Owners' personal expenses charged to firm, case alleges
Winnipeg Free Press
Saturday, April 8th, 2006
By Dan Lett and Geoff Kirbyson
A group of prominent Winnipeggers with stakes in the Protos International business empire are seeking a court order to force businessmen David Wolinsky and Costas Ataliotis to repay $1.4 million invested over the past six years.
The shareholder group launching the legal action includes Winnipeg Jet hero Thomas Steen and his wife Mona, who in total have invested more than $900,000 in Protos International and related businesses.
The Steens are joined by Lone Star Motors owner Ed Danylchuk, Dr. Ken Murray, a prominent plastic surgeon, and his wife Judith Murray, Max Feierstein, a successful information technology consultant, and former Jets owner Barry Shenkarow, on behalf of the Winnipeg Jets Employee Benefit Plan.
Yesterday, the group filed an "oppression remedy" application in the Manitoba Court of Queen's Bench.
The application alleged that Wolinsky and Ataliotis, as sole directors of Protos International, "unfairly" disregarded the interests of the shareholders by failing to inform them of major business decisions, failing to seek their approval for transactions, and using the company to pay for personal expenses.
Robert Tapper, the lawyer representing both Wolinsky and Ataliotis, said he was out of town until today, and as a result didn't expect to see anything cross his desk until Monday.
The application seeks an order under the Corporations Act of Manitoba that would force Ataliotis and Wolinsky to repay $1.4 million invested in, or loaned to, Protos International and a related company, Maple Leaf Distillers.
The applicants are also seeking an investigation of the business dealings of Protos and Maple Leaf and how they affected shareholders.
Protos and Maple Leaf are currently in receivership and are facing claims of more than $22 million from creditors, investors and suppliers. However, at one time Protos was billed as a significant business empire with tens of millions of dollars in assets and more than 800 employees.
The "World of Protos," as it was called by Wolinsky and Ataliotis, included businesses such as Salisbury House Restaurants and Green Gates Restaurant, along with varied interests in business consulting, film and television production and manufacturing.
The applicants complained that Wolinsky and Ataliotis permitted some shareholders and creditors to "cash out" their stakes in Protos or be repaid for loans without informing the remaining shareholders, or allowing them to do the same.
The affidavits claim those investors or creditors who were given preferential treatment included Mayor Sam Katz, former CBC reporter Ross Rutherford, Doug Stephen of WOW Hospitality and Lorne Saifer, business manager for rock singer Burton Cummings.
One of the investors, Max Feierstein, alleged in his affidavit that he was told by another shareholder that staff at Maple Leaf Distillers alleged Ataliotis and Wolinsky had been charging personal expenses to Protos International, including university tuition at Duke University in North Carolina for one of Wolinsky's children, fees for Ataliotis's children to attend St. John's Ravenscourt School in Winnipeg, lease payments for cars used by both families and personal cellphone accounts.
dan.lett@freepress.mb.ca
geoff.kirbyson@freepress.mb.ca
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The allegations:
In affidavits filed in court yesterday, the applicants complained that Protos International:
* failed to hold any annual general meetings or special shareholder meetings to approve of major decisions affecting Protos and Maple Leaf Distillers, including the purchase of additional assets ;
* failed to issue updated financial statements to shareholders, and refused to produce bank statements; * failed to make scheduled payments on loans made to Protos and Maple Leaf, and failed to satisfy promissory notes upon demand.
The applicants also complained that they were assured by Protos directors David Wolinsky and Costas Ataliotis that the business affairs of Protos and Maple Leaf were healthy, despite the fact that it now appears both companies were in financial crisis.