Gregor Gmerek is led out the back door of the Yorkton Court of Queen’s Bench courthouse Tuesday afternoon to be taken to prison. Gmerek was given two four-year penitentiary sentences, for fraud and forgery, to be served concurrently. He was led out of the courtroom in handcuffs following the sentencing.

Defrauded his employer, Prairie Livestock, of $1.2 million: Gmerek sentenced to 4 years

July 16, 2018 7:44 am
Kevin Weedmark

Gregor Gmerek has been sentenced to four years in prison for defrauding his former employer, Moosomin’s Prairie Livestock, of more than $1.2 million, and could face deportation to Germany.

Gmerek was found guilty of fraud and forgery in Yorkton Court of Queen’s Bench in June.

Justice Janice McMurtry found that Gmerek had defrauded his former employer, Prairie Livestock, of approximately $1,209,000 by various means, including issuing cheques to himself, depositing them, then voiding them on the company’s accounting system and issuing second cheques with the same cheque number. Deposit slips were also falsified, Justice McMurtry found. Funds were deposited into Gmerek’s bank account and used to pay his wife’s credit card bills, she found.

She found Gmerek also used company funds to purchase a vehicle, and used company funds to speculate in foreign exchange markets, taking the profits for himself.

On Tuesday, Justice McMurtry sentenced Gmerek to two four-year sentences, one for fraud, and one for forgery, to be served concurrently.

Kirk Sinclair, owner of Prairie Livestock, made a Victim Impact Statement during the sentencing hearing Monday.

“For six months we had no social or personal life with family or friends, only 15 hours a day seven days a week trying to discover the full extent of the fraud,” he told the court.

“Dealing with lawyers, RCMP etc, I sent over 450 emails in that period.”

He said the fraud impacted Prairie Livestock’s cash fllow and hurt the business.

“I had to take out a $600,000 mortgage shortly after. . . and two years later, when the full impact of the fraud hit the financial statements, I had to take another $1 million term loan.

“I wasn’t able to take any profits out of Prairie for five years. On our balance sheet, we had to write off $1.466 million. The loss of income from being occupied with the fraud and not being able to properly manage the business is easlily as much as the fraud again. It would be 10 years of my net income that is gone forever and will be missing from my retirement, or my estate.”

The court had been told that Gmerek used the funds stolen from Prairie to buy cars, to buy a house in Moosomin, to buy jewelry, and to pay his and wife Renita’s credit card bills.

“I accept that Mr. Gmerek’s offending deprived Prairie Livestock of approximately $1,209,657,” Justice Janet McMurtry said in delivering her sentence Tuesday.

“I find the following to be relevant in determining the gravity of Mr. Gmerek’s offending:

“1) Mr. Gmerek is solely responsible for fraudulently depriving Prairie Livestock of $1.2 million.

“2) Prairie Livestock is the sole direct victim. However this company employed approximately 15 people when he offended against it, putting their livelihoods at risk. Within two years of the discovery of the fraud, Prairie Livestock took on additional debt of $1.6 million.

“3) The president of Prairie Livestock wrote in a victim impact statement of the effect Mr. Gmerek’s offending had on his life. He suffered health problems, marital stress, and he lost significant income.

“4) Mr. Gmerek began offending against Prairie Livestock soon after he began with the company and continued until he was fired, over a period of four and a half years.

“5) Mr. Gmerek carefully covered his tracks. He created false transactions to cover the fact he was paying himself income to which he felt entitled.

“6) Mr Gmerek has no criminal record.

“7) On the other hand, Mr. Gmerek would not have been in a position of trust if he had any history of offending.”

She said there were many aggravating factors in Gmerek’s case that led to the four-year sentence.

“In Mr. Gmerek’s case there are many aggravating factors, and no mitigating factors, except for the lack of a criminal record,” Justice McMurtry said. “For four years, through hundreds of transactions, Mr. Gmerek deprived Prairie Livestock of an enormous amount of money—$1.2 million. His criminal actions caused significant consequences to the company president and his family, and put the viability of Prairie Livestock at risk. Mr. Gmerek used his accounting skills and his position of trust to carefully hide the fraudulent transactions. It took Prairie Livestock months to discover the extent of its loss. I accept it will take the company many years to recover financially.
“Mr. Gmerek, I am sentencing you on four years on each charge to be served concurrently.”

Crown Prosecutor Dana Brule asked for a penitentiary sentence of 4.5 years in a sentencing hearing Monday, while defence lawyer Jeff Deagle argued that a penitentiary sentence of 24-36 months would be more appropriate. Deagle pointed out to the judge that a sentence of anything more than six months could lead to Gmerek being deported, as he is not a Canadian citizen and Canada’s immigration law allows anyone who has been incarcerated for more than six months and has been convicted of a major crime to be deported. Gmerek was born and raised in East Germany.

Kirk Sinclair said after the sentencing that he accepts the sentence is in line with similar cases, but he would like to see the law changed so that those who commit fraud spend a longer period in prison, a time over which their loss of earnings would equal the fraud.

“I think the law needs to be changed so the time in jail is equivalent to the amount they stole,” he said. “If they stole a million dollars and you made 100 grand a year you should be locked up for 10 years, otherwise you’re making money by stealing. You need to take the incentive out of it.”

Sinclair won an earlier civil case against Gmerek and has recovered some property from Gmerek.

He still has a lawsuit pending against RBC, which he alleges should not have accepted fraudulent cheques made out to RBC that were then used to pay off Gmerek’s credit cards and a car loan. The allegation is that RBC did not have direction from the company’s owner or anyone with signing authority on how to apply the cheques made out to RBC. There is also an outstanding lawsuit against the accounting firm of Young, Park, and McNabb. In 2010, before the bulk of the fraud happened, Sinclair provided the auditors with evidence of fraud, but the accounting firm accepted Gmerek’s explanation and continued to sign off on the company’s accounts until Sinclair finally found proof of fraud in 2012.

Sinclair says that, while the sentence provides some sense of closure, “we’re not finished because we haven’t finished the civil side to recover what was lost. That will take another year. It finalizes it in the fact that these other lawsuits that are pending can be wrapped up now that we have a conviction.”

What has Sinclair learned from the whole experience? “I’ve learned not to doubt my instincts,” he says. “I was right, right from the start.

“I’ve also learned you can never do enough due diligence. We should have done more due diligence when we hired him. We should have fact-checked his resume.

“I’ve learned that our justice system is slow, but it works. The legal system is so backlogged it’s unfortunate that I don’t know what changes the government could make to run the court system more efficiently—it just drags on forever.”

Not credible

In June, when Justice McMurtry delivered her guilty verdict, she went through the various pieces of evidence presented at trial, and said she found Gmerek’s explanations for most of them not credible.

“I refer to these transactions to illustrate the various ways Mr. Gmerek made false entries into Genesis (Prairie’s accounting system) with the purpose of paying himself or his family with company money. I am satisfied Mr. Gmerek was not entitled to any of these payments,” she said.

“Mr. Gmerek is facing charges of fraud, theft, forgery, and uttering forged documents. I accept Mr. Gmerek defrauded the company of approximately $1.2 million. This deprived the company of approximately $1.2 million. Thus he also committed theft. To commit theft and fraud, Mr. Gmerek forged the signatures of Mr. Sinclair and others on company cheques. He then used those forged cheques to pay himself company money to which he was not entitled. I am satisfied the Crown has proved each of these charges beyond a reasonable doubt.”