The man behind the allegations that CN Rail improperly billed GO Transit for tens of millions of dollars says CN is moving — yet again — to shut him up.
Scott Holmes, 51, told CBC News that CN’s legal counsel is requesting an urgent hearing in a Toronto court on Friday — concerned he may be improperly leaking information to the media and the Ontario Provincial Police.
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Holmes claims it’s just another chapter in a legal battle with the railway — and its little-known private police force — that, according to court testimony, has seen CN police mislead judges to get search and arrest warrants, admissions that the rail company directed police to help investigate what CN believed was fraud, the seizing and depletion of Holmes’s assets, and his humiliating arrest in front of his 12-year-old daughter.
On Nov. 6, 2009, CN police took Holmes out of his car and handcuffed him in front of his daughter. He and his wife were detained overnight.
CN police detective Robert Zawerbny, in court testimony in November 2010, admitted the embarrassing arrest was a “calculated” move by the CN police, stemming from an investigation that at times was directed by railway management.
The investigation was what he, at one point, called a “joint venture” between CN’s lawyers and police force.
One of Holmes’s lawyers, Graydon Sheppard of Hamilton, Ont., calls the lengthy and ongoing legal battle “one of the strangest” he has seen during his 40 years as a lawyer.
“Any other person would have been crushed and would not have been able to recover,” said Sheppard, referring to the tactics used on his client by CN.
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“He has put up with five years’ worth of expense and allegations of improper activity and yet he continues to fight back."
CN says Holmes “has been making spurious allegations” against the company. The railway is suing him for fraud, alleging Holmes as a CN employee was hiring his own construction companies for CN’s work and fraudulently approving payments to his own company without CN’s knowledge. Holmes denies this, saying CN management was fully aware and approved the hiring of his companies.
CN police charged him with criminal fraud and fraud-related offences on two occasions, but all charges were withdrawn by the Crown.
Holmes’s history with CN
The tale begins more than 14 years ago, when Holmes, a track supervisor for CN making about $96,000 a year, set up companies to do work the railway subcontracted out. His businesses grew and, according to internal CN emails, Holmes gained a reputation of being able to finish work quickly and efficiently. He says he used the money to buy doughnut shops.
Holmes estimates his net worth, before his conflict with CN started in 2008, was about $10 million.
He says he then took issue with what he says was CN’s improper billing of GO Transit for CN operational expenses that had nothing to do with GO.
Holmes says the billing ramped up in 2005 as CN took on $72 million of upgrades to GO's Lakeshore West lines between Burlington and Hamilton.
CN has denied there were any “financial improprieties” in the expansion.
CN and CN police got involved in the spring of 2008 when executives received two anonymous letters alleging Holmes and another employee were defrauding the company. Both CN Rail and its police commenced investigations.
That August, CN filed a lawsuit against Holmes and others alleging deceit, conversion and conspiracy in respect to a fraud. His assets were seized, his property was searched.
But in November 2010, one of the charges against Holmes got to a preliminary hearing and CN detective Robert Zawerbny made some embarrassing revelations about the investigation’s true motive while under cross-examination by Holmes’s other lawyer, Michael Lacy.
"CN police’s mandate in this investigation was to go out and gather evidence to support their civil claim against Scott,” Lacy told CBC News.
“That spoke to me in terms of the abusive nature of the powers that the CN police have,” he added. “What corporation has the power of a private police force? I think it is very problematic and I’d like to see someone revisit the idea.”
When CBC News contacted CN police headquarters for this story, the call was returned by Mark Hallman, CN’s corporate spokesman, who declined to comment.
Holmes is also suing CN and its police force and several officers for $40 million, alleging abuse of process, malicious prosecution and false imprisonment. CN and CN police have each filed separate defences stating they had reasonable grounds to suspect fraud and that their respective lawsuit and criminal charges were in good faith.
He says he has also spent $45,000 of his own money to try to force an investigation of CN police.
Several police forces, and the federal department representing the RCMP, have fought his efforts for two years.
Holmes also handed over his documents to the Ontario Provincial Police, which is considering an investigation.
Holmes calls himself a whistleblower in a David versus Goliath fight.
CN is “just trying to beat me down over what really happened — what I really knew,” he said.
The impact on his life
Holmes continues to fight the civil fraud charges brought by CN, though the battle has been long and costly.
Holmes has had his computer and documents taken away, his funds frozen and a receiver called in to sell his assets.
One of his coffee shops was sold “for next to nothing,” he said.
“They took all my assets, all my inheritances, you name it, anything. They took it all,” he said.
What motivates him, though, is what happened to his family, he said, in particular on that November night in 2009.
“What they did to my daughter, 12 years old, they go and terrorize her,” he said.
“They break my wife's Charter rights — wouldn't allow her to call a lawyer [and] threatened to throw her in the penitentiary,” he said.
Holmes said his wife also “suffered a medical condition” while being held in solitary confinement.
“They wouldn't let her out to an open cell that was there,” he said.
“I won't get into what happened. There's something very serious that happened that they think is just a joke. But you know what? It's going to affect her for the rest of her life.”
Holmes said he has been through too much to be angry, but he wants justice.
“But I will tell you with what they did to my family, I will not stop. Never.”