MONTREAL - Two of four men charged in a $120-million fraud involving a scandal-plagued children's TV production house were granted bail Thursday as police waited for two others to turn themselves in.
A Montreal judge imposed several bail conditions in releasing Hasanain Panju and Lino Matteo.
Both men were arrested separately on Wednesday as police swooped in after an eight-year probe into alleged fraud at Cinar.
Police were still looking for Cinar co-founder Ronald Weinberg and former Norshield Financial Group president John Xanthoudakis.
In all, the four face a total of 36 charges, including fraud, forgery, using fake documents and publishing a false prospectus.
Neither police nor prosecutors wanted to comment specifically on the whereabouts of Weinberg and Xanthoudakis on Thursday, although police said earlier at least one of them was believed to be abroad.
According to court records, Weinberg's address is unknown while Xanthoudakis's last known domicile was in the Montreal borough of St-Laurent.
Panju, the former chief financial officer of Cinar, was allowed to return to his home in Ontario after depositing $50,000.
He can't leave Canada, work in any administrative capacity with a public company or do any investment work except for his personal retirement planning. He is also forbidden from taking part in the production of a prospectus.
Matteo's wife took out a $50,000 mortgage on a property to secure his release. Matteo, a former head of the Mount Real Corp. investment company, was seeking a legal-aid lawyer to represent him in future proceedings.
He also cannot leave the country and is not allowed to take part in investment work.
"We were satisfied that with these conditions, they will respect (them) and if they don't they'll suffer the consequences," said Crown prosecutor Matthew Ferguson.
The two are forbidden from speaking to three indviduals who have been integral to a decade worth of legal proceedings regarding the Cinar/Norshield/Mount Real saga.
The Crown's case will centre on testimony from the three:
-- Robert Daviault, former chief financial officer of Globe-X Canadiana and Globe-X Management which allegedly helped invest some of the money;
-- Mario Ricci, a former Norshield vice-president;
-- And Montrealer Tom Muir, former president of Norshield International Ltd., a Bahamian investment company previously affiliated to companies where the Cinar money was allegedly transferred.
Police allege the fraud was worth $120 million.
Weinberg and Panju are accused of investing funds without the approval of the production house's board of directors in an effort to draw personal profit.
Police allege Matteo and Xanthoudakis helped camouflage the investments.
The alleged fraud occurred between August 1998 and March 2000.
The Cinar scandal began in 1999 when the Mounties started investigating the production house, whose children's TV shows included the popular "Caillou" and "Arthur."
The RCMP suspected the company used Canadian names on American-produced scripts to get tax credits north of the border.
The RCMP never filed criminal charges against the company, but the troubling revelations multiplied as the Quebec securities commission and provincial police opened their own investigations into the company and its executives.
Cinar co-founders Weinberg and Micheline Charest were ousted and the company was plunged into financial crisis when word leaked of money invested ilegally in Bahamian hedge funds.
The couple were subsequently fined $1 million by Quebec's securities commission without ever being found guilty of a crime.
Charest, who was married to Weinberg, died in 2004 after a lack of oxygen to the brain following six hours of facial and breast surgery at a Montreal clinic.
Both Mount Real and Montreal hedge fund operator Norshield have been the subject of legal proceedings for allegedly fleecing investors out of millions of dollars.
Xanthoudakis has been in trouble with securities regulators before. Last August, he and former Norshield president Dale Smith were ordered to pay $4.3 million in fines for misleading investors.
They were each fined more than $2 million each for artificially inflating the value of their funds, playing favourites with their investors and being unable to account for investors' funds.
Norshield lost most of the $159 million invested by its 1,900 Canadian retail investors when it collapsed in 2005.
Matteo was head of Mount Real in 2005 when it disintegrated, costing 1,600 investors an estimated $130 million.
More than 700 securities violations were laid against Mount Real for what has been alleged to be an elaborate Ponzi scheme but victims have said it's unlikely criminal charges will ever be laid in that case.
Provincial police said their lengthy investigation included meeting 50 witnesses and analyzing 50 boxes worth of documents and nearly 10,000 computer files.
"We have to be patient with the file," Ferguson said.
"It's complex evidence of an international scale and there's an abundance of evidence as well, so we have to take our time. We have to be patient in order for this to come to court."
Panju and Matteo are due back in court on May 4.
