My replies to each point are bold and underlined.
Crawley MacKewn Brush
corporate and securities litigation
Suite 800 -179 John Street
July 3, 2013
VIA ELECTRONIC MAIL Ms. Rachelle Berube
228 Scarborough Golf Club Rd. Scarborough, ON MlJ 306
Dear Ms. Berube:
Re: League Investment Services Inc., League Financial Partners, League Assets Corp., League IGW Real Estate Income Trust, Adam Gant and Emanuel Arruda (collectively, “League”)
I write further to my letter dated June 24, 2013, a copy of which you published to your website, LandlordRescue.com (the “Website”) in a post dated June 30, 2013. I note that you have not responded to my correspondence dated May 28, June 14, or June 24, 2013.
I have replied but in a format in which you are unfamiliar. I’m sorry about that, I feel compelled to share your lawsuit with any interested parties. It is my theory that such lawsuits work better for me when exposed to the bright light of public scrutiny rather than festering in the dark, sordid, pits of a lawyer’s filing cabinet. My right to do so is right here in the Charter of Rights and Freedoms.
Everyone has the following fundamental freedoms:
(a) freedom of conscience and religion;
(b)freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication;
(c)freedom of peaceful assembly;
(d)and freedom of association.
See there under s.2 (b)? That’s the part I’m talking about.
As you know, in my June 24, 2013 letter I advised you that your allegations that League is a Ponzi Scheme, and that League is perpetrating a fraud on its investors, are untrue and that such statements are defamatory of my clients. Since your receipt of my June 24, 2013 letter, you have continued to publish defamatory statements alleging that League is involved in fraudulent activities to the Website. These unfounded allegations of criminal activity and related unscrupulous business practices are the subject matter of the Action League commenced against you and the other named defendants in Court File No. VLC-S-S-134347 (the “Action”). League will rely on, amongst other things, its financial statements, which were audited by KPMG, a leading international accounting firm with a reputable and well-respected audit practice, in its efforts to protect itself from your ongoing defamatory campaign.
Discovery will be very interesting, although I did hear a rumour that the last time League was faced with financial discovery, they settled the lawsuit. I do not know if this is true at all.
Definition of ‘Ponzi Scheme’
A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.
Now I direct you to page 8 of League’s own Offering memorandum There is a chart there at the bottom of the page and the title of “Description of use of available funds listed in order of priority” the very first item is pay PIPU’s retracted pursuant to Income Priority Unit Anniversary Retraction Right $8,000,000 and next item is Pay existing retractions and redemption payments due, $20,000,000.
According to League’s own OM the very first intention League has once they raise new funds is to pay the old investors back their monies..
You now allege that the Action is a SLAPP lawsuit. This allegation is baseless, incorrect and defamatory of League. The Action is a legitimate lawsuit made necessary by your continued publication of statements which are defamatory of League, and which are causing damage to League. As you know, the Action only seeks to restrain your defamatory speech. League is not attempting to interfere with your ability to publish non-tortious information or opinions in any way.
A strategic lawsuit against public participation (SLAPP) is a lawsuit that is intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition.
The typical SLAPP plaintiff does not normally expect to win the lawsuit. The plaintiff’s goals are accomplished if the defendant succumbs to fear, intimidation, mounting legal costs or simple exhaustion and abandons the criticism. A SLAPP may also intimidate others from participating in the debate. A SLAPP is often preceded by a legal threat. The difficulty is that plaintiffs do not present themselves to the Court admitting that their intent is to censor, intimidate or silence their critics. Hence, the difficulty in drafting SLAPP legislation, and in applying it, is to craft an approach which affords an early termination to invalid abusive suits, without denying a legitimate day in court to valid good faith claims.
Other widely mentioned elements of a SLAPP are the actual effectiveness at silencing critics, the timing of the suit, inclusion of extra or spurious defendants (such as relatives or hosts of legitimate defendants), inclusion of plaintiffs with no real claim (such as corporations that are affiliated with legitimate plaintiffs), making claims that are very difficult to disprove or rely on no written record, ambiguous or deliberately mangled wording that lets plaintiffs make spurious allegations without fear of perjury, refusal to consider any settlement (or none other than cash), characterization of all offers to settle as insincere, extensive and unnecessary demands for discovery, attempts to identify anonymous or pseudonymous critics, appeals on minor points of law, demands for broad rulings when appeal is accepted on such minor points of law, and attempts to run up defendants’ costs even if this clearly costs more to the plaintiffs.
League tried to sue “John Doe” and me and a bunch of anonymous commentators from blogs.
I am telling you here and now, that I am the sole provider of my disabled husband and my autistic son.
The very first form I filled out in relation to this lawsuit is Form 80 which lets me petition the court to waive filing fees. Even though you have not specified damages, they are sought along with costs. The draft of your suit asked for $2,640, 000 an amount that is laughable, it may as well be $80 billion. John Doe may have to stop laying around the coroner’s office and get a real job to pay League back.
The only purpose of your lawsuit is for me to stop warning investors to perform super extra careful due diligence on this company. I am not the only one who is very concerned.
I am not rich but I will not tolerate your attempts to censor my legitimate speech in the common interest. Even thought I am only one person I will try. I may even fail, but I have faith in the courts ability to detect artifice and bad intentions. The courts do not enjoy abuse of process and the principle of proportionality applies to your action against me.
The details of your defamatory publications since my June 24, 2013 letter are as follows.
In a post dated June 29, 2013, entitled “Dear League Investors…”, you wrote,
“I’m not sure if you all know what a Strategic Lawsuit Against Public Participation is but…how it works is the people with the money get lawyers to threaten, bully and intimidate the people who are speaking out about the wrongs they see in an attempt to get them to shut up, stop posting information about scams and issues. People send lawyer letters to people who give a bad review on YELP all in an effort whitewash the intemet…I’m really sorry but the only way you get paid back is if new investors come in and lose their money and that’s not fair…there’s no way on earth I’ll let somebody bully me with a lawsuit for performing a public service. NO WAY.”
This post repeats and reiterates allegations that League is perpetrating a fraudulent scam in which the only source of funds for old investors is funds taken from new investors. It also alleges that League is attempting to “threaten, bully and intimidate” you to force you to stop publishing “information about scams and issues” through the use of a SLAPP lawsuit.
Yes I said that and it is true. See S. 2 (b) above.
In a post dated June 30, 2013, entitled “Adam Gant and Emanuel Arruda Whacking the Bee’s Nest”, you wrote,
“People do you know how this all started? Because of this blog post’s comments, and not wanting me to say anything about your company failing to repay investors on Canadian Money Forum. Do you really think you can censor the internet and keep everybody from talking when investors don’t get their money back?”
The Website link you provided leads to your post dated September 26, 2010, in which you state in a comment responding to a comment about League dated December 5, 2011, “Very interesting! So the plot thickens. How can these people market this ponzi scheme to new investors? It’s thievery at it’s most outlandish.” This post repeats and reiterates allegations that League is perpetrating a fraudulent Ponzi Scheme.
So far just in IGW REIT investors have lost $20,000,000. I am just repeating what is in League’s own OM.
In a post dated July 2, 2013, entitled “Celebrating Canada Day- SLAPP Lawsuits and Censorship”, you wrote,
“Strategic Lawsuits Against Public Participation are when a large company like League REIT sues a person like me who will find it
very difficult to defend themselves against a lawsuit for defamation. In most cases the people sued will be cowed by the costs of defending themselves and their very legitimate speech and just say fuck it I’ll take it off. Rinse and repeat until your reputation for failure in real estate disappears. In my case a few comments in a three year old blog post and some more comments on Canadian Money Forum is cause for a Supreme Court Lawsuit. Never think it’s about winning in court. It’s not. It’s about intimidation. It’s like having a wart and going to the hardware store and buying the biggest sledgehammer and smashing your finger off. Too much….I’ve been thinking that after this blows over a little bit I should get my own coat of arms from the Canadian Government…. I’ve considered a few mottos as well. Of course my latin is a little rusty so forgive my French.
1. Ponzi Mortem
6. Murum aries attigit”
This post repeats and reiterates the allegation that League is perpetrating a Ponzi Scheme. This post also reiterates your allegations that League has commenced a SLAPP lawsuit against you.
Ponzi Mortem means Death To Ponzi, there is nothing wrong with me using that as a motto is there? Is League now going to tell me what I can use as my company motto? Why is League taking my motto so seriously? Do they suffer from cripplingly low self esteem over there? Why must every mention of Ponzi be about your client? I do not like Ponzi schemes, I am not making that a secret.
League is not perpetrating a fraud. Your baseless accusations of criminal conduct on the part of League are defamatory of League.
Really? Because over $20 million dollars in missing investor money wants to argue with you. I want you to notice that nowhere in the commonly accepted definition of “Ponzi scheme” does it mention criminal conduct as a criteria, but rather the use of new investor money to repay the old investors. This is conduct that your own client admits in his own OM. In fact if your client raised $100 million dollars today 39% would immediately go to pay back the old investors and only 61% of the $100 million would be used in new operations to try to generate a return on the $100 million. In fact according to that OM if some poor soul gave $39,000,000 to League today 100% of it would go to repay old investors.
I myself have never discussed the criminality of your client’s conduct, that is a matter for the RCMP to decide.
Further, your allegations that League has commenced a “SLAPP” lawsuit against you are untrue. Wikipedia defines SLAPP lawsuit as, “a lawsuit that is intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition.”1 The purpose of the
action commenced under Court File No. VLC-S-S-134347 (the “Action”) is to obtain relief from the defamatory statements published by you and the other named defendants to that action. The purpose of the Action is not to restrain non-tortious speech. Your allegations that the Action is a SLAPP lawsuit clearly imply that League is attempting to wrongfully censor your speech. Such allegations are defamatory of League (together with the allegations of fraud, the “Defamatory Statements”). The Defamatory Statements have caused and continue to cause League damages.
I was exploring the defense of mitigation. It’s very uncommonly used and generally regarded as messy for the Superior Courts. My understanding is that to claim defamation you have to have a reputation to defame. However, it is my theory that any “right thinking member of the community” once informed of the actual numbers behind League and the money lost by investors, many of them seniors who cannot “get a job” to support themselves, would agree both with my statements that League is a Ponzi scheme and the sentiment behind those statements. I am not defaming League, I am protecting the public from them. The public should be protected.
I understand that the Latin phrase “Murum aries attigit”, which you listed in your July 2, 2013 post as a potential motto for your coat of arms, translates to “The ram has touched the wall”, and that this phrase,
“refers to the policy of not allowing any mercy or surrender to the occupants of a fortification once the battering ram begins the assault on the gates. This policy was to act as a deterrent against resistance to those about to be besieged. It was an incentive for anyone who was not absolutely sure that they could withstand the assault to surrender immediately, rather than face the possibility of total destruction.”2 (emphasis in original)
In light of your suggestion that this phrase describes your attitude towards the Action, and your continued publication of statements defaming League, I understand you to be indicating that you intend to continue your defamatory campaign against League. As such, League will be bringing a motion for an interim injunction on an expedited basis seeking to restrain you from publishing further defamatory statements.
Actually I suggested no such thing and in fact I did use this very same phrase long before League in my Trademark Dispute which I won. They also sent me cease and desist letters. As I was publishing emails and telephone calls from their own clients who had called me by mistake I was not in any real danger from their SLAPP suit. Here is that post in case you missed it.
Regarding the Action, I note that the Rules of the Supreme Court require that your Response to the Notice of Civil Claim be served and filed within 21 days from the date that you were served with the Civil Claim. As such, you are required to serve your Response by July 9, 2013. If we have not received your Response by that date, we will requisition the Court to note you in default and pursue default judgment against you.
Thank you for repeating the same information written on the very first page of the lawsuit, I was unable to comprehend it when it was written there because of…letters. Of course I spoke to a lawyer in BC who mentioned that if I ran out of time to repond, I could email you to ask you not to seek default. Considering I am currently unrepresented I may take advantage of that. I am actually working on my defense although I am at a considerable disadvantage because I am not a lawyer and cannot afford one. Still I will do my best, I would like to see your client endure discovery. I would like to hear you explain how millions of missing investor money is not a Ponzi with a straight face.
I remain available to discuss this matter at your convenience. Yours truly,
Is your phone broken, because my telephone number is plastered all over the website, you may call me to discuss. It might have been a good idea to call before filing your lawsuit. I am actually quite nice when I’m not being threatened or sued.
In fact had your client not seen fit to file suit against me, I would never have mentioned or spoken or investigated them. They are in BC and I am in Ontario. I had very little interest in them, preferring instead to use my blog for the purpose it was invented for, helping landlords of Ontario with their issues. Now I’ve got a stick up my ass, I’m pissed off and I have a lawsuit to defend against.
I think you should tell League about the Streisand Effect, and I think you should call me now and offer to settle before this gets worse for your client.
League has so much more to hide than I have to lose.
Not that I’m going to lose.
League knows it.
2 http://en.wikipedia.org/wiki/The Ram has Touched the Wall, accessed July 2, 2013.
Have a nice day and thanks for reading my blog.