Superior Court Justice Robert Goldstein sentenced Steven Nowack, seen here, to a nine-year jail term for running a 'large-scale, complex, sophisticated' fraud.Toronto Police
Steven Nowack had rubbed shoulders with famous musicians and even a Nobel Prize laureate. He presented himself as an experienced foreign-currency trader. He even let investors watch him make purchases and sales on his mobile phone.
But he wasn’t registered with the Ontario Securities Commission. He wasn’t really trading live on his phone, but used demonstration accounts, which are intended to allow people to practice trading, and contain fake money. He was not raking in large sums, but used his investors’ money to pay his rent, credit-card bills and legal expenses.
Those facts were read in a Toronto courtroom on Tuesday as Superior Court Justice Robert Goldstein sentenced Mr. Nowack to a nine-year jail term for running a “large-scale, complex, sophisticated" fraud.
The judge said Mr. Nowack operated a Ponzi scheme, taking $15.7-million from his victims.
Among those he defrauded were his retired family doctor, who had treated him since he was a child. The court also heard that Mr. Nowack ensnared his former in-laws.
“Mr. Nowack says he has a gift for making money. He certainly has a gift, but his gift is an ability to deceive people,” the judge said.
A jury convicted Mr. Nowack in April on 12 counts of fraud more than $5,000.
The 56-year-old grew up in Toronto. He ran a restaurant and was a hedge-fund trader, then a music promoter, working with well-known performers. He had a chance meeting with retired Archbishop Desmond Tutu, and persuaded the Nobel Peace Prize laureate to attend the launch of a music-streaming service he said he was starting.
As early as 2009, Mr. Nowack sought investors, promising good returns from trading foreign currency in an account in New York. In fact, the account was in London, with the FXCM brokerage.
As early as 2009, Mr. Nowack sought investors, promising good returns from trading foreign currency in an account in New York.Bebeto Matthews/The Associated Press
Justice Goldstein said that, as part of his deception, Mr. Nowack sent bogus account statements to his victims and a forged e-mail purporting to be from FXCM. He later closed the FXCM account and opened one in Las Vegas. He also had an account in the Isle of Man. “Reputable professionals don’t open accounts in Las Vegas,” Justice Goldstein said.
One of his first victims was his former family physician, who was in his 80s, and lost his life savings at a time when his wife had Parkinson’s disease. Another doctor had to sell his house and postpone his retirement. One other victim was unable to help his children with their university tuition fees. Several said the fraud damaged their relationship with their relatives and spouses.
Justice Goldstein said fraud is not just a financial matter, but also an emotional crime – the perpetrator betrays people’s trust, and they are embarrassed and left doubting their judgment and intelligence.
By 2013, a number of investors had turned to civil court to recoup their money. Mr. Nowack still looked for other victims, and he talked a building contractor, David Weenen, into investing $100,000.
In an interview after the sentencing, Mr. Weenen recalled that he badgered Mr. Nowack for months to get his money back. Mr. Nowack gave him a bank draft, which a teller wouldn’t cash because it was forged.
Mr. Weenen went to Toronto police with the bogus bank draft and his e-mail correspondence with Mr. Nowack.
Two months later, police charged Mr. Nowack. After his arrest, he tried to persuade a man who had given him $5-million to invest not to co-operate with the investigation, the court heard.
The judicial proceedings were lengthy. After he was convicted, Mr. Nowack’s bail was revoked. He tried to apply for bail again, and complained that the behaviour of correctional officers was "only three or four steps removed from Auschwitz.”
Justice Goldstein denied him bail in June, calling the Auschwitz comparison “odious.”
Mr. Nowack presented a letter of support from Archbishop Tutu at his sentencing. But the judge was not impressed.
Prosecutor Renna Weinberg had asked for a 10-year-sentence. The defence suggested two years. With credit for his presentencing custody, Mr. Nowack will have eight years and four months left to serve.
In addition to imposing a $15.7-million fine in lieu of forfeiture, the judge also prohibited Mr. Nowack from handling third parties’ assets for life, citing his “exceptional ability to manipulate other people.”