CINAR scandal

The CINAR scandal was a major accounting scandal in Canada that came to light in March 2000 at CINAR, one of the world's most successful children's television production companies at the time.[1] It was exposed when investigators revealed that US$122 million was invested into Bahamian bank accounts without the board members' approval. The scandal resulted in Canada's longest criminal trial ever brought before a jury.[2][3]

In 2004, following the scandal, CINAR was sold to a group led by Nelvana founder Michael Hirsh, and former Nelvana president Toper Taylor for CA$190 million.[4] The company was subsequently renamed to Cookie Jar Group.[5] They would be acquired by DHX Media (later known as WildBrain) in 2012 and then folded 2 years later.[6][7][8][9]

Background

CINAR was founded by the husband and wife team of Micheline Charest and Ronald Weinberg in 1976 in New York City after organizing an event for a women's film festival, and later moved its operations to Montreal, Quebec. Throughout the 1980s and 1990s, the company saw massive success with children's programming such as Papa Beaver's Storytime, The Busy World of Richard Scarry, Are You Afraid of the Dark?, The Adventures of Paddington Bear, Wimzie's House, Caillou, Zoboomafoo and Arthur.

CINAR went public on the Toronto Stock Exchange in 1993, and then on the Nasdaq one year later.[10] By 1999, CINAR boasted annual revenues of CA$150 million and owned about CA$1.5 billion of the children's television market. In 1996, CINAR acquired the library of the British animation studio FilmFair, which included television adaptations of Paddington Bear. CINAR shut down the studio in 1998. In February 1999, CINAR acquired the film library of Leucadia Film Corporation.[11]

Scandal

The company collapsed in 2000, when an internal audit revealed US$122 million was invested into Bahamian bank accounts without the board members' approval.[12][13] CINAR had also paid American screenwriters for work while continuing to accept federal grants and tax credits for the production of domestic content, although the names of Canadian citizens (generally non-writers connected to CINAR, including Charest's sister Helene via the alias Erika Alexandre (Eric and Alex are the names of the sons of Micheline Charest and Ronald A. Weinberg)[14]) were credited for their work.[15][16][17][18]

Aftermath

On August 26, 2009, in a separate case, the Superior Court of Quebec ruled that CINAR had plagiarized the work of Claude Robinson for its animated series Robinson Sucroe. The series was based on a concept he had pitched to CINAR in 1986, but had been turned down. Robinson was awarded $5.2 million in damages, in a suit that resolved a 14-year dispute between the two parties.[23][24]

On March 10, 2011, co-founder Ronald A. Weinberg returned to Montreal from vacationing in the Caribbean islands and was promptly arrested for securities fraud after a warrant was issued for him to be taken into custody earlier that month.[25]

On January 17, 2014, former CFO Hasanain Panju pleaded guilty to undisclosed crimes. The judge noted these crimes were "disgraceful" and placed a publication ban on details surrounding the trial. Panju was sentenced to four years in prison.[26]

On May 12, 2014, Weinberg, John Xanthoudakis of Norshield Financial Group and Lino Matteo of Mount Real Corp. were charged with 26 counts of fraud in Montreal Superior Court.