Dieppe man ordered to repay employer $280K after 'kickbacks' scheme uncovered
A judge ordered a Dieppe man to repay his former employer more than $280,000 after the company discovered he used his position to obtain secret commissions as well as personal benefits such as driveway paving and roofing.
Soprema Inc. fired Eric Martin in October 2016. The company filed a lawsuit in the Court of Queen's Bench seeking to recoup money from Martin.
Justice Jean-Paul Ouellette of the Court of Queen's Bench ruled in favour of the company in an April 4 decision.
The decision states that without the company's knowledge, Martin "awarded contracts to Soprema suppliers by negotiating secret commissions or personal benefits, awarding contracts to higher-priced suppliers to obtain personal financial benefits, and (supplied) Soprema products to customers or friends for their profit without charge."
A lawyer for Martin said neither would comment.
"We're likely going to appeal," Dominic Caron said.
Soprema directed an interview request to its lawyer.
"We're satisfied with the judgment," Ian Girard said, declining to comment further.
Martin was hired in 1993 by the international manufacturer of waterproofing, insulation and soundproofing products used in roofs and buildings.
He was fired during an internal investigation while serving as director of corporate development in the company's Dieppe office. Months before he was fired, he was a company vice-president and oversaw a staff of 16 in Atlantic Canada.
Martin claimed he had the power and a duty to promote the company's products using incentives.
The judge called Martin's explanations "implausible."
The company claimed Martin owed it:
$29,183 for materials and credits from Soprema to a roofing company without invoicing
$6,300 for asphalt delivered to Martin's home paid for by Soprema
$225,585 in secret commissions or kickbacks paid to Mr. Martin
$5,085 paid by suppliers of Soprema for the purchase of Martin's snowmobile
$8,000 worth of building materials for a patio and the construction of a roof at Martin's home
$8,000 in gasoline, materials and other merchandise obtained for personal benefit
$1,805 worth of goods delivered to a friend of Martin
Soprema filed several affidavits in support of its case.
Offers refused
Alain Haché, president of transport company PACA Logistics, said in an affidavit that he was approached by Martin in 2011 to be Soprema's favoured transport company in return for a $75,000 annual rebate paid directly to Martin. Haché refused.
George-Luc Boudreau with Boudreau Sheet Metal 1999 Inc. said he was approached by Martin in 1999 or 2000 to be a silent partner. Soprema, Boudreau said, would then provide a better price on its products. Boudreau refused, saying it would place the company in a conflict of interest.
Jean-Marc Desilets of Down-East Transport Ltd. said the company provided transport services for Soprema and was asked by Martin to pay him a personal fee. Desilets said the proposal would increase the cost of transportation for Soprema, with the difference in price paid to Martin.
The offer was refused, and the judge's decision says the company eventually lost Soprema's contract to other carriers.
"Clearly, Mr. Martin had a mode of operation wanting to receive secret commissions or kickbacks for his personal benefit," Ouellette wrote in his decision.
Hidden inventory
Martin set aside a portion of the company's Dieppe warehouse to store obsolete or defective products tracked outside Soprema's normal inventory system.
At one point, Martin directed that area be cleared out and a spreadsheet tracking it deleted. The products worth about $25,700 were sent to Northwest Roofers in Edmundston.
Martin confirmed in October 2016 that he had sent Soprema-owned products to customers or friends who were not billed, including the material sent to Northwest Roofers. All the products sent to Northwest Roofers were returned to Soprema, the court decision says.
Personal benefit
When Soprema's Dieppe parking lot was expanded, Martin used the work to obtain asphalt, installed at his home at the company's expense. Martin claimed he never received an invoice.
When Soprema looked into painting work at its Dieppe office that cost about $16,090, Martin said the company hired had painted his own home without charging him.
Boudreau Sheet Metal told Soprema the company, in 1999 or 2000, roofed Martin's home for free and provided a wood patio in exchange for a good price on products Boudreau would buy from Soprema. It was estimated the work was worth between $6,000 and $8,000.
Consulting firm set up for payments
Martin claimed he worked with a company that supplies Soprema to develop a new product. The product became popular, so Martin said the company wanted to reward him.
Martin established a separate company, BES Consulting Inc., for tax purposes to receive the payments over about two years, ending in 2008.
Martin said the payments weren't hidden from Soprema — he just wasn't asked about them.
Soprema's employee handbook requires approval before receiving donations, gifts and sponsorships. The judge ruled the payments violated Martin's duties to Soprema.
The judge ordered Martin to pay Soprema $282,209.73 and also awarded costs of the court action.
New Brunswick RCMP would not say whether they are investigating
