Lawyer Letter #3 From League & My Response

July 3rd, 2013 · 8 Comments · League REIT Updates, REIT

fire breathing mythical dragon 300x269 Lawyer Letter #3 From League & My Response

 

My replies to each point are bold and underlined.

Crawley MacKewn Brush
LLP

corporate and securities litigation

Suite 800 -179 John Street
Toronto,Ontario MSTlX4
Phone:416.217.0110
Fax:416.217.0220
Web: www.cmblaw.ca

Kate McGrann

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.

Fundamental 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..

SLAPP SUIT?

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.[1]

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.

SLAPPs take various forms. The most common used to be a civil suit for defamation, which in the English common law tradition was a tort.

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.

Good, I’m glad that League doesn’t mind me publishing their two foreclosures Duncan LLP and Colwood “White Flying Elephant” Corners and that 5 out of 6 of their properties have lost money.

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.

I won’t.

I’m right.

League knows it.

Kate McGrann

*srnh

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.

 

 

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