Here's a little recent airline history for all you Jetsgo lurkers. It may be because of this, as well as the Intair bankruptcy that no one of any consequence in the industry or financial community has any faith in anything Leblanc says.
Check out Ontario Superior Court of Justice court file 01-cv-215820cm
Canada 3000 and Michel Leblanc, Roland Blais and Groupe Royal Aviation Ltd.
It was never settled due to the bankruptcy of Canada 3000 and the passing of John Lecky, the driving force behind C3000. As such, these are allegations. It's up to you to decide if "where there's smoke, there's fire".
Canada 3000 sued the defendents for $40,000,000 for fraud, negligance, breach of contract, conspiracy, fraudulent or intentional misprepresentation and/or negligent misprepresentation in respect of the financial status, financial statements and other financial records of Royal Aviation Inc.
To paraphrase:
C3000 states that during the meetings with Leblanc from Nov 23 2000 thru Feb 2001, Leblanc repeatedly and consistently represented to C3000 that Royal would earn a pre-tax income of approc $12.5 m for the fiscal year ended April 30 2001. Leblanc claimed that Royal would have a "blockbuster" fourth quarter ended April 30 2001. Leblanc knew or ought to have known that the aforesaid representation was false and that Royal's true financial position was such that it could not possibly report pre-tax income of this magnitude for that fiscal year.
Following the completion of the acquisition of Royal, Canada 3000 conducted a comprehensive review and analysis of books, records, ledgers and other financial documentation to which Royal refused to permit Canada 3000 access prior to the completion of the acquisition. Canada 3000 discovered very serious and substantial discrepencies between what Leblanc and Blais represented to Canada 3000 was Royal's financial position and the true financial position of Royal. Royals consolidated statement of operations was not formulated and prepared in accordance with GAAP, or even with specialized accounting principles applicable to a corporation carrying on business as an air carrier.
Leblanc and Blais made fraudulent misrepresentations regarding Royal's financial position which were material to C3000's decision to make the offer and complete the acquisitions. In the alternative, Leblanc and Blais wilfully, or in the alternative negligently and/or recklessy, failed to disclose material facts regarding Royal's true financial position.
Leblanc and Blais made fraudulent misrepresentations and non-discloures for the purpose of deliberately and deceptively adjusting the figures reported on the 3rd qtr financial statement as at Jan 31 2001 in order to make the pre-tax profit for the year ended April 30th appear to be very close to the income figure of $12,500,000 which Leblanc represented to C3000 during their negotiations. The aggregrate amount of these fraudulent misrepresentations, non-disclosures and financial adjustments totalled approximately $15.8m.
Unjustified adjustments totalling $9m, with no back up records to substantiate the adjustments. The adjustments had the effect of increasing pre-tax profit by $9m. Royal then caused all the adjustments to be reversed in the following monthly financial period.
Operating expenses were reduced by $1m by allocating them to start-up costs which were capitalized. There were no back up records to justify that these expenses were incurred.
Costs totalling $3m for maintenance of aircraft were not accounted for as operating expenses. Blais knew that the actual maintenance expenses had been incurred but failed to record these as expenses.
A sum between $500,000 and $600,000 as an insurance claim receivable. Royal had not submitted a claim to its insurer in respect of that amount.
A series of transactions where expenses were posted, then later reversed in following months, which all had the effect of decreasing Royal's operating expenses which, in turn, created the false appearance that Royal's pre-tax profit was
