$104,000 secret commission could cost investment banker 6 years in prison

December 18, 2024 Canuck

A Calgary investment advisor with TD Wealth who bought more than $6 million of high-risk oil and gas stock and then accepted a secret commission of $104,000 from the company should spend up to six years in prison, the Crown argued Wednesday.

Jeffrey Ber, 43, was convicted in September on two counts of fraud over $5,000 and one count of accepting a secret commission from Blackbird Energy.

On Wednesday, sentencing arguments took place before Justice Eleanor Funk. The Crown asked for a five- to six-year sentence and the defence proposed a three- to 3½-year prison term.

Funk is set to release her decision in January.

Ber was friends with a Blackbird vice-president

Back in 2017, Ber was close friends with Blackbird’s vice-president of business development, Josh Mann.

At the time, Blackbird was a small, publicly traded oil and gas company based in Calgary. In the early part of the year, Blackbird had a goal of raising $80 million through a new share issuance to be offered at an initial price of $0.55 per share.

Details of Ber’s crimes come from Justice Funk’s 38-page conviction decision.

On March 14, 2017, Ber placed about $6 million in high-risk Blackbird shares in his clients’ TD investment accounts.

“These purchases of Blackbird shares instantly put many of those accounts offside with their designated risk tolerances,” reads part of Funk’s decision.

Ber said $104,000 was for ‘lunch and learns’

To purchase the Blackbird shares, Ber sold millions of dollars of his clients’ existing investments.

Less than two weeks after purchasing the Blackbird shares, Ber accepted a cheque for more than $104,000 from Blackbird Energy.

Ber testified that he’d received his clients’ authorization for the transactions and that the $104,000 was payment for helping Blackbird grow its broker business through “lunch and learns.”

“I do not believe Mr. Ber’s evidence that Blackbird paid him for consulting work he had done years earlier,” wrote Funk.

Justice Funk found Ber “knowingly engaged in a course of dishonest conduct that he knew put TD’s economic interests at risk.”

‘Jeff wants additional funds’

Funk also found that Ber lied to his employer by denying any relationship with Blackbird.

“Mr. Ber knew he was being dishonest when he chose not to disclose to TD his relationship with Blackbird,” said Funk.

Several senior Blackbird executives and employees, including those with intimate knowledge of the company’s financials, testified they believed the payment to Ber was directly tied to the new share issuance.

Ber was not known to host lunch-and-learn events at Blackbird, and several employees said they’d seen him at the company’s offices on only one occasion.

When called as a witness, Jeff Swainson, then the CFO of Blackbird, said he learned of the $104,000 payment when Ber’s friend and Blackbird vice-president Josh Mann showed him the invoice and said words to the effect of “Jeff wants additional funds.”

Vice-president of land prepared statement for police

Swainson described conversations with Blackbird’s CEO Garth Braun and its legal counsel about the payment to Ber.

Blackbird’s underwriting agreement with TD governed all fees paid to brokers, and Swainson said the company could not pay any fees beyond that agreement.

Swainson testified that Blackbird’s legal counsel agreed that any payment to Ber could not be based on fees; the invoice would have to describe the services rendered in another way.

Ber’s invoice to the company referenced “consulting services” performed from February to April 2017.

After learning of the company’s $104,000 payment to Ber, Blackbird’s vice-president of land became so concerned, he took a photo of the cheque and invoice, sought legal advice and ultimately prepared a statement he provided to RCMP.

Ber buys $43,000 watch

The judge found that Ber’s request for a disproportionately large number of Blackbird shares coupled with his “aggressive placement of those shares in his clients’ accounts” suggests Ber knew he would receive a personal benefit for his involvement.

Additional evidence of that knowledge also came from Ber’s spending patterns in the weeks leading to the new share issue, which showed he expected to come into a significant amount of money.

Over a four-week period, Ber made $70,000 in credit card purchases, including $43,000 for a watch.

On March 29, 2017, Ber deposited the $104,000 cheque from Blackbird and immediately made a credit card payment of $75,000.

“This suggests to me that Mr. Ber had already earmarked the bulk of his commission cheque to pay for his lavish spending the previous month,” noted Funk.

After TD discovered Ber’s “fraudulent placement” of Blackbird shares, the financial institution reversed the transactions, reimbursing clients the full purchase price despite Blackbird trading below its initial per-share price of $0.55.

Prosecutor Colin Schulhauser is also seeking a $681,000 restitution order to make up for what TD paid to reimburse clients.

In their sentencing arguments, defence lawyers Alain Hepner and Kelsey Sitar told the judge that Ber is a cancer survivor with no criminal record, many letters of support and a reputation for volunteerism in the community.

In 2019, Blackbird completed a merger with Pipestone Oil. The combined company was eventually sold in 2023.

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