Saturday, July 6, 2019

Unapologetic grifter Sherman Kreiner left a legacy of lies and distrust

The spin-doctors were out in force trying to control the narrative after the demise on July 1st of Sherman Kreiner, a Philadelphia lawyer who came to Manitoba and excelled at bellying up to the trough for decades as a model for the white wine socialists of his era. 

It is natural that former colleagues of Kreiner, most recently Managing Director of the University of Winnipeg Renewal Corporation, would stoke  his memory with accolades for being "a doggedly committed advocate for social and economic justice." 

But if there's one thing Kreiner avoided in his time in Winnipeg, it was being on the receiving end of justice or a public inquiry for his deception as CEO in the mismanagement of the Crocus Fund, where he used investments from duped investors to underwrite absolutely stupid money-losing enterprises that advanced his socialist and glory-seeking agenda. 

Under the vision of Mr. "Multiple Bottom Lines", Crocus Fund investors were going to save democracy from capitalism, and pay him handsomely to manage it. 

A Labour-sponsored venture capital fund, it was supposed to grow small to mid-sized Manitoba businesses. What actually grew, was the influence and wallets of Kreiner and his team.

*  In March of 2007 we dedicated a special week to the contents of a leaked briefing memo that had Premier Gary Doer scrambling off a plane from Washington to try to save his ass before the provincial election. The briefing note, signed by then Finance Minister Greg Selinger in 2000, was conveniently never provided to the provincial auditor for his report - and the RCMP could not confirm thay had gotten it for their investigation either. 

In an on-air interview on 92.9 KICK-FM that week Liberal MLA Kevin Lamoreaux told our audience that he had no doubt the NDP was hiding even more information, and that Selinger had lied to the House when confronted with questions about Crocus in the past. The NDP outvoted a motion for Legislative Committee evidence to be sworn and moved that the Opposition Leaders apologize to Selinger. 

The Cabinet memo proves that back in 2000, the government knew that new investors' money was actually going to be used to pay out those investors who in essence, bailed before 34,000 people lost millions. Questionable investments touted by Kreiner included pouring endless sums into entertainment industry failures like Westsun ($21 million) all the way down to Blye Brothers ($1 million, zero films produced). 

Exhorbitant expenses were being rung up before an illegal loan from the Solidarity Fond in Quebec in 2002 was described as an "investment" and then used to cook the Crocus books and give it the illusion of stability and liquidity.  

*  The big dollars he had the Crocus Fund throw at media outlets made him feel he was above scrutiny as the ponzi scheme he captained was slowly decending into a death spiral. Shortly after the injection of Quebec capital, a critical letter from a shareholder circulated around the Legislature and media. 

We reported in January 2008 that when CBC reporter Krista Erickson asked Crocus about the reasons for the deal with the Fond , Kreiner wrote back , “As for the inference to liquidity raised by .... it is simply false.” 

However documents put into court in a shareholder lawsuit included the letter to the Fond requesting the money. The first reason Kreiner listed was “We presently face a short term liquidity challenge”. 

So he had no problem lying to CBC, especially when the letter had clearly told the truth- that regular investors got no guaranteed rate of return, so the Quebec money was not an "investment" but a high-cost short term loan. 

He also had no problem breaking the law, to conceal that Crocus was in deep trouble.

In that same correspondence begging for the bail-out, Kreiner vowed to repay the $10 million plus 7 % interest after 18 months, "even if the consequences of the redemption would place us offside our regulatory requirements regarding Reserve Funds" - in other words even if the Crocus Fund broke the law to do so.

(In fact, Crocus eventually committed to pay 10% interest, not 7%, to get the "investment".)

* Even the protective shield of the Crocus-friendly Winnipeg Free Press began to buckle, as editor Nick Hirst acted as a nervous canary in the coalmine after leaking the letter from the disgrunteled investor to his pal Shermy.  

Saying he had already found it "difficult to keep such letters out of the newspaper”, Hirst warned Kreiner “This letter become insidious if followed by others. 
It suggests there really is something wrong ... (This is) an example of one of the many letters we are receiving about your fund. It was also an example of the many letters Hirst did not publish to protect his friend from scrutiny. 

* So friendly, in fact, that a Fund sponsor upstaged the 2005 hearing at which the Securities Commission had asked the court to appoint a receiver to manage Crocus's affairs.

The Manitoba Federation of Labour brought forward a group of "volunteers" suggesting that they were in a better position to run Crocus than a professional receiver. One was Nicholas Hirst, months after leaving the newspaper to "write tv scripts".

For a timeline of the Crocus collapse click here

* Here's how the Flin Flon Reminder described the Auditor's report into Kreiner's term heading up Crocus:

"Apparently no one was minding the store, such the C.E.O. Sherman Kreiner who Singleton said 
- had no investment management background
- did nothing about management problems, and 
- did not properly inform the Directors

Kreiner was forced out in early December, shortly before Crocus stopped trading and devalued by $46 million. 

He remains hostile to the Auditor-General's report even though he can't explain how a $10 million loan from Quebec was reported as an asset

Apparently Kreiner's biggest failure was his inability to control the wild spending of his Chief Investment Officer James Umlah, who among other things spent $1.1 million on expenses.

* Shortly after the NDP helped the University of Winnipeg with a little pension shortfall, Kreiner was hired there in what was called "a far cry from his glory days with Crocus when he paraded around town as a Prince of the City, thuggishly threatening and intimidating anyone who dared challenge his command of the Crocus Fund and its many socialist offshoots." 

His benefactor, former U of W president Lloyd Axworthy, remembers the late Kreiner for "turning the university’s food services from an unpopular, greasy canteen to a social enterprise focused on organic and fresh food". Here is how it was described at the time: 

"The architects of this food services delivery model are two Winnipeg based organizations, The University of Winnipeg Community Renewal Corporation (UWCRC) and SEED Winnipeg." 

What Axworthy doesn't want you to remember, is that when the press release quoted Kreiner and SEED's Executive Director Cindy Coker, the University was careful not to reveal the two were actually married, and had been for a long time.  

* Axworthy also doesn't want anyone remembering how under Kreiner's direction, the U of W lied to conceal their manifest destiny vision of expanding the University footprint to adjacent streets in the west end. 

According to the Social Justice Committee of  Blessed Kateri Tekawitha Aboriginal Catholic Parish " Jennifer Rattray said, “The University of Winnipeg would never buy the buildings on Langside or Young and displace the people. It would be terrible PR.” 

"We were told there were never any discussions about buying these buildings or using them for students or kicking people out. Jennifer Rattray was very adamant that we were just stirring up the residents for nothing."  

But the day after the meeting "(we found) a document quoting a July 5th meeting of Spence Neighborhood Association representatives, Maggie Friesen, Cyril Keeper, Don Miedema and Kate Sjoberg with Sherman Kriener (sic) spokesperson of the University of Winnipeg, states the specific details of such a take over of MHRC buildings. They "...specifically discussed the displacement issue and recognized that it was one (they) would need to address very carefully." 

(Well, Shermy was consistent, he'd lie to anyone in the west end, whether it was a CBC reporter or the neighborhood church).

* The day after the NDP was re-elected under Selinger in 2011, 8 of the 10 Crocus directors who had nominally been responsible for Kreiner made a whitewash deal with the highly compromised Manitoba Securities Commission to save their skin. The Order allowed them to walk away without being held accountable or expressing any remorse for allowing inflated shares in the labour fund to be sold without the required checks and balances being followed by the Board, that would have protected trusting Manitobans from being fleeced. 

The Order included dirty details of stalled Valuation approvals and details of backroom infighting between parties unnamed in the documentation - but who were Kreiner and new executives Chief Operating Officer Laurie Goldberg and Chief Investment Officer John Pelton, who blew the whistle to authorities when they found the Fund was collapsing. 

* Axworthy told the Free Press that Kreiner was working on a book  "about social enterprises, and how to get more conscious businesses into the market." 

"I’m hoping that book comes to publication, because the parts he read out to me were just brilliant. Let’s just say: we’re still going to hear from Sherman Kreiner."

If and when you do, read this brief retrospective again and compare Kreiner's actual record in the community from the fiction he was no doubt compiling to cover himself in glory.  

When Winnipeg loses experienced journalists, it loses institutional memory. There are fewer reporters in the city than EVER. The deep researched coverage we gave to the Crocus Fund scandal on KICK-FM helped establish citizen journalism in this town.

The public deserves more than the spin put out there about divisive characters like Sherman Kreiner. 

In the next few months I want to make sure that there is added coverage of city hall, the Manitoba election and the federal election too, as well as stories like this. 

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