-Finzi who asked for the financial information. When Det. Sgt. Vita-Finzi said he did not have to provide it, he did not provide it. He had jumped through all the hoops and provided all the information requested. But he is stubborn and there comes a point when enough is enough. Nothing in his company has changed since he began at Casino Rama, except that he has added some staff.

58. He has known Michael Doherty since 1989. He started with Clear Channel and is now with Live Nation who are the world’s largest promoters. Mr. Doherty also had a full time job as a train engineer with GO transit until his accident in 2004. Mr. McBean indicated that he is in charge of his business, Michael Doherty has never had ownership or a controlling interest in Northwest. Doherty never dealt with the casino on Northwest’s behalf in either a supervisory or management role.

59. Michael Doherty had his accident while roller-skating with his daughter and shattered his arm in 40 places. Mr. McBean did not see or speak to him for over 2 months. He was on heavy pain killers and they were worried he would lose his arm. When he finally spoke to Michael, he was still on medication, was feeling sorry for himself and had given up on life, on work. As a result, Mr. McBean sent the letter (Ex.1, Tab 13) to the AGCO saying he couldn’t fulfill his obligations at Northwest. Det. Sgt. Vita-Finzi went to see Michael to assure himself that the reported accident was not just an excuse not to fill out the personal disclosure form.

60. He knew Michael Doherty had been registered with the AGCO before so disclosure was not a concern for him. Although Mr. Doherty stopped working for Northwest after the accident, he did not stop paying him because he did not want his family to suffer. He did not anticipate that Mr. Doherty would return to work.

61. Unbeknownst to him, Mr. Doherty was at the 2005 Molson Indy. Michael Doherty had been involved with the Indy since the beginning and Karen Harding had called Mr. Doherty at home asking for his assistance because she had always dealt with him. He learned of this when called to pick up Mr. Doherty who could not drive back home because of the pain and medication.

62. Northwest’s contract with the Molson Indy states:

Northwest’s designated site representative must include the attendance of Michael Doherty to the site in order that the terms of this agreement are considered as being met. If Michael Doherty ceases to be employed by Northwest, MS&E shall be entitled to terminate this agreement immediately upon 5 days of written notice. (Ex. 1, Tab 19, pp.6, 7.2).

63. Mr. McBean confirmed he signed that contract on Northwest’s behalf. He explained this type of clause is not unusual in the industry. Before the accident, Mr. Doherty was licensed as a security guard but the only security function he performed was to give people breaks. After the accident, he would faint from pain if someone touched his arm. They have to babysit him to make sure that his medication does not affect his behaviour. He liaises with clients, specifically Live Nation, and has nothing to do with Northwest. Casino Rama does its own booking of entertainers. He was busy and never thought about the request for disclosure from Michael Doherty.

64. Mr. McBean denied receiving the letter of September 14, 2005 (Ex.1, Tab 20) asking for further financial information. Had he had received it, he would have responded.

65. The conviction under the Private Investigators and Security Guards Act resulted during the summer when their employees increased to 400 and a person was employed at the Molson Indy before receiving his licence. It was an administrative error by a personnel officer due to the volume of work. He plead guilty and paid the fine. There have been no other convictions.

66. On cross-examination, Mr. McBean explained that Northwest has been registered as a non-gaming related supplier since 2000. He signed the application form and his personal history report to permit background checks to be done.

67. Regarding the addition to the letter (Ex.1, Tab 12), Mr. McBean explained that Michael Doherty was on painkillers and would have signed anything. He was clear in his letter (Ex.1, Tab 13) that Mr. Doherty was not able to work for medical reasons and that he turned in his security guard licence. Mr. Doherty does not really use it for he is a salesman. It is a formality to have his licence. Mr. Doherty turned in his licence without his knowledge. He agreed that he kept paying Mr. Doherty although he was not working.

68. In 2005 Michael Doherty came back to Molson Indy much to his surprise and likely was there in 2006 also. Mr. Doherty dealt with large events and concerts from his home. It never crossed his mind to advise the AGCO. It was an oversight on his part. He was very busy and it did not come to mind. He never understood Det. Sgt. Vita-Finzi’s interest because Mr. Doherty had nothing to do with casinos and also he had previously been registered with the AGCO. He told Det. Sgt. Vita-Finzi that there was no need for a personal history form from Mr. Doherty. He has not provided one to the Commission to date. Mr. McBean agreed that Michael Doherty played an important role in Northwest as a salesman.

69. Det. Sgt. Vita-Finzi called him after the letter of January 25, 2005 (Ex. 1, Tab 16). He said he didn’t need the information and that Mr. McBean could appear before the Board which would be able to explain to him why he needed to give that information. He didn’t think there was a problem with the Commission but with Det. Sgt. Vita-Finzi and his superiors. He felt that, even if he gave the shareholder account information, there would be a request for something else and he would still end up at a hearing. He has nothing to hide and there is an explanation for these matters. He provided all things as he did for the initial registration. When issued a non-gaming supplier renewal certificate in 2005, he thought everything was okay and moved on.

70. Mr. McBean felt that as a non-gaming supplier, he should not have to provide the shareholder account information unless someone explained to him what benefit there was to seeing it. He provided all the information asked on the form for a non-gaming supplier and would not give more.

71. When asked about sections of the Act dealing with an applicant providing information and facilitating an investigation, Mr. McBean stated that he did not know anything about the Act. He gave all the information asked for and then decided he would not give more. He facilitated the investigation and gave the investigator the name of his banker and accountant and when the investigator asked for information about the shareholder account and he could not understand why, he told his accountant not to give it.

72. At this point the Chair directed counsel to rule 9 which permits the Board to restrict public access to documents filed in hearing before it. After discussion with his client, counsel stated that the only thing they could do at this point was to address the matter in closing arguments.

73. Mr. James Arnold Miller has worked for Northwest for the past 2 years as a Director of Operations after retiring from the OPP. He indicated that he could not remember a conversation about Michael Doherty or a conversation as described in Det. Sgt. Taylor’s statement (Ex. 1, Tab 21). He pointed out some of the things in the statement that he would not have said such as he was “retired RCMP officer”, or that “he (Michael Doherty) was not in at the moment” for he is never in. He agreed that Michael Doherty brings in business through his contacts with Clear Channel and Live Nation but he does not oversee all concerts. He brings in clients and attends on behalf of the clients but he does not work for the company. He also said that he did not know if Michael was an employee or a consultant but he certainly brought business to the company. He did not know if Mr. Doherty worked from home but he did not work in the office. He also stated that he could not say that the conversation described by Det. Sgt. Taylor did not take place but he could not recall it.

Submissions

74. Mr. Wren submitted in summary that the Board must consider whether the act of not revealing that Michael Doherty was back at Northwest after he had left was misleading or dishonest. Also there is an attempt to distance Mr. Doherty from the company and from gaming. These are elements of past conduct that should be weighed by the Board.

75. The Registrar has the statutory power to require an applicant to provide such information as he needs to make an informed decision about the application. The applicant failed to facilitate an investigation by refusing to provide financial information requested as part of the due diligence investigation. By failing to do so, the applicant also failed to comply by the terms of registration as required thereby contravening the Act

76. Mr. Wren asked that the Board find that there are reasonable grounds to believe that the applicant has not acted as a gaming supplier in accordance with law, or with integrity, honesty, or in the public interest, having regard to the past conduct of the applicant and that the applicant has carried on activities that have been in contravention of the Act and regulations, and the terms of registration. He asked the Board to uphold the NOPO.

77. Mr. Henderson submitted essentially that there was no attempt to mislead the AGCO regarding Michael Doherty. Mr. McBean gave a reasonable explanation for why he did not report that Mr. Doherty was back with Northwest.

78. He submitted that the investigation of Mr. Doherty was improper because Det. Sgt. Vita-Finzi was simultaneously doing a criminal investigation of Mr. Doherty. This was prejudicial to Northwest. The length of the investigation, 19 months, was also prejudicial.

79. The investigation was illegal because Michael Doherty could only be investigated if he is an interested person as defined in section 8 of the GCA. The Registrar did not have reasonable grounds to believe Michael Doherty controlled the business. Only the Registrar or the Deputy Registrar, who has delegated authority from the Registrar, have the authority to say who should be investigated. Mr. Gomes, who issued the request to investigate Mr. Doherty, did not have the authority to do so.

80. Mr. McBean did not fail to facilitate the investigation. He provided all the information required on the application form for a non-gaming related supplier and the administrative staff asked for information required of a gaming related supplier in error. Mr. Henderson submitted for the applicant that during the investigation Mr. McBean complied, provided information and gave Det. Sgt. Vita-Finzi access to his bank and accountant but at a certain point he said enough.

81. Just the refusal to provide information can’t be the basis of the NOPO. In order for the Registrar to properly require the information, it must be relevant as it states in section 33 of the Act. The information requested by the AGCO is irrelevant for 2 reasons. First, there is a distinction in the statutory framework between gaming and non-gaming related suppliers and the application form makes that distinction (Ex 1, Tab 8, p. 13). While both Det. Vita-Finzi and Mr. Schmidt asked about stocks and bonds, on the application non-gaming related suppliers don’t have to supply that information. Although the Registrar can ask for more information, given the difference in what is required on the application from gaming and non-gaming related suppliers, asking for this information is an error. Regulation 385/99 also distinguishes between gaming and non-gaming related suppliers. By asking about stocks and bonds, administrative staff is operating contrary to the distinction made in the statutory framework.

82. Second, according to both Mr. Longhurst and Mr. Wren, the information requested was necessary to determine the financial responsibility of the applicant. However, in the NOPO (Ex 1, Tab 1, pg. 3) the grounds relied on by the Registrar are relate to subsections 10(b) and (c) of the Act. Financial responsibility is in subsection 10(a). The information sought would only be relevant if the Registrar was relying on subsection 10(a). Without an allegation regarding financial responsibility this information is irrelevant.

83. If the Board does not accept the applicant’s submissions, Rule 9 of the Board’s Rules is one potential way of dealing with this, but he asked the Board to accept his submissions and not disqualify Northwest on the basis of the NOPO.

84. In Reply, Mr. Wren submitted that Det. Sgt. Vita-Finzi is an investigator for the AGCO and he is also a police officer and he simultaneously provided information to the police. He acted on behalf of the Registrar under standing orders. His investigation did not take 19 months but that time elapsed from the beginning of the investigation to the issuance of the NOPO. Mr. Longhurst described what happened after the investigation report was submitted.

85. Section 33 deals with particular places and is not relevant to this matter. The relevant section is section 9 of the Act.

Reasons

Information on Michael Doherty

86. Based on the credible evidence of Det. Sgt. Vita-Finzi, there are reasonable grounds to believe Michael Doherty is a person with control in the company. Despite Mr. McBean’s statement to Det. Sgt. Vita-Finzi that Mr. Doherty was not going to return to work after the accident as confirmed by Mr. Doherty’s letter (Ex 1,Tab 12) and Mr. McBean’s assertion (Ex. 1, tab 13) this ended the need for personal disclosure from Mr. Doherty, Mr. McBean continued to pay Mr. Doherty. This creates some ambiguity about his status with Northwest during Mr. Doherty’s recovery period. In light of all the evidence the Board finds Mr. McBean’s explanation that Mr. Doherty was paid because he did not want the family to suffer financially, simply is not credible.

87. In addition, there is clear and detailed evidence from Det. Sgt. Vita-Finzi, Det. Sgt. Taylor and Det. O’Halloran that Michael Doherty returned to Northwest, albeit working from home, to continue working at large venue events. He was presented as head of security with Northwest and dealt with security concerns at the 2005 and 2006 Indy races. The importance of Mr. Doherty to the company is demonstrated definitively by the contract with Molson Sports & Entertainment (Ex 1, tab 19, 7.2) which permits the latter to terminate the contract on short notice if Doherty was not in attendance. Despite asserting Mr. Doherty would not be returning to Northwest in November 2004 Mr. McBean signed a contract in May 2005 which required Mr. Doherty’s active attendance at the event. His claim that Mr. Doherty returned to the Indy unbeknownst to him and he only found that out when called him for a ride from the site cannot be reconciled with these facts. Rather, it supports the conclusion Michael Doherty did not leave Northwest but was off work for a time due to his accident and returned once recovered.

88. Mr. McBean admitted that he did not inform the AGCO of Michael Doherty’s return. Given the fact that the AGCO was interested in Mr. Doherty’s role in the company and that the application process was still ongoing, the Board cannot accept Mr. McBean’s explanation that it never occurred to him to report Mr. Doherty’s return or that he forgot because he was busy as reasonable.

89. The Board agrees there was an attempt to distance Mr. Doherty from the company and from gaming: that Mr. Doherty worked from home; the description of him as a salesman with nothing to do with Northwest; and that he had nothing do with the casino which was defined as merely the casino floor area in a casino (Ex 4). This is all contradicted by Doherty’s role at the Indy and Mr. Miller’s evidence that Mr. Doherty brought in clients to the company and attended events on behalf of clients.

90. The Board rejects the argument that the investigation of Michael Doherty was improper and prejudicial due to the overlapping criminal and due diligence investigations and the length of the investigation. The Board accepts Det. Sgt. Vita-Finzi revealed none of the confidential information from informants to the AGCO. The criminal investigation report to the OPP was not provided to the AGCO. There is simply no evidence of any prejudice to Northwest in the decision making process regarding this file. Also the investigation did not take 19 months as Mr. Henderson claims. The time between the application and the issuing the NOPO was 19 months. A great deal of that time was taken up by the AGCO waiting for Mr. McBean to provide information requested by the investigator, the registration officer and the Deputy Registrar. Even if the Board found delay existed, there is no evidence of prejudice to the applicant.

91. The Board does not accept the investigation of Mr. Doherty was illegal or outside the scope of the registrar’s statutory authority. Mr. Henderson argues the Registrar could only investigate Mr. Doherty under subsections 9(1) and (2) of the Act if he came within the definition of “interested person” in section 8 of the Act. Pursuant to subsection 6(2) of the Alcohol and Gaming Regulation and Public Protection Act, 1996, the Registrar may delegate authority, including the authority to conduct inquiries under section 9 or form opinions for the purposes of section 8, to a Deputy Registrar.

92. The Registrar supervises employees who act on his behalf. This was a typical investigation based on standing orders. Det. Vita-Finzi and Mr. Gomes acted on behalf of the Registrar and Deputy Registrar to obtain information necessary for the Registrar or Deputy Registrar to decide whether to take regulatory action. Mr. Gomes is a registration officer. His responsibility was to investigate the applicant and his business including any key employees of the applicant.

93. Based on the totality of the evidence regarding Mr. Doherty, the Board concludes Mr. McBean attempted to mislead the Commission and the Board regarding Mr. Doherty’s status and employment with the company. This puts into question Mr. McBean’s honesty and integrity.

Fail to Facilitate Investigation

94. The Board agrees with Mr. Wren that the Registrar has broad powers under section 9 of the GCA with regard to what inquiries or investigations he can make and what information he may require.

95. The Board agrees with Mr. Henderson that there is a difference between a gaming and a non-gaming related supplier and more information is asked of a gaming related supplier on the application form. However, the fact the form does not seek added detail from every non-gaming supplier that does not prevent the Registrar from seeking any of the information detailed in section 9 from any applicant to determine whether an applicant meets the requirements of the Act and regulations. Forms do not bind the Registrar’s legitimate statutory authority and responsibilities.

96. Section 10 deals with financial responsibility, acting in accordance with the law, with integrity, honesty and in the public interest and carrying on activities in contravention of the Act. The Registrar can look into the officers, directors and partners of the applicant or persons interested in them. The Registrar can look into financial responsibility in the context of sections 10(b) and 10(c) and therefore the information requested is relevant as it pertains to the overall suitability of the applicant.

97. Although Mr. McBean cooperated to a point and gave some materials to the investigator, when information was sought about his personal finances, he refused and said that he had given enough and what was asked for was irrelevant. The Board finds the information refused was relevant and, by refusing to provide it, Mr. McBean contravened section 30 of the Act which states that it is a term of registration that every registered supplier facilitates investigations under the Act.

98. Further, Mr. McBean is in violation of subsection 46(1)(c) for failing to comply with a term of registration.

Section 10

99. The Board concludes that Mr. McBean, by failing to comply with a term of his registration, is carrying on activities that are in contravention of the GCA thereby triggering the application of subsection 10(c).

100. With regard to subsection 10(b) of the Act, past conduct, the Board has found that Mr. McBean was not honest and forthright about Mr. Doherty’s status and employment. The Board agrees that the conviction under the Private Investigators and Security Guards Act is minor on its own but forms part of the past conduct. The Board finds it impossible to determine whether Mr. McBean is acting in accordance with the law and with honesty and integrity because he has refused to provide the information needed by the Registrar and by the Board to make that determination. In this connection the Board notes Mr. McBean failed to avail himself of a rule 9 application which he agreed was an alternative solution to the problem. The refusal to provide the documents even under conditions where access by the public would be prohibited, leaves the Board with no option but to suspect that the documents would disclose information detrimental to Mr. McBean’s application. What we do know is that Mr. McBean has consciously made the decision not to provide this information. On the basis of all these facts, the Board finds that Mr. McBean’s past conduct provides reasonable grounds to believe that he will not act in accordance with the law and with honesty and integrity.

Conclusion

101. Given the findings made, the Board CONFIRMS the proposal not to renew the registration of Northwest Protection Services Ltd. as a non-gaming related supplier.

DATED AT TORONTO THIS 11th DAY OF SEPTEMBER, 2007.

KIRSTI HUNT, VICE-CHAIR DAVID C. GAVSIE, CHAIR

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