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Victims celebrate as Toronto foreign exchange trader behind $20M Ponzi scam gets nine years in prison

Victims celebrate as Toronto foreign exchange trader behind $20M Ponzi scam gets nine years in prison
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“Where do they keep the champagne glasses?” joked one former military man turned contractor, a victim of Nowack’s $20-million foreign exchange trading Ponzi scam, anticipating the unusually long sentence about to be imposed. “Piece of dogs—. You are dogs—. The worst kind,” said another, as Nowack was brought in to learn his fate, and nodded in return.

“Is there a problem here?” one court officer said firmly, before another cautioned a man not to take video inside the courtroom, one of Toronto’s more luxurious ones, fronting through high windows onto University Avenue.

It was a day of reckoning that Nowack, 56, had gone to incredible lengths to avoid. “Mr. Nowack did everything he could to delay a trial on the merits of this case,” Judge Robert Goldstein said.

Steven Nowack Toronto Police Service

Judge Goldstein took care to note he was unmoved by the “passions” in the gallery. Then he sentenced Nowack to nine years in prison, with time and a half credit for the few months he has served since a jury found him guilty on a dozen counts of fraud over $5,000 in the spring.

Each count represented a person who had given him money, in some cases millions, on the understanding he would trade with it, leveraged 100 times, on a foreign currency exchange. He lured them in by showing them fake “demonstration accounts,” in which he seemed to be making huge profits, then forged emails to conceal his real losses, and used money from some investors to pay others, the judge found. In the end, he lost everything.

In addition to his nine-year prison sentence, he has a fine in lieu of forfeiture of nearly $16-million, with three years to pay after his release, otherwise he faces a potential seven more years in prison. There is also a restitution order to pay the victims about $14.5-million, which takes priority over the fine. Several complainants also have civil judgments against him, which remain unpaid, and the judge said courts will guard against double payment. He is also prohibited for life from having authority over other people’s money.

He told the National Post he intends to appeal.

Six years since his arrest has taken its toll. His hair is long, stringy and greasy from jail life. He has survived a serious cancer that threatened his heart. But his efforts to prevent this extremely harsh punishment have been vigorous.

Everyone knew they were involved in a high-risk venture

He tried to have the prosecutor removed because her name erroneously appeared online as co-author of an article with a lawyer for his victims in their civil actions. He claimed, to no lasting effect, that this showed the Crown was in cahoots with the victims, willing to use criminal charges as leverage for repayment, and to “trade an individual’s liberty for money.”

He breached his bail by contacting a victim. He was found in contempt of court multiple times. As another judge in a civil matter put it, “For a year and a half he has been appearing in court making illogical arguments and trying to muddy the waters with these arguments.”

He even managed to get a vague, short letter of support from Archbishop Desmond Tutu, from which it is not clear the Nobel Peace Laureate even knew what Nowack was convicted of, and which the judge found “very curious indeed,” but accepted at “face value.” More recently, he wrote to the prime minister and justice minister, urging them to intervene against alleged “judicial misconduct,” and was told the obvious in reply, that “administration of justice is the responsibility of the provincial governments.”

Nowack has maintained his innocence all along, and denies having money stashed overseas, as some victims have speculated.

Steven Nowack in 2001. National Post file

He claimed to have developed a “proprietary methodology,” in which he would play on “dichotomies in the market” created by different ways of thinking among Asian, European, and American investors. So as the markets opened and closed, he would take what he called “monster positions,” eventually building up more than $100 million in his trading account, he said. Most victims had signed a contract, and most agreed to split profits with 37.5% to Nowack.

“The fact is it was a business,” Nowack said in one of many recent phone conversations with the National Post, carried out in 20-minute increments because the jail phone automatically hangs up. “I loved what I was doing. It was hard work. It was strenuous mentally.”

“I’m penniless now,” he said. “This was a business transaction gone wrong… Everyone knew they were involved in a high-risk venture… Everyone loved when I was making money.”

Invited to comment before sentencing on Monday, Nowack stood before Judge Goldstein and apologized — not for scamming people out of their money, in some cases life savings, but for making the judge “visibly angry at and frustrated by me during the trial.”

“I was only trying to do the best to defend myself,” Nowack said.

“No apologies necessary. I accept it,” Judge Goldstein said, before reading out his scathing sentencing reasons.

I’m penniless now

At his trial this year, Nowack testified he had a “gift” for making money. On the contrary, Judge Goldstein said, his proposals were part of a massive fraud and Ponzi scheme, and “his gift is the ability to deceive people into parting with their money.”

“The currency trading was a fig leaf for the real business of fraud,” Judge Goldstein said. By the time the currency exchange froze his trading a few months before his arrest in 2013, his account was $850,000 in the hole.

One victim was Joseph Greenberg, a prominent Toronto family doctor who died before he could testify at trial, but told a police investigator in 2013 of the shame and embarrassment he felt. He was taken for more than $4-million, his family’s life savings. Nowack later consented to a civil judgment for the entire amount, but has not paid it.

Another was David Weenen, a former airborne gunner in the Canadian Forces, now a contractor. His losses of about $100,000 were the smallest in dollar amount. “I just feel stupid,” he said in a victim-impact statement. “More than anything, that’s the impact I know I have.”

He said he imagines Nowack “sizes” people up to see how stupid they are and how he can cheat them, then rob them while looking them in the eye “without so much as a flinch or a squint.”

Nowack has two children, a girl and boy aged 11 and 13, both with special needs. He is separated from his wife Melissa Frishling but was living with her prior to being jailed.

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