Blott investigators make serious allegations

After six days of hearings in Vancouver Supreme Court, the decision on what to do with Calgary law firm Blott & Company now rests in the hands of Justice Brenda Brown, one of nine judges across the country who oversee the Indian Residential Schools Settlement Agreement.

By Paul Barnsley and Kathleen Martens
APTN National News
VANCOUVER
–After six days of hearings in Vancouver Supreme Court, the decision on what to do with Calgary law firm Blott & Company now rests in the hands of Justice Brenda Brown, one of nine judges across the country who oversee the Indian Residential Schools Settlement Agreement.

In the meantime, thousands of former residential school students are waiting to find out what will happen with their Independent Assessment Process (IAP) claims for compensation for physical and/or sexual abuse they suffered in the schools as children.

The judge ordered an investigation into Blott & Company on Nov. 10, 2011 after complaints were filed by four of the law firm’s clients.

Starting April 30, Crawford Class Action Services, the Ontario-based firm that monitors the IAP on behalf of the court, presented the findings of its four-month, $3 million investigation in court.

Crawford employed former police detectives, lawyers and forensic accountants to go through the material that was obtained during the investigation.

APTN National News and Current Affairs was provided with a copy of the report to the court submitted by Michael Mooney, the vice president of Crawford.

The 51-page report expands on the results of the APTN Investigates report first broadcast last November. It contains allegations that have not been proven in court. Justice Brown is now assessing the court monitor’s submissions and other testimony. She did not say when she will render her final decision.

Looming over this waiting process is the Sept. 19 deadline for submitting IAP applications to the government.

The report reveals that investigators obtained more than 200,000 documents. More than 800 Blott & Company clients were interviewed. Computer hard drives and documentation was taken by investigators at a variety of locations in Alberta and Saskatchewan.

Mooney wrote that “those interviews and documents clearly show that a substantial number of the claims of the Blott claimants are not being administered in the manner contemplated by the settlement agreement and related court orders, directions and protocols.”

“The resulting harm to the Blott claimants is both emotional and financial,” he added.

While disputed by Roy Millen, the lawyer who represented David Blott, principle partner of Blott & Company, during the Vancouver hearings, if accepted as credible evidence by the judge, the monitor’s report – and the thousands of pages of supporting documentation – would represent a scathing indictment of the people involved with Blott & Company.

Mooney told the court that 1,159 claimants who filled out application forms for the IAP had not been submitted to the IAP Secretariat, the federal government agency set up to administer the IAP process.

Those people believed their files were active but they were not, Mooney wrote.

“Given the age of many Blott claimants, a delay of, in some cases, more than a year in submission of a completed application is contrary to the aims of the settlement and not at all in the best interests of the claimant,” Mooney wrote.

Mooney and his investigators have concluded that the many companies and corporate entities created by Blott and others are connected to each other, with the goal being to take as much of the residential schools compensation money as possible. The monitor’s report alleges that illegal and unethical means were employed.

The relationships between form-filler company Honour Walk, loan companies Settlement Lenders and BridgePoint Financial, Funds Now, Hands Free Office Services and Blott & Company is a complex mix of corporations, including several numbered companies.

But the investigators say those companies share “common directorships, investors, financial transactions, ownership details and other interactions showing the nature of the relationships between the parties and the involvement of Blott & Company and David Blott in the processes.”

“Although a number of separate corporate entities appeared to be involved in each step of the activity (recruitment, form filling, legal representation, lending) the relationships between the parties is such that on an ongoing basis there are clear issues of conflict of interest, improper access to personal information and unauthorized access to privileged legal files by non-lawyers,” the report also states.

The IAP application form is a complicated document that has great importance to the eventual decision on the compensation amount. Some law firms only allow lawyers or paralegals to fill out the forms. Honour Walk, the company that filled out IAP forms for Blott and Company, mostly employs people with little or no legal training, Crawford attorney Lou Zivot told the court.

Honor Walk was paid $200,000 a month by Blott & Company, Mooney’s report alleges. The report also says that Honour Walk president Thom Denomme was provided with a vehicle and a credit card by the law firm.

The investigators say they found evidence that Honour Walk form fillers falsified IAP applications at the direction of Blott & Company lawyers.

“The monitor’s investigation reveals that the Blott & Company lawyers provided guidance to form fillers to make changes to applications already completed by Blott claimants so that the applications submitted . . . did not accurately reflect the information provided by the Blott claimant despite the certification on the application by the Blott & Company lawyers,” the report states.

The monitor’s report also alleges that Blott & Company and Honour Walk stockpiled clients, falsifying documentation to disguise that fact, to the detriment of the clients.

“In one instance, the back dating of an application form by David Blott led to an application being submitted that was ‘certified’ by David Blott more than two months after the claimant had in fact passed away and that particular application was then submitted to the IAP Secretariat by David Blott several months later,” Mooney wrote. 

Investigators reported to the court that in 10 boxes of applications seized from David Blott’s main office, they found the files of 63 people who had died.

The average settlement under the IAP is just over $120,000. The federal government pays an additional 15 per cent of that amount to lawyers to cover legal fees and expenses. For cases that require more than the usual amount of work, the settlement agreement allows lawyers to charge a maximum of an additional 15 per cent. That additional legal cost is deducted from the clients’ settlement payment.

But the Crawford investigators reported to the court that they discovered that Blott & Company and the allegedly affiliated companies found other ways to increase the amount of money they could charge the clients.

Funds Now, a company owned by Calgary businessman David Hamm was created to locate companies that would loan money to survivors in advance of them receiving their settlement cheques, the monitor alleges.  Mooney wrote that Funds Now was charging a 20 per cent finders’ fee, above and beyond the interest charges that the loan companies charged. That fee was eventually reduced to 10 per cent.

In court, Zivot called the combination of high interest rates and fees charged for the loans “criminal.”

Zivot told Justice Brown the loans are “a very serious matter.”

He said the monitor had auditors analyse numerous loans. He alleged they discovered that BridgePoint Financial exceeded 60 per cent once all fees were charged, including arrangement fees, interest and finder’s fee charged by Funds Now.

He told the court it was an “astonishing” thing to do when they knew clients had an award coming in, adding there was a “predatory nature” to this.

Zivot alleged that David Blott participated in the assignments that led to the loans, something that is prohibited by the settlement agreement and federal law.

And Zivot also told the court that many of the clients did not receive the full amount of their loans.

Auditors retained by Crawford analyzed the loans of six claimants and compiled a chart of loans and fees to see what was actually disbursed to the claimants. These six did not receive the full value of their loans, Zivot told the court, adding that one of the complainants is owed $7,000 plus fees. He said the total shortfall for the six loans was $80,000.

Mooney’s report includes a chart entitled “Known relationships (prior and current) between individuals and parties involved.”

Five members of the Blott family are listed on that chart, along with 26 others: David Blott, Sherry Blott, Barbara Blott, Randy Blott and Shaun Blott. At least one of those people was involved in making a loan to an IAP client.

The monitor concluded its report with a series of recommendations to the court. The main decision it urges the judge to make is to decide whether Blott & Company should be removed from the IAP process or, as the Law Society of Alberta has done, left the law firm in place to complete the files so that the many Blott & Company clients are allowed to complete their claims without interruption.

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Online Producer / Ottawa

Before moving to become the APTN News social media producer, Mark was the executive producer for the news in eastern Canada. Before starting with APTN in 2009, Mark worked at CBC Radio and Television in Newfoundland and Labrador and Ottawa.

2 thoughts on “Blott investigators make serious allegations

  1. “Leeches – they’re making monies from our people’s sorrow and pain.”

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