It is now the turn of the lawyer for the Caisse de depot et placement du Québec to cross-examine the former CEO of Otéra Capital. Alfonso Graceffa had to explain on Wednesday why he met a man with a criminal history in his office even to receive $ 15,000 in cash, in 2017.
This meeting was part of his efforts to “help his brother” Salvatore Graceffa, to whom the sum was due, he explains. The problem: the individual in question, Jean-Denis Lamontagne, had already been convicted of drug trafficking.
He was also virtually bankrupt. However, it is forbidden for an insolvent person to repay a creditor without going through a trustee or a controller. “It would be a preferential payment,” said Caisse lawyer Mason Poplaw.
He mentioned a series of emails and reports sent to Graceffa detailing Lamontagne’s criminal history and poor financial standing. These messages also suggested that Salvatore Graceffa, with a judgment obtained against his debtor, was threatening to question his spouse and his mother in an attempt to recover his debt of $ 79,043.
Mason Poplaw asked the ex-CEO of Otéra several times if he remembered having seen these documents, which landed in his mailbox. “I don’t remember,” repeated Graceffa.
Under pressure, Lamontagne finally showed up at his office to give him part of the sum, namely $15,000.
Mason Poplaw asked him if it had “entered into his mind” to check on Lamontagne before receiving him at the Caisse, if only by reading the reports he had received.
“My brother had a deal,” he replied, adding, “I didn’t realize he was coming to give me cash!”
“And when he handed you the envelope, why didn’t you refuse it?”
“I gave him a receipt. I had nothing to hide! replied Graceffa.
An undeclared takeover
The ex-strongman of the Caisse in the real estate loan also had to describe the way in which he had gradually taken control of his brother’s company, Constructions Sainte-Gabrielle (CSG), without ever declaring his interest to the ethics officers. “An oversight,” he said.
Over the years, he became a 50% shareholder and its largest creditor, having loaned the company two million.
He tried to convince the judge that for him, CSG was only an “investment” and that he did not make decisions.
He was my brother. It was a one man showand it’s a small company.
Alfonso Graceffa, about Constructions Sainte-Gabrielle
Mason Poplaw pointed out to him that he was writing checks for CSG. He even obtained the power to act in place of his brother, “who was not well”.
The ex-CEO of Otéra then assured that he had never used this power. Judge Andres Garin himself then pointed out that his signature appeared on a resolution he had seen. “It was a mistake,” Graceffa replied.
A personal partner, client and supplier of Otéra
Mason Poplaw then addressed the relationship that the former CEO of Otéra had with Thomas Marcontonio.
This businessman was both a client of Otéra, which granted him financing for his projects, and a supplier of loans for Otéra, as a mortgage broker. He is also an old “business friend” of Graceffa, a partner in his real estate projects and in mortgage financing for more than 25 years.
The lawyer for the Caisse mentioned in particular a loan of 2.15 million that Graceffa granted through the company of his partner in 2016. A sum for which Marcantonio had guaranteed.
Mason Poplaw suggested that these multiple layers of relationships with him, through Otera and his own personal business dealings, risked raising “awkward questions” in the audience.
The Caisse’s lawyer pulled an old transaction out of his sleeve to undermine the credibility of the former CEO of Otéra. In 2010, when he was vice-president of credit at Otéra, Graceffa would have granted with his money a loan of $50,000 to Louis-Robert Lemire, convicted of insider trading two years earlier by the Bureau de decision and review in securities.
“Disordered ethical compass”
In its defence, the Caisse describes Graceffa as a leader with a “disordered ethical compass”. She is trying to demonstrate that her ethical excesses amply justified her dismissal. The ex-CEO of Otéra is suing his former employer for 6.9 million for “wrongful dismissal”.
According to him, the Caisse “threw him under the bus” to clear his reputation, following a five million dollar internal investigation, commissioned after a series of reports by the Montreal Journal in 2019 on poor governance at Otéra.
They revealed in particular that a subsidiary of Otéra, the Financial Company MCAP, had granted more than 9 million in loans to personal real estate companies of Graceffa. Otéra had also lent 44 million to the company of its partner Marcantonio.