Inside the interrogation of Bridging’s CEO before receivership

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David Sharp of Bridging Finance in Toronto on February 9, 2017.Jennifer Roberts/

Of all the questions surrounding Bridging Finance Inc. — the $2 billion private loan manager put under the control of a receiver last week — few compared to the one asked last Thursday at 2:22 p.m.

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At the time, David Sharp, Bridging’s chief executive officer, was in his home and examined over video conference by a forensic accountant and attorney for the Ontario Securities Commission. Under oath, he was asked repeatedly whether he had accepted any money from one of Bridging’s biggest borrowers, a Winnipeg-based businessman named Sean McCoshen, whose companies borrowed more than $180 million from Bridging. Had taken.

Mr. Sharp was almost clear: to the best of his knowledge, no, he didn’t.

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Then, he asked, why did the company controlled by Mr. McCoshen deposit a total of $19.5 million into Mr. Sharpe’s personal checking account?

Mr. Sharpe took a moment to speak to his lawyer, then, after a 10-minute break, he changed his tune: “So I’ve had some personal financial deals with Sean McCoshen and from him in the form of loans ,” he told them.

To explain why he had not disclosed it earlier, Mr Sharp replied: “I honestly didn’t think it was applicable.” A little later, when pressured to explain why the payments came within days of moving the loan to Mr. McCoshen’s companies, Mr. Sharp admitted: “It certainly doesn’t look good. That’s for sure.” “

The OSC agreed, and a little more than 24 hours after that interview, a transcript of which has been filed with the court, the regulator turned to Ontario Superior Court Justice Glenn Haney to put the bridging under the control of receiver PricewaterhouseCoopers LLP. Turned.

Following this, Bridging’s investment clients, most of whom are accredited retail investors, are left wondering what will happen to their money. Documents filed in court reflect a complex web of bridging funds, loans and payments between clients, owners and executives, which would take time to work through while the money manager was under PwC’s control.

The transaction includes a $19.5-million payment from Mr. McCoshen, as well as a bridging decision to hand over a larger loan to Mr. McCoshen that it gave to the troubled construction company Bondfield Construction at cost and without payment.

Bridging’s relationship with former co-owner Gary Ng is also under scrutiny. Two days before Mr Sharp’s interview, the OSC asked Bridging co-owner Jenny Coco about the $10 million dividend the company paid to Mr Ng, before he paid $5 because of fraud charges against him. bought back his stake for $50 million. Through her lawyer, Ms Coco said the money was advanced to help Mr Ng service some of the troubled debts.

In its request for receipt, the OSC alleges several irregularities around disclosure and conflicts of interest in Bridging: Bridging improperly used investor money to purchase a fund-management contract from another firm, Ninepoint Partners LP. with whom it is co-managing the Bridging Income Fund; that Mr. Sharp asked a customer to participate in a suspicious transaction designed to “give the appearance” that Ninepoint Payments was financed through a loan; And just two weeks before it bought a 50-percent stake in Bridging, Bridging lent Mr. Ng $32 million in investor money.

But at the heart of OSC’s case, and the key topic whose staff returned repeatedly during Mr. Sharpe’s investigation last week, is his relationship with Mr. McCoshen, who is behind a proposed railway line connecting the ports of northern Alberta and Alaska. was a visionary. ,

The Alaska-Alberta Railway Development Corporation, or ARDC, which was founded by Mr. McCoshen, is the bridging’s biggest debtor, with more than $180 million in debt.

Mr McCoshen did not respond to requests for comment. AARDC, where Mr McCoshen also serves as CEO, issued a statement saying it was “disappointed to learn of the allegations against Bridging Finance and its principals.”

OSC’s analysis of Mr. Sharp’s Bank of Montreal checking account filed in court shows that between 2017 and 2019 a company controlled by Mr. McCoshen made six payments to Mr. Sharp – each of them to bridge advance loans. Paid within days. To Mr. McCoshen’s companies.

In his interview on Thursday, the OSC pushed Mr. Sharp over these transactions – which he declined to mention in a previous interview in 2020. Asked whether there was an actual loan agreement explaining the payments, Mr. Sharpe replied: “There probably is one,” before making a more definitive statement that, yes, there was an agreement. It was a hard copy in the bridging office, he said.

Investigators demanded that he produce the loan documents by 5 p.m. that day, citing concerns that Mr. Sharpe was “deliberately misleading” him – a characterization disputed by Mr. Sharpe’s lawyer. At 8:13 a.m. that night his lawyer e-mailed Carlo Rossi, a lawyer for the OSC, to say that Mr. Sharpe went to Bridging’s office but did not find a settlement.

In his interview, which was mandated under Ontario’s securities law, Mr. Sharpe was vague about the purpose of the loan from Mr. McCoshen, saying it was “for investment.”

Mr. Rossi asked Mr. Sharpe a direct question: “So, Mr. Sharpe, I just want to put it to you. Are these the loopholes that Mr. McCoshen is giving you with regards to lending to your companies?”

Mr. Sharp replied: “No, they are not.”

Investigators also asked Mr Sharpe what made Mr McCoshen out of the millions that led him. Mr. Sharp’s checking account showed that, in addition to paying for renovations and car leases, Mr. Sharp paid two bridging employees: $260,000 to the company’s vice president of sales, Ian Bayley, and a total of $180,000 to Bridging’s chief compliance officer. paid. , Andrew Mushor. Mr Sharp said these were “gifts”.

Investigators asked him how normal it was for him to give such large gifts to employees.

Mr. Sharp replied: “I am a very generous person.”

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