Changin’ the rules.
Whenever we’re caught.
The law is the law.
Except when it’s not.
Makin’ judges from lawyers.
And what’ve you got?
The law is the law.
Except when it’s not.
Table of Contents
by Timothy Paul Madden, forensic-financial-economist, and historian of equity, law, and policy.
Farmer: I harvest wheat.
Banker: I harvest farms.
Early in 1880, a long-building crisis had broken out in Ontario (the then recently former Upper Canada) with its then still largely agriculture-based economy, as a result of farmers who were being described in Parliament as leaving the country in droves for the United States, due to a highly organised property forfeiture scheme being run by mainstream lawyers and management of what were then called loan societies.
The people behind the loan societies would send agents out into the countryside to persuade farmers to borrow money from the society to expand (normally double) and / or mechanise their farming operations.
Farmland prices and rental rates were determined in practice so as to define a modest operating margin but otherwise such that the net value of the annual crop yield was roughly 6% of the land value. If a given farm normally produced (or was capable of) annual crops totaling / netting $600 (after the operating margin and production and delivery expenses), then the market value of that farm would be about $10,000 (with some variation for location, proximity to creeks, rivers, railway lines, etc.).
The corresponding mortgages, which attached to the entire expanded farms, generally called for (claimed) interest rates of 6% per annum such that the increased yield would theoretically go to the loan society, nearly all at first, and then on a declining basis according to the 25-year amortisation, with the farmer’s gain realised primarily as nominal capital gain (increased / proportional value (and income) of the expanded / enhanced farm) at (and ever more increasingly toward) the end of the 25-year term and amortisation.
By appearances, it was a relatively mutually-beneficial arrangement. The farmer and family would contribute the time and work-energy and general value-added to support the increased production, and the provider of the financial-capital would obtain a starting yield equal to the entire profit and contribution of the producer, and then declining marginally for each of 25 years while their principal investment was also commensurately paid back over the same period, without having to concern themselves with any of the problems of farming and of planting, growing, harvesting, and marketing, crops. With every step toward the end of the 25-year amortisation, both parties increasingly benefit from the arrangement.
And because it appeared to be relatively equitable, it tended to be attractive to, and was generally targeted at, the youngest, most energetic, and most ambitious farmers who were willing and able to take on the 25-year commitment to doubling the size of their family farm.
It is also important to keep in mind, however, that the fact that the farmers had to pay for the land at all was a relatively huge added cost and burden to themselves, and a constructive bonus for what I describe as the entrenched-money-power. Somewhat earlier, immigrant farmers to what is now the (former Crown possession) Republic of South Africa, for example, did not have to pay anyone if they were willing and able to double the amount of land under their cultivation. Just as in Canada, the land was already there, and everyone benefitted from the increased production. And it was difficult enough to make a go of it even if the land were otherwise free.
In Canada, however, the farmers by the 1870’s had to pay financial compensation by reason of the Crown having relatively recently simply claimed ownership of the land. In that sense even the apparent 6% return to the loan society was founded more in coercion than equity (notwithstanding that the ultimate free-rider at the end of the financial-food-chain was the Crown in this respect, and not the loan society. As Bob Dylan sang: “You gotta serve somebody”).
The mortgages regardless also provided in technical and legally complicated language that if a payment were late, then, as a penalty, the interest rate (and corresponding payments) on the whole then remaining principal balance would double to 12% for the duration of the 25-year amortisation.
The loan society people and their lawyers would then sit back and enjoy their purported 6% return, while also waiting for the inevitable and statistically-predictable variations in weather patterns to produce a partial or general crop failure (normally or on average about once every seven years), whereupon the farmer would henceforth owe (at least) the combined gross profitability of the farm to the loan society, and normally after the first few backbreaking years of labour (e.g., clearing rocks, timber, etc.) and general value-added needed to prepare the expanded operation for farming, and leaving the farmer no practical alternative than to emigrate (cross the relatively nearby border) to the U.S. to start over.
And, insidiously, the farmers were required to pay the legal expenses for the creation and issuing of the mortgages, and were both passively and actively induced by the loan society management and their lawyers into believing that the lawyers were working for them (i.e., for the farmer) and did not generally seek independent legal advice.
Once the farmer had signed, the system went Gotcha! and the Courts / judges ultimately responded with: The law is the law so what can we do? (Because of the private-law and all-or-nothing principle of contracts). It is unfortunate, but you have inadvertently made yourself into an unpaid servant of the loan society and its lawyers. But you can always abandon your equity and everything that you own to the unearned and unjust enrichment of the money-people and their professional language-manipulators and move on to the U.S. Thanks for your support.
The same mortgage-secured transactions were also plagued by the practice of front-loading ((concealed / undisclosed / unregistered) nominal loan fees (cross-leveraged-double-counting-fees and accounting-fraud-concealment-fees) compounded / capitalised in advance), and (double-cross-leveraged-against) the so-called (and insidiously fraudulent) nominal method of interest calculation. Even without the nominal rate-doubling penalties, the actual / real rates defined by the net loan and the required payments were often 7%, and in some cases approaching 8%, and not 6% as claimed / declared in the mortgage.
Even if a given farmer and family were fortunate enough to escape the caprice of nature for an inordinate period, the alleged fifty-fifty bargain tended more towards 2-to-1 in favour of the loan society right out of the starting gate. Even if the expanded / mechanised operation were to yield a relative 12% after versus before, the loan society would obtain up to 8% or 2/3 of the total, leaving as little as 4% or 1/3 for the farmer and family who would also perform the additional work needed to prepare the additional land and grow the crops on it. The land itself could normally only yield 6% at best, and so for the loan society to get 7% or 8%, the difference had to come out of the farmer’s alleged half. For the first few years especially, the farmers had to do up to twice as much work, to make up to a third less than before.
More generally, it is not possible to make a loan without making the loan, and a separate charge claimed for the lender’s agreement to make the loan is just naked coercion and double-counting.
As a final coup de grâce, the mortgages also provided, in likewise legalese, that the only way for the farmer to get out of it at any time, was to also pay the loan society all of the remaining interest for the 25-year amortisation.
The nominal method of interest calculation is a purported measuring device for the time-value-of-money. It is used almost exclusively to determine interest charges and to disclose / declare rates per annum for interest payment periods of less than a year. Its foundational premise is that there is no incremental-time-value-of-money for any period less than a year. It is as clinically insane as it is transparently fraudulent. Its only virtue is that it just happens to be close as long as the real interest rate is close to zero.
More psychologically, it is based on a three-headed absurdity that is the essence of fraud, coupled with a pathological need to oppress and dominate, yet with concurrent self-denial of the fact of it – a perfect storm of fraud, theft, and moral cowardice:
- The borrower does not need to know the interest rate;
- The borrower does need to know something that is not the interest rate; and
- The borrower needs to believe that the thing that is not the interest rate is the interest rate.
If a loan agreement requires total interest payment amounts equal to 24% over the course of a year, for example, then under the nominal method it makes no difference to the rate whether the interest is accrued / paid / deducted in advance (a real 31.57%), at the end (a real 24%), or by 12 equal monthly payments of 2% (a real 26.82%). It is absurd and preposterous on the face of it, and ever more so in a modern financial world where vast fortunes are measured and can turn on the basis-point or 1/100th of 1% (even at the time the commercial-trading base-unit was 1/8th of 1%).
Perhaps the most damning test of the nominal method is that the nominal creditors did not use it – nor could they – for internal purposes. The nominal interest rate (which is not a rate at all) is near-meaningless (and by itself often actively misleading) information that, again, does not recognise the incremental-time-value of money for any period less than a year. No financial institution could function on any such basis. It is more or less reserved exclusively as a way to systemically understate real interest rates in fraud of borrowers. It has no other purpose.
As an example designed to expose and demonstrate the nature and extent of the fraud and the absurdity of it, if the actual interest amount is determined at 1% per day, for example (e.g., 1% for 1 day, and 37% for 37 days, etc.), then there are 365 different real interest rates so-defined in a year, and which range from 365% per annum (365% for 365 days) to 3,678% per annum (1% for 1 day), while the nominal annual rate remains at 365% in all 365 cases. Why is that? Because there are 365 days in a year, and that is all that the nominal method allows you to determine.
All professional creditors have been, since well before the 1870’s, equally well familiar with the measurement formula (the actuarial or real-interest-rate formula) stipulated under (today’s) s. 347 of the Criminal Code (criminal interest rate) because virtually everyone in the industry already used it for virtually everything except disclosure, and could not function otherwise.
More critically, the financial consequences of the math procedure error in the alleged nominal method increase exponentially with the stated or claimed interest rate. At a stated rate of 3% per annum, for example, on a 30-year mortgage amortisation (as is the norm in the U.S. for example), it is the difference between making the same monthly payment for 30 years versus 29.75 years. Almost no difference (because the claimed / nominal interest rate is close to zero).
By a stated 6% per annum, the extra 1/4 year has increased to almost 1.4 years (30 years v. 28.6 years) and the difference (which is 100% interest) now accounts for about 9% of all the interest money to be paid under the mortgage / contract.
By a stated interest rate of 15% per annum, again for example and to show the incredibly rapid (exponential) progression, it is the difference between making the same monthly payment for 30 years versus 18.7 years.
By a stated or nominal 15%, the fraudulent methodology quietly and exponentially leverages the total interest / money cost of credit under the contract by 93% over and above a real 15%, and accounts for 48% of all the interest money to be paid over the 30-year amortisation. That is one reason among several why the nominal method was most recently banned outright in the U.K. in 1974 as criminal fraud, and on the grounds that it is “false and seriously misleading”.
The nominal method is prima facie evidence of a deeply disturbing psychiatric defect / condition among a certain faction of the human species.
However that may be, these three were the primary fraudulent devices that had been employed through much of the 1870’s to systematically loot farming families of their property and of the product of their labour, and which had become a full-blown crisis early in 1880:
- Loan fees (including real and / or contrived expenses) and / or bonuses illegally capitalised / compounded in advance as a separate charge and cross-leveraged–double-counting device for the lender’s deemed / pretended separate agreement to make the loan (and not disclosed / declared at all under the registered security / mortgage);
- Use of the wholly fraudulent nominal method of interest calculation, under which the financially sophisticated lenders quietly, and up to massively, leverage the money cost of credit, while fraudulently passing off a circular reference for the number of payment periods in a year as the interest rate, while concurrently in the business of knowing that it is not; and
- Late payment penalties and de facto property forfeiture provisions.
Overall, the situation had become so bad, so egregiously wrongful and detrimental and disruptive of the real economy, that in 1880 Parliament (the House of Commons) had moved / proposed (and / or otherwise threatened) to institute an absolute and real 6% per annum limit on interest rates all across the country.
Every time one of these deals was made, the loan society people effectively set a small localised financial and economic time-bomb – effectively an act of theft against the individual farmer, but also sabotage against the future productive capacity of the country, and set on an event-based time-delay to coincide with the first widespread and substantial crop failure and / or unexpected combination of other factors.
So the loan society people spend a period of years entering into these deals across the country / province while experiencing no substantial immediate consequences (vis a vis the penalties), which creates a feedback-loop of encouragement to repeat the cycle.
Meanwhile, the general level of disaffection was also building due to the other two fraudulent devices as they steadily depleted or taxed the equity the farmers had had in their original pre-expansion farms, while the farmers increasingly realised that there was something very wrong with the arrangement, depending on how many years they were then presently into it.
Then, when the inevitable significant crop failure hits the mostly agriculture-based economy (and / or unanticipated combination of other factors depending on the region), the time-bombs all go off more or less simultaneously, and legally drive the affected farmers and their families off of their land, which land itself (and accumulated equity) is concurrently harvested by contractual forfeiture to the loan society people and their lawyers, while the Courts purportedly could not help because the law is the law, meaning the all-or-nothing principle of contracts.
The proposed real 6% interest rate limit was a reasonable response to a very wrongful state of affairs.
There was also the larger and more systemic problem or broadly-defined device known as common practice or business custom:
MP Mr. Bourbeau: If a man gives a [promissory] note for $100, and it is afterwards discovered that the maker of the note has been deceived, and has been a victim of false pretences, no Judge or jury will condemn him to pay that note. But that is not the case with loan associations [or any established institution]. There is no means of bringing them to account. No instance can be pointed out where the loan companies have been interfered with, and where the payment of the loan has been successfully resisted. The law is singularly in favour of these societies. (Hansard, House of Commons, March 31, 1880, p. 971).
The loan society people (and their lawyers) had learned that as long as they all employed the same deceptive techniques, they could essentially hold the country and its economy hostage.
Both the loan fees and the nominal method were objectively fraudulent but had become entrenched as so-called business customs among money-lenders. And the judges / Courts could not declare one loan agreement invalid for misrepresentation without affecting all loans using the same device or technique. And if all loans, or even a relatively small proportion of them, were rendered uncollectible, then the poor widows and orphans would lose their savings and the economy would collapse. Thus, for the good of the country, the judges / Courts were compelled to let the loan societies, and the entrenched-money-power more generally, become a law unto themselves.
So Parliament either had to enact specific laws against each of these fraudulent techniques, or else it could deal with it all by enacting a maximum rate of interest, and it had set out to do the latter.
But the appointed and unelected Senate (or Ex-Bankers’ Club), as representative of the entrenched-money-power, responded with a preemptive bill (proposed law) of its own and to the effect “No! No! No! You can’t do that! Here is the deal: First, no more penalties under mortgages of real estate, period.”
The result here was, and remains, what is now s. 8(1) of the federal securities law called the Canada Interest Act (emphasis added):
8. (1) No fine or penalty or rate of interest shall be stipulated for, taken, reserved or exacted on any arrears of principal or interest secured by mortgage of real estate, that has the effect of increasing the charge on any such arrears beyond the rate of interest payable on principal money not in arrears.
And that is why, in Canada today, late-payment penalties on mortgage-secured debt is an ever-ballooning multi-billion-dollar business in its own right.
WTF!!! (Pardon my initialism).
You see, the administrative agents of the people who constitute today’s entrenched-money-power believe that they ought to be able to stipulate for and collect late-payment penalties on mortgage-secured debt, and so Canadian judges are physiologically incapable of seeing the words “No…penalty…shall be stipulated for”.
If they were capable of seeing those words, then these descendants of the same entrenched-money-power who made the social contract in 1880 would not be able to stipulate for financial penalties in terrorem of the productive masses, upon whom they feed, and obviously we can’t have that.
Also, and critically, if the judges were able to see those words, then any such mortgage would be recognised as an illegal contract, and the solicitors would become liable for any actual or constructive losses to the nominal creditors. The all-or-nothing principle is a double-edged-sword. The entrenched-money-power’s socio-economic-control system would collapse, there would be chaos and rioting in the streets – and, here again, we obviously can’t have that.
So in the minds of the visually and cognitively impaired former-bank-lawyers who are directly appointed as judges by the former-bank-lawyer and / or former-bank-director normally occupying the prime minister’s office at any given time, they are actually doing us all a favour.
Policy is the entrenched-money-power’s politically-correct one-word-short-form for their three-word-answer to the question: What about the law?, and that is:
We. Don’t. Care.
Concurrently, by total amount, all debt outstanding in Canada today is independently a function of the continued and ever-continuing use of the egregiously and insidiously fraudulent nominal method of interest calculation and declaration / disclosure that has likewise been illegal in Canada since 1880 on mortgage-secured debt (under the same federal law (s. 6) as the No penalties provision) and since 1897 on virtually all other debt (under what is now s. 4), and, again, notwithstanding that it has also been recognised and banned as criminal fraud throughout the U.K. since 1974 on the grounds that it is “false and seriously misleading” (and which is itself the understatement of the century).
An important factor why this law was not enforced was that after all three readings in the House of Commons (in 1897), someone in the appointed and unelected Senate (or Ex-Bankers’ Club) appears to have whispered something in the clerk’s ear, and the words in the typeset bill requiring disclosure of “what is truly the per annum [rate]” were crossed out and replaced with the hand-written insertion “the annual rate which is equivalent”. The alteration – of which there is no record of any debate or legitimate procedure – did not alter the technical meaning, but it eliminated the intended emphasis against the nominal method. The lenders then simply ignored the new law and continued to use the fraudulent nominal method. Some member of the unelected Senate simply chose to overrule and rewrite the law that had originated in the Commons.
Again, the bare premise of the nominal method is that money has no-incremental-time-value for any period less than a year. That as long as the total amount of interest paid is 24%, again for example, then it does not matter whether it is deducted in advance (a real 31.57%), paid as 24% at the end of the year, versus 2% per month beginning one month after the loan. It is just plain stupid. An equal amount paid sooner is a higher rate by definition. 2% per month is the same rate as 26.82% per annum, and has nothing to do with 24%.
More toward the near inconceivably fraudulent higher-end, an average or typical payday loan in Canada (and the U.S., and most everywhere else) defines a real interest rate of about 30,000% per annum, but which is passed off, using the nominal method, to the nominal borrowers and to the public generally, as about 300%.
Its broader purpose and policy is to help ensure that the working-poor and the rank-and-file military remain in a state of perpetual poverty, subservience, and political powerlessness by targeting and taking away their de facto working-capital.
It also helps the entrenched-money-power immensely that the public be kept generally ignorant of what it is that the rate of interest measures. If, for example, I loan you a penny, and charge you a penny interest for one day, then the rate of interest is absolutely astronomical, but it is still only a penny.
At the same time, if I am able to loan a penny to each of seven billion people on Earth, and collect from them a penny interest per day each, then the rate is astronomical, and so is the amount ($70 million per day return on a $70 million investment). Professional creditors are in the business of seeking out the most extractive balance between the amount and the rate.
The amount of interest is the torque, and the rate of interest is the horsepower.
The amount of interest is the amperage, and the rate of interest is the voltage.
The amount of interest is the speed, and the rate of interest is the acceleration.
More generally, to triangulate financial reality, you need both pieces of information – the real interest (growth) rate and the so-called nominal rate (or pro rata amount). The real cost-of-credit is manifest in the relative difference between the two. That is why even in the U.K. where, in the early 1970’s, the legislature recognised the fraudulent substance of the nominal method by itself, the bankers went into heavy damage-control-mode and fought to limit the new law to requiring only the real interest rate, and not what was and remains truly needed, which is both.
But even then, the individual and aggregate amounts being exacted today are more than sufficient to convict the lenders (and the governments who support them) of crimes against humanity. The near astronomical rates are not just a technicality.
Extended globally, from the temp-worker in Chicago, to the army-private in Birmingham, to the subsistence-farmers in India, the broadly-defined micro-loan / payday-loan industry is extracting about (or rather as an absolute minimum) the USD-equivalent of $100 billion ($100,000,000,000) annually from about 100 million of the broadly-defined working-poor and rank-and-file military (on average about $1,000 each), at average rates of about 30,000% per annum. Even the words obscene and despicable don’t quite do it justice.
The state of our reality is reflected in the details and layered-complexity of this brief description of a consumer loan contract in the U.S. (in material part, emphasis added):
The Enforceability of Adhesion Contracts
The 2016 Delaware case, James v. National Financial, LLC, is a case study in unconscionability of an adhesion contract. Here, the plaintiff, Gloria James, was a part-time housekeeper at a local hotel. She had dropped out of high school and had neither a savings account nor a checking account. To make ends meet she signed an agreement for a $200 consumer loan that was a standardized, boilerplate agreement that was provided to her on a take-it-or-leave-it basis. It was clearly an adhesion contract.
The contract’s terms called for James to make twenty-six, bi-weekly, interest-only payments of $60, followed by a twenty-seventh payment comprised of $60 in interest plus the original principal of $200. The contract required her to pay $30 per week in interest, the total payments adding up to $1,820. The annual interest rate came out to a whopping 838.45%. ….[lawshelf.com].
So what is wrong with the article?
While the amounts define an egregiously wrongful and exploitive and unconscionable transaction regardless, the real story is the prima facie innumeracy (mathematical illiteracy) of the lawyers and of the judges / Courts.
The rate of interest defined by the terms of the loan is 93,368% per annum and not 838%.
If you had an effective / real-interest-rate daily accrual savings account, then it would have to pay interest at an annual rate of 93,000% for $60 to accrue on a deposit of $200 over fourteen days.
The Court / judge(s) (and the lawyers reporting on it) are out by more than a factor of 100 times. 93,000% is not 800%. The most immediate and lethal danger faced by humanity is that society’s most critical decision-makers have a massive right-brain / left-brain imbalance. They are masters at manipulating language – but they cannot do even junior-high-school-level math. More critically – they are not even aware that they cannot do even junior-high-school-level math.
Even within the article itself, after explaining that the contract required actual payments of $60 every two weeks or 14 days, the lawyer gratuitously and quite wrongly states: “The contract required her to pay $30 per week in interest”. But the whole point is that $60 per two weeks is not the same thing as $30 per week. If the contract had in fact called for $30 per week in interest (to be paid / converted), but otherwise identical terms for total payments of the same $1,820 over the same one-year period, then the rate of interest would have been 146,103% instead of a mere 93,368%. Even the otherwise highly educated lawyer explaining the issue has no real grasp of the mathematics or of what it is that is being measured.
Interest, and how it accumulates, is arguably the most significant determinant of all power on Earth, and yet even the most significant professionals in closely-related fields are essentially clueless.
And to compound that problem, at about the same time that the U.K. banned the nominal method as criminal fraud, the U.S. government made it mandatory under federal law and labelled it “Truth in Lending” legislation (1968, Regulation Z).
As long as real interest rates were reasonably low (i.e., close to zero) it was a fairly easy matter to pass off the discrepancy or bankers’ bonus as of little consequence as and when the issue came up.
The official story is to (sometimes – if necessary or unavoidable) acknowledge the fact of the difference while asserting it to be trivial and of no material consequence. Bankers and government regulators are masters at (consciously and/or unconsciously) picking examples that make the difference seem trivial and they studiously avoid real world combinations that make the fraud obvious and overwhelming.
The (mostly banker-written) Encyclopedia of Banking Finance (1931) explains under the general heading “Interest”:
…if the interest period is less than one year, the [interest money assessed under the] nominal…interest rate is greater than the true interest rate… Practically, however, the difference is disregarded.
While according to the former bankers and bank solicitors who operate and control the Courts in Canada (Standard Reliance v. Stubbs  S.C.C. VOL. LV 423):
It must be observed that whatever interpretation is put upon the words “calculated…,” the difference [from the nominal method] in the rate chargeable would be only fractional, …
Meanwhile, testifying before the Select Standing Committee on Banking and Commerce in 1928, the spokesman for the chartered banks (Mr. M. W. Wilson) said of the nominal method discrepancy:
Mr. Wilson: It [use of the nominal method] makes an infinitesimal difference. That is not the reason it is done, I give you my word for it.
Of course, when it goes the other way, the bankers have no problem actually emphasizing and fraudulently exploiting the same public ignorance while self-righteously explaining the elementary mathematics:
From the May 25, 1993 Edmonton Journal:
Banks and trusts are finally “coming clean” on a rate deal that was unfair to retirees who took the option of receiving monthly interest payments on their GICs,… The moves belatedly corrected a situation where rates on monthly-paying GICs were unfairly low compared to rates on those that pay once a year,….
The five-year GIC was paying 6.5 per cent, if the investor was paid interest monthly, and had a seven per cent rate, if paid yearly.
Normally, the rate on a GIC that pays monthly would be somewhat less than one paying yearly…. [because] the investor gets his or her [interest] money sooner…
The bankers had been simultaneously admitting (actually promoting and featuring) the discrepancy while overstating it (almost double) to cheat seniors. To be logically correct and consistent the last sentence above ought to read:
Normally, the total monthly amounts [per year] on a GIC that pays monthly would be somewhat less than one paying yearly…. [because] the investor gets his or her [interest] money sooner…
In terms of financial significance (i.e., to measure the relative scope of the fraud even at this relatively low / historical-norm level), assume that the bankers charge a nominal 7% on advances of credit while paying out an adjusted 7% on GIC’s (Term Deposits) such that they appear to the public to make exactly no money or exactly break-even, while employing the deception explained by the smoking-gun newspaper story above.
They would collect an effective 7.23% from borrowers while paying out an effective 6.75% to depositors for a difference of roughly 1/2 of 1% per annum.
In 1993, the big six banks in Canada collected some $60 billion of interest revenue or roughly $8.3 billion for each percentage point, thus making the half point difference – the deception – worth about $4 billion (and roughly doubling their total profits). And here again this is still at relatively low interest rate levels.
That is also why no one in the industry ever asks the obvious question: “Why don’t you just obey the accounting laws (GAAP), and use the proper calculation formula to adjust the amount of interest to always exactly correspond to the stated / agreed rate per annum?”
Here again, the last sentence quoted above from the newspaper article is wholly non sequitur and irrational:
Normally, the rate on a GIC that pays monthly would be somewhat less than one paying yearly…. [because] the investor gets his or her [interest] money sooner…
Yet it makes perfect sense to anyone in the broadly-defined financial system because the logic-error has been essentially grafted into their cognitive DNA.
Meanwhile, however, and back on the lending side of the equation, by the late 1960’s and early 1970’s the seemingly relentless increase in interest rates generally made the exponential fraud in the nominal method virtually impossible to ignore, at least in the U.K. (mostly likely because it was then under a relatively-hostile Labour government and which temporarily altered the dynamics of the entrenched-money-power control system).
MP Mr. Alan Williams in 1973 explained before the U.K. House of Commons in respect of the proposed new law (Consumer Credit Act (CCA)) to ban the nominal method (in material part, emphasis added):
Mr. Alan Williams (Swansea, West): The [Consumer Credit] Bill…is a bipartisan bill [i.e., endorsed by both the Conservative and Labour parties]. It is not a Bill that will provide the basis for great political dispute…. The [Crowther] committee was set up in 1968 by the Labour government. It reported in 1971, and the present Government is correct in saying that, largely, they are implementing the proposals arising from the consumer protection element of the report….
The Daily Mirror [newspaper] and the Consumers Association undertook an investigation of moneylenders, and the results were published on 19th June this year . On the basis of computations worked out according to the prescriptions of the Moneylenders Act 1927, the investigation showed a range of [nominal rate] interest between 48 per cent. and 325 per cent. I am sure that the House will regard those figures as unacceptable. However, using the more up-to-date [effective / real rate] formula which would apply under the Bill and assessing the true rate of interest on that basis, one finds that the range is not between 48 per cent and 325 per cent. – all of which were illegal under the Moneylenders Act anyhow – but between 57 per cent. and an incredible 1,706 per cent….
Similarly, the Consumers Association…undertook a survey with BBC local radio stations in Derby, Nottingham and Stoke. This survey found that some finance houses were charging a true rate of interest of 111 per cent., and that over half the moneylenders were charging more than 48 per cent….All too often, the terms are made to sound attractive, and the more attractive they sound the more expensive they may in fact be….Moreover, the Consumers Association and the BBC local radio stations found clearly that in all cases it was the poor who paid most._
At the high-end of the study, the working-poor of the day were being charged amounts corresponding to rates that were more than five times greater than they had contracted for.
It is also critical to note that the Crowther Committee had examined about a dozen so-called or technically nominal methods of interest calculation (e.g., the Rule of 78’s nominal method, the Add-on nominal Method, the Discount nominal Method, the Sum of Digits nominal Method, etc.) that had been in use among creditors in the U.K. (in addition to the most common Straight-Double-Division nominal Method that we are currently examining), and not a single one of them had an error or deviation that was in favour of the borrower or debtor. Every one of them contained an error or deviation that resulted in the creditor taking interest money at an exponentially-increasing greater rate (per annum) than had been either disclosed or agreed to.
Yet almost immediately after being identified, all of these other fraudulent nominal methods were stuffed down the memory hole and the issue presented to the public as a choice between only two methods – the mathematically correct way and the most-common (straight-double-division) nominal method.
Among the most salient aspects, however – the true socioeconomic sleight-of-hand – is the obvious additional damage-control that had already come into play. The very extensive Crowther Committee Investigation (1968-71) had determined sufficient facts to establish (1) that the most common (straight-double-division) nominal method overwhelmingly satisfies the essential elements of fraud under the criminal law (i.e., the official finding that it is “false and seriously misleading” was in fact a massive understatement),_ and (2) that it cumulatively accounted for an amount greater than all debt everywhere on Earth at that time, and most certainly all debt in the U.K.
Yet the remedy was to merely ban the nominal method going forward, so as to henceforth require the creditors to do the calculations correctly, but without any refund or write-down of the industry’s ill-gotten gains. As in “Ok – No more stealing or accounting fraud but you can keep all the money you have stolen / defrauded so far, plus all the interest that has compounded upon it, and continue to charge your victims more interest upon it until they repay the stolen money (their fraudulently-inflated debt-balances) to you.”
The contemporary spin-doctors then went to work so that by the time the new law came into force it was being presented and portrayed to the public as a mere administrative adjustment. Even MP Mr. Williams (who supported the bill) in reference to the formula which is not criminal fraud describes it as “the more up-to-date formula” with the implication that the old formula was merely administratively inferior. That is why it was so important to first disassociate the straight-double-division nominal method fraud from all the other fraudulent nominal methods identified by the Crowther Committee Investigation.
Remember the screaming headlines in 1974?:
U.K. bans U.S. interest calculation method as criminal fraud!!
Of course not – because there wasn’t any. Doesn’t that seem rather odd? It is what happens when the entrenched-money-power’s media arm reports to the public on the criminal activities of its financial services arm.
In the new hyper-rate-normalization era, the entrenched-money-power in Canada achieve the same public-ignorance result, not merely by putting-out-fires, but by actively advancing / planting disinformation via ridiculously inaccurate conceptual-reinforcement statements and misrepresentations in mainstream media to keep the minds of the masses from straying outside of their allowed boundaries. The following, for example, is from the CBC (Canadian Broadcasting Corporation) website (cbc.ca website, Payday Loans: Short-term money at a hefty price. October 4, 2006), (in material part):
How much do payday loans cost?
They are the most expensive legal way to borrow money
Typically, you can expect to pay up to $100 in interest and fees for a $300 payday loan. The Financial Consumer Agency of Canada says that amounts to an effective annual interest rate of 435 per cent on a 14-day loan.
The interest rate objectively defined by that transaction is just over 180,000% per annum. It is a fairly simple calculation and easily verifiable.
But the people have been generally too dumbed-down mathematically to even suspect that there is a problem with the numbers. And no one even seems to wonder about who funds The Financial Consumer Agency of Canada? How can the people running a financial consumer protection agency not know the difference between 435% and 180,000%?
Taken to its logical conclusion the issue becomes: But if that is true and accurate, then why would any sane man or woman believe virtually anything that they are told by those who own and operate the broadly-defined financial system? If they can so blatantly lie about something this important and get away with it, then why would they tell the truth about anything?
The most important aspect here is the typical or average high-end ratio of about 100-to-1. While most if not all of us are all generally or vaguely aware that the working-poor are being exploited for their labour by the owners of the financial system, we are just not grasping that it is normally somewhere between 10-times greater and 300-times greater than we think it is or presume it to be.
For hundreds of years the real business of the entrenched-money-power has been about hiding, concealing, and otherwise obfuscating to the rest of us just how much of a free-ride they are obtaining from the rest of us. We have simply reached the runaway-point in an exponential system.
If the borrower receives for example, $335 today, in exchange for an obligation to pay $400 in ten days’ time, then the principal amount is $335, the interest charge is $65, and the interest rate is 64,622% per annum. Here is the spreadsheet formula (for ms excel and apple numbers):
= 646.22 or 64,622% per annum.
The payday-lender makes a gross rate of return of 64,622% per annum on their $335 principal investment over and for the ten-day period. If you had an effective / real-interest-rate daily accrual savings account, then it would have to pay interest at an annual rate of 64,000% for $65 to accrue on a deposit of $335 over ten days.
If the borrower instead receives $350, then the interest charge also declines to only $50, and the rate of interest is:
= 129.82 or 12,982% per annum.
If instead we go the same $15 the other way, then the borrower will receive only $320, and the interest charge also increases to $80, and the rate of interest is:
= 3444.20 or 344,420% per annum.
Note especially the exponential sensitivity. Our base case is $65 and 64,000%. Based on the same $400 paycheque and due in the same ten days, if you give the borrower an extra $15, then the rate of interest declines to just under 13,000% per annum. But if instead you take away another $15, then the rate of interest balloons to 344,000%.
Every competent engineer, math teacher, insurance professional, and banker on the planet knows how to do the calculation. But former bank lawyers and bank solicitors after they have been appointed judges – not so much.
Prima facie criminal conspiracy by the lawyers (and government)
Next, and likewise, consider the real interest rates that correspond to 20% per two-weeks, and to 20% per week. 20% for two weeks or 14 days is:
= 114.97 or 11,497% per annum.
And 20% per week or per 7 days is:
= 13449.44% or 1,344,944% or 1.34 million percent per annum.
Since 1981 and the amendment to the Criminal Code (of Canada) to provide for a criminal rate of interest (anything above an effective or real 60% per annum), various private law firms in Canada have (in total) produced a series of periodic nominal Criminal Interest Rate / Payday Loan Reports targeted at the broadly-defined legal profession that are in effect training manuals on money-laundering and on how to conceal violations of the criminal law on behalf of financial-institution-clients.
What is so interesting from a conspiracy theory viewpoint is that although these ostensibly unrelated private Reports employ a variety of example transactions and general approaches, they all use the same identical / verbatim footnote to set / describe the respective Report’s frame of reference with respect to the nominal method, and (at the higher end) they all deal exclusively with the nominal interest rates and do not provide the corresponding real interest rates.
The particular Report from which I copied the footnote (one of two that used the same examples – see below) used 20% per two weeks and 20% per week as example transactions, and which it claimed to be 520% and 1,040% per annum respectively, and, again, without even mentioning or referencing the corresponding real rates of 11,497% and 1.34 million percent, respectively; but qualified as follows by the footnote (emphasis added):
The annualized percentage rate (APR) [used in this Report] is the nominal rate not the effective rate. The nominal method is used for calculating consumer loans in North America and Europe, excluding the U.K. The effective method, which is a more complex actuarial calculation, is used in calculating the criminal rate of interest under s. 347 of the Criminal Code [of Canada]. The effective rate would be significantly higher for short-term loans.
For the lawyers and the legal profession more generally, that is certainly a curious way of explaining that the U.K. recognizes and condemns their banker-clients’ interest calculation methodology as wholly fraudulent and has banned it outright.
Especially given that the term “annualized percentage rate” means “effective annual rate” such that the Orwellian double-speak of the opening sentence is “The effective annual rate [used in this Report] is the nominal rate and not the effective rate”, which reduces to “The effective annual rate is not the effective annual rate” or “The real interest rate is not the real interest rate”.
And regardless of whether such qualifies as a conspiracy theory – it would be sufficient in a competent court of criminal jurisdiction to convict all of the various Report authors / lawyers of a criminal conspiracy to aid and abet within the meaning of that real and actual offence (conspiracy) as defined under the Criminal Code.
Just as a brief aside, lawyers are trained in how to lie by stringing together series of statements that are technically true, or at least not categorically false. The above referenced footnote, for example, does not contain any direct false statements except for the objectively false use of the term “annualized interest rate” but which has sufficient plausible-deniability to it that its author could feign honest mistaken belief if and when directly challenged on it.
But what makes this particular Criminal Interest Rate / Payday Loan Report so special is that even though it uses exactly the same identical / verbatim footnote as all the Reports prepared by the private law firms (and uses the identical example transactions of one of them), this one was actually the feature article in the May 2007 edition of Perspectives, the monthly publication of Statistics Canada!!! The mathematically correct real-interest-rate formula flows through the very veins of Statistics Canada. Yet the agency appears to have adopted (verbatim) the position of the private law firms – as if it were taking dictation.
While on the civil law side, according to the principle laid down / explained by the late Supreme Court of Canada judge, Willard Z. Estey (at the time a judge of the Ontario Court of Appeal), 100% taken in advance such that the borrower gets nothing, yet must repay the principal a year later, is only greater than 100% per annum if the lender chooses to do something with the 100% received in advance in the meantime (i.e., $0 today for $100,000 in a year, is the same rate as $100,000 today for $200,000 in a year) (in material part, emphasis added):
It has long been said…that interest at the rate of ten percent per annum calculated monthly [the nominal method] is more than 10% per annum calculated yearly [the real-interest-rate method – i.e., that an equal amount paid sooner defines a higher rate by definition]. This is so only if one assumes the recipient of the monthly payment puts the money to work during the balance of the year and consequently accumulates interest. Such is not the case if x percentum per annum is payable annually. If one does not make the assumption that the interest is reinvested during the balance of the year then ten percent per annum is the same whether paid annually or monthly. Hence the issue here really involves the application, as a quasi-rule of law, of the reinvestment principle.
Hint: If the Honourable Judge were already in a psychiatric facility, then he would not be getting out anytime soon. At the very least, the man’s intellectual self-respect had to have been close to zero to put something that objectively and profoundly stupid in writing.
Although, to fair, there is also sufficient evidence to demonstrate that the judge knew exactly what he was doing. The opening phrase or premise “…that interest at the rate of ten percent per annum calculated monthly [the nominal method] is more than….” deliberately begs the question as to whether he is referring to the amount of interest or the rate.
Either way, the nominal lender and immediate beneficiary of the deemed reinvestment principle and quasi-rule-of-law in the 1977 case was Metropolitan Trust Company of Canada. Justice Estey was then elevated (also in 1977) from the Ontario Court of Appeal to the Supreme Court of Canada, undoubtedly as a function of his special insight into the mathematics of finance. In 1988 he retired from the S.C.C. to then become a Director of – surprise – surprise – Metropolitan Trust Company of Canada, and an Executive Officer of the Bank of Nova Scotia.
He had been a very good dog, he got lots of cookies, and a well-deserved pat on the head.
That, too, is policy.
Beyond the near inconceivable amounts of money involved, however, either or both are incredibly dangerous policies. Imagine the extinction of humanity beginning with the following (as yet) hypothetical news story out of equatorial Africa:
Thus far 100 million people are dead from the worst infectious disease outbreak in human history. An international panel of experts has identified the primary cause of the crisis getting out of control as being that the original samples of the incredibly lethal virus, with an observed actual growth rate of 5% per 24-hours, were mislabeled by the technician responsible, as having an AGR or Annual Growth Rate of 1,825% instead of the real and actual 5.4 billion per cent (5,400,000,000%). The technician, a recent graduate of Bankers’ Math University, responded when asked for comment: “I’m really sorry. I honestly didn’t know.”
A species that celebrates and rewards systemic professional incompetence, and especially in pursuit of unearned financial gain, is a species living on borrowed time.
As humans obtain more and more technology, we are ever-increasingly exposed to lethal danger that grows exponentially. The existential problem with lethal danger that grows exponentially is that if you wait until you actually see it coming, then you’re already dead.
If a virus grows at the rate of 5% per day or every 24 hours, then it grows at an annual rate of 5.4 billion per cent. Even if only for a single day.
If price-inflation runs at a daily rate of 5%, then it runs at an annual rate of 5.4 billion per cent. Even if only for a single day.
It is only interest-bearing-debt, where if it grows at 5% per day, then that is deemed or pretended to grow at an annual rate of only 1,825% (for public consumption and education purposes), and not 5.4 billion per cent, as the correct and accurate latter figure might have the tendency to reduce public confidence in government and most everything else.
On the nature of policy
At this point it is helpful to briefly review the substance and legal status of what is called policy. We are all constantly exposed to it, but few have an understanding of its legal or equitable substance.
An appreciation of policy, however, itself requires an understanding of the de facto doctrine or doctrine of necessity. One important sense or legal definition of De facto is “in fact, and for the time being”.
Assume that you are the driver of a car, and that you have just come to a stop at a traffic-light-controlled intersection, and where there is a “No Left Turn” sign above the red-light signal, and others elsewhere in the intersection. But before the light turns green, a police officer arrives and gets off his motorcycle and takes a position in the middle of the intersection and directs you to turn left.
The question is: Do you obey the sign and drive straight forward when the light turns green?, or do you follow the officer’s direction and turn left?
Legally, you have to turn left, even though the “No Left Turn” sign is otherwise legal / legitimate, because you are following the same authority “in fact and for the time being” as represented by the police officer.
Notwithstanding the presence of the legal “No Left Turn” sign, the driver is complying with the policy of the authority (Crown / state government) as administered by its officer(s) “in fact and for the time being”, and so there is no offence.
The thing about such special-purpose (ad hoc) authority, however, and however necessary it may be as a general tool of government, is that it is often subject to abuse and especially systematic abuse.
With respect to nominal speed limits on the highway, for example, it is the actual and announced policy of the Crown (or state government in the US) that drivers are encouraged to exceed the posted limit by a reasonable amount in the interests of traffic flow.
That policy is then administered by the RCMP (or State Police), for example, as agents of the Crown and “for the time being”.
But if a given officer chooses to issue an offence ticket to a given driver, because such driver has, in the opinion of the officer, exceeded the posted limit by an unreasonable amount, then they will claim and charge the driver simply with exceeding the posted limit.
That is fraud and maladministration on the face of it (also technically and in fact racketeering). At its most basic level, the Crown (or any nominal government) is not supposed to be engaging in such carny-level bait-and-switch con games. Such things are presumed to be beneath the dignity of the Crown to engage in.
Procedurally, what the government and the courts are doing under the nominal speed limit laws is the same as charging the first driver, mentioned above, who follows the police officer’s directions to turn left, with failure to obey the “No Left Turn” sign. (Technically the offence occurs at the moment the accused exceeds the posted limit (which they are encouraged to do by the Crown) and not when they attain whatever speed they are accused of).
But further than that, the most salient aspect of the racketeering-based-enforcement model is that it is such an obviously defective (prima facie criminal) system, yet the same socially caustic, corruptive, and corrosive system has remained firmly entrenched throughout most of the world since shortly after the invention of the automobile.
We must consider at least the bare possibility that the racketeering-based corrosive system is in place domestically and globally as a higher-level policy of itself and for its own sake. It conditions the citizens to treat and accept the law as a kind of game where they are hunted for sport by the very administrative agents that they purport to elect.
Finally, however, and to complete the model, assume that the real reason the police officer is standing in the middle of the intersection directing you to turn left, is because his brother-in-law has just opened a new store on the cross street and needs customers.
That, in a nutshell, is how the whole world works. Everything that the people think is being done by law is actually policy, and it is the private policy of the administrators and is most often the diametric opposite of what the law provides.
As we shall see, the base function of the Courts is to foist the private policy of the entrenched-money-power on the masses, while passing-it-off as law.
Next and concurrently, by total amount, all debt in Canada today is again independently a function of (would not exist without) illegal and unlawful (and highly-cross-leveraged) loan fees or cross-leveraged-double-counting-fees that are illegally and unlawfully capitalized / compounded in advance, notwithstanding that such was made illegal in 1880 under the same No penalties and No nominal method law, and more recently made expressly criminal in Canada in 1981.
Honest money-lender: I want to make a net 10% on my money, and I also want to incur $2,000 of legal and other expenses in order to build a legal-cage in which to hold you. Therefore I have to charge you interest at 12% per annum over the entire term / amortisation of the loan.
Dishonest / criminal money-lender (hit with a blast of truth-ray): I am going to charge you interest at 10% per annum on the face of the registered security, plus I am also going to deduct $2,000 in advance or from the nominal proceeds by unregistered side-agreement because I also want to spend $2,000 up front on legal fees and other expenses to build a legal-cage in which to hold you. This way I cheat the per diem rule and the GAAP and IFRS accounting laws, while concurrently inducing you to pay me a cross-leveraged-return on expenditures incurred for my benefit and at your interest-bearing expense; and all while avoiding the unpleasantry and legal obligation of disclosing / declaring to you (and anyone and everyone else) the real interest rate.
And when I demand a bonus or an application fee, etc., then that is just pure / naked coercion. For whatever reason, you need the loan, and I have the power to deny it to you. So you are going to pay me a separate amount for that, and you are going to agree to help me to conceal it by falsifying the securities.
It has nothing to do with whether $2,000, or whatever, is or is not a reasonable sum for the legal and other expenses. It is all about the criminal and cross-leveraged form of deceit. And about concealing and denying it by omission from the registered securities.
There are at least six primary-level frauds committed and facilitated by requiring the borrower’s or nominal debtor’s nominal consent to the falsification of debt securities to overstate the nominal creditor’s real / net investment or (reinsurance) underwriting, and to conceal fees, bonuses and other rebates / kick-backs. They are:
- Interest rate disclosure / declaration fraud,
- Accounting / GAAP / IFRS fraud,
- Third-party Unsecured / Subordinated creditor fraud,
- Taxation (Income versus capital gain) fraud,
- Regulatory-capital fraud, and
- Financial-market fraud.
The global aggregate financial systems, civil court systems, accounting systems, taxation systems, financial regulatory systems, and, above all, domestic and international financial-market systems, are defined by the organised interplay of these six primary categories of fraud. We are collectively saturated with it.
The ex-temporal fraud of front-loading or conversion / infinite-rate-acceleration of unearned interest-in-advance (by whatever name or pretense) and the coerced-consent securities falsification to hide it and to deny it, and especially the resulting cross-leveraged-super-fraud, is the engine, or driving force, of domestic and global finance and unearned-wealth aggregation and concentration. It’s the official gravy-train of the “1%”.
From about the major multi-nation Bank / Banking Act revisions circa 1968 (and measured just up to the year 2000), for example, the average direct leverage ratio was about 15-to-1, meaning that every $1,000 (or 1%) of loan / credit fees on a standardised ($100,000) mortgage will also leverage / increase the total cost of credit by about $15,000 over the whole term (amortisation period) of the loan or advance.
And then every extra $1,000 of such juiced interest income will in turn leverage or allow the bank to also increase / expand its total credit assets (and liabilities) by another 20-to-1 or $20,000. Every $1,000 or 1% front-loaded loan fees / bonuses per $100,000 of new credit supports and accommodates (pyramids) another bonus $300,000 for the owners of the nominal banking system over and exponentially-proportional to the subsequent and ever-rolling-forward twenty-five-year period.
The 1990’s corporate takeover of (Toronto-based) Maclean-Hunter cable-TV by Rogers Telecommunications, for example, purportedly involved (or was to involve) a near $90 million rake-off of nominal loan fees (cross-leveraged-double-counting-fees) for the bankers, brokers, and solicitors on a nominal $2.15 billion loan or 4.2% illegal front-loading.
The banks and brokers backing Ted Roger’s bid for Maclean Hunter Ltd. stand to skim off almost $90 million in fees if shareholders take up the cable magnate’s $2.9 billion offer for the media conglomerate. *** The four chartered banks that have agreed to lend Roger’s Communications Inc. $2.15 billion to finance the take-over will walk away the biggest winners from the deal according to an offering circular sent to Maclean Hunter’s shareholders late Monday. *** The lending group – led by the Bank of Nova Scotia and believed to include the Toronto-Dominion, Royal and Canadian Imperial Bank of Commerce – will receive “up front fees” of up to $49 million, the circular says. The sum does not include loan interest payments….” [The other near $41 million was for the brokers (and (normally) the solicitors)].
Assuming that the deal went through as described / reported, and based on (or measured against) the rates in effect at the time, the banking syndicate behind it (the Gang of Four) will have received the $90 million once in advance or from the nominal proceeds on the day of the advance, then a leveraged $1.2 billion of interest-upon the extra $90 million over the 25-year amortisation, including a second payment (“re-payment”) of the $90 million again as pretended principal.
Overall, the nominal 4.2% illegal interest-front-loading will leverage the total dollar cost of credit by about 36% per se (i.e., from about $3.4 billion, to $4.6 billion) and which would then be down-loaded to the broadly-defined public through CRTC (i.e., government-approved) rate increases on cable-TV subscription services. In effect, for 25 years (from 1994 to 2019) a quarter of everyone’s monthly cable bill will have gone to pay the bankers interest on the $90 million illegal party fund that they created for themselves, the brokers, and the lawyers, from the nominal proceeds on the day of the deal.
For those who understand the process involved, the bankers will have violated the Bank Act, the per diem principle under GAAP and IFRS, and multiple ordinary and anti-racketeering / anti-organised-crime provisions of the criminal law, to fraudulently employ their bank charters to simultaneously create, convert, and launder an extra $90 million in new money / credit for their own accounts.
Then over that same trailing 25-year period, the extra $1.2 billion of juiced income as earned-interest-income / deemed / pretended-equity on their income-statements and balance-sheets will in turn have supported an additional credit-asset-expansion of at least 20-to-1 or $24 billion. In practice, the combined cross-leverage-ratio over 25 years will have been about 250-to-1.
That, in a nutshell, is why we are increasingly being exposed to, and conditioned to, the concept of a quadrillion dollars ($1,000,000,000,000,000). A pentillion ($1,000,000,000,000,000,000) won’t be far behind. Virtually all money is debt, and debt is hyper-leveraged by loan / credit fees (cross-leveraged-double-counting-fees or infinite-rate-interest-accrual-acceleration-fees).
As a species, up until about the middle of the 20th century, we only needed up to the concept of multiple millions to account for just about everything important for all of human history. In terms of money and relative wealth, especially, it was widely reported in the early 1970’s that the American industrialist Howard Hughes had only then just become the world’s first billionaire and the world’s single richest human. Minimum wage was then in practice about $2 per hour.
Approaching fifty years later, and the broadly-defined media are routinely posing the question as to who will become the world’s first trillionaire. Minimum wage in practice is now about $10 per hour ((measured in $USD across Canada and the U.S.).
Over the same near fifty-year period, the standard by which the world’s single richest human is measured has increased by approaching 1,000-times, while the minimum-wage-in-practice for the little people has increased about 5-times. The single most important reason for that discrepancy is ex-temporal fraud – the unlawful and illegal front-loading of loan / credit fees (cross-leveraged-double-counting-fees or infinite-rate-interest-accrual-acceleration-fees).
“A man shall not have interest for his money and a collateral advantage besides for the loan of it…” – Jennings v. Ward  2 Vern. 520, 18 R.C. 365
Every benefit taken indirectly by a creditor, for the granting of which no impulsive cause appears but the money lent, will be voided as extorted. (Principles of equity: Kames, Henry Home, Lord, 1696-1782).
[A] stipulation capitalising interest, turning it into principal and charging interest upon it, however formally expressed, was not allowed to prevail. [and] A stipulation that [a lender]… should be paid a commission…was always defeated; – Mainland v. Upjohn,  Chancery Division [Vol. XLI] 126.
MP Mr. WHITE: …Not only have borrowers to pay large [concealed and cross-leveraged] commissions to the agents of these loan societies, many of whom are lawyers, but [the “double machinery” of] high rates of interest as well. (Hansard, Canada, House of Commons, March 31, 1880, p. 968).
MP Mr. LAYLOR: It seems to me that we overlook the greatest evil there is in money lending as it is usually carried on, when we confine ourselves to the question of interest. It is not a question of interest, but of the [concealed and cross-leveraged] bonus [double-counting fee] that is charged, that we must provide against. (Hansard, Canadian House of Commons (1898)).
Whereas it has become the common practice for money-lenders to make charges against borrowers claimed as discount [i.e., concealed interest-in-advance falsely claimed as investment of principal], deduction from an advance, [i.e., concealed interest-in-advance falsely claimed as investment of principal] commission [i.e., concealed interest-in-advance falsely claimed as investment of principal], brokerage, chattel mortgage and recording fees [i.e., concealed interest-in-advance falsely claimed as investment of principal], fines and penalties, or for inquiries, defaults or renewals, which, in truth and substance are, in whole or in part, compensation for the use of money loaned or from the acceptance of risk of loss [i.e., concealed interest-in-advance] or are so mixed with such compensation as to be indistinguishable therefrom and are, in some cases, charges primarily payable by the lender [i.e., in respect of expenditures incurred by and for the benefit of the nominal creditor] but required to be paid by the borrowers; and whereas the result of these practices is to add to the cost of the loan without increasing the nominal rate of interest charged [i.e., to disguise and misstate the amount invested and real rate and amount of interest] so that the provisions of the law relating to interest and usury have been rendered ineffective: Therefore His Majesty, by and with the advice and consent of the Senate and the House of Commons of Canada, enact as follows:-
That last above extensive Preamble to the 1939 Small Loans Act was insisted upon by a majority of Parliament because all previous attempts to stop interest / loan-fee-front-loading had been thwarted by judges (former bank / finance lawyers) who would interpret-away the wrongful nature of the act (front-loading) itself (the judges would always do a traverse into claiming that it was a question of whether the fees were reasonable for the purported services, and not their illegal / unlawful conversion in advance), and so Parliament spelled it out for them with a legal preamble stating the nature of the evil addressed by the law, and why it had to be prevented.
And even then, and as dangerous as it was to the entrenched-money-power, the preamble only addressed / dealt-with one of the six primary evil / criminal purposes of front-loading (disclosure to the borrower / producer). The potential was there to unravel their entire system.
Forty-two years later, in 1980/81, the entrenched-money-power persuaded / lobbied Parliament to repeal the Small Loans Act (and its dangerous and damning preamble) by concurrently agreeing (under the same bill) to amend the Criminal Code to provide for a criminal rate of interest (ultimately enacted as anything above 60% per annum).
Their primary immediate motivation (in 1980) was to jack-up credit-card-account interest rates (from a nominal 6% (a real 6.167%) to a nominal 24% (a real 26.8%)) to remain solvent, but as long as the Small Loans Act remained in force, its preamble represented potentially catastrophic consequences (to their organised looting of the economy and of the People). And this is where the entrenched-money-power made a monumental mistake or miscalculation.
In all likelihood they never intended to go through with the criminal law amendment, but they ran out of time before the two pieces / components could be procedurally separated, and as interest rates spiraled out of control globally, they were forced to accept the criminal interest rate law.
But the entrenched-money-power almost always have a back-up plan in case these things, as here, do not go as planned. In this case they had taken the seeming precaution of building selective-non-prosecution into the proposed new law as an ultimate fail-safe device.
In late 1980, just prior to the final amendment of the Criminal Code (in early 1981) to provide for a criminal rate of interest conversion with respect to time (but after it had been rammed through all three readings in the House of Commons without debate over the last two days of the session (July 21/22)), it was on several occasions (over roughly a three-month (Oct. – Dec.) period) directly and indirectly raised and conceded by certain witnesses before the Senate banking committee that mainstream financial institutions would routinely violate the new criminal law via loan fees illegally and unlawfully capitalized or otherwise received in advance, and that they would therefore be open and liable to criminal prosecution. The most direct reference was as follows (and notwithstanding that it was otherwise a transparent and fraudulent contrivance and an act of pure theatre to explain / justify giving such alleged discretionary power to the AG’s) (in material part, emphasis added):
Mr. Paul-Emile Wong, Consumer Research Branch, Department of Consumer and Corporate Affairs: Senator Buckwold, in one of the submissions made to the department at an earlier stage, the question was raised whether or not a standby fee [or any loan fee converted / received in advance], being a fee, would be included in the definition of “interest”, and if it were, how would the interest [rate] be calculated, because, being infinite, it would certainly be above 60 per cent [per annum],…
Senator Buckwold: Is that illegal?
Mr. Wong: As the section stands, that would be illegal, yes.
Senator Buckwold: Then looking at the reverse aspect, the bank, theoretically, could be prosecuted for charging a criminal rate of interest for a standby fee [or any other loan fee received / converted in advance (or more generally from the loan / credit proceeds)]
Mr. Wong:…theoretically, yes. That is one of the reasons this [soon to be new] section [of the Criminal Code] is unusual, in that it requires the consent of the Attorney General before [criminal] prosecutions are initiated, thus preventing the application of the section to [criminal] commercial practices to which it was not intended [by the bankers and other controllers of the credit / money system] that it apply. It then becomes a question of the Attorney General’s discretion [i.e., It becomes something that we can pass off as policy]. ((Select Standing Committee on Banking, Trade and Commerce) (SSCBTC) transcripts; 4-11-1980 [November 4, 1980], 24:28)
But that selective-non-prosecution solution (and back-up plan) is regardless and of itself a flagrant and scandalously illegal act by the Crown / government (unlawful and illegal dispensation or non obstante / law-of-apartheid), and which also requires a capital dereliction of duty by the provincial Attorney(s)-General to administer.
Requiring the consent of the Crown / government to prosecute is in substance of a class known as non-obstante or notwithstanding clauses (dispensation) under which the Crown licenses certain classes of its subjects (e.g., The Great Men of the Realm / entrenched-money-power) to violate the law against other of its subjects (e.g., peasants / serfs / the little people) (underlining and bolding added):
NON OBSTANTE. In English law.
These words, which literally signify notwithstanding, are used to signify the act of the English king whereby he dispenses with the law, that is, authorizes its violation. He cannot by his licence or dispensation make an offence dispunishable which is malum in se [evil / wrongful-of-itself (like front-loading)]; but in certain matters which are malum prohibita [not wrongful but illegal only by statute], he may, to certain persons and on special occasions, grant a non obstante. (Vaughn 330-359 ; Lev. 217. ; Sid. 6, 7 ; 12 Co. 18, 7 Bacon Abr. Prerogative (D 7) 2 Reeve, English L.C. 8, p. 83. But the doctrine of non obstante, which set the prerogative above the laws, was demolished by the bill of rights at the revolution. 1 W. & M. Stat. 2 c. 2 ; 1 Bla. Com. 342 ; 1 Steph. Com. 460 ; (Bouvier’s Law Dictionary 1883).
Under the English Bill of Rights of 1689 the English Crown was compelled to concede, in perpetuity, that the law is the law of the land, and not the law of the person. The drafters of the Bill of Rights even referred to it as a “pretended” power to emphasise that it had never been legitimate but only maintained by pure coercion by the Crown. Either way, at no material time has the English Crown itself possessed any such power to then bestow on the Crown in Right of Canada.
Here in 1980/81 the entrenched-money-power in Canada committed what is among the most monumental and egregious sleights of hand in legislative history. Dispensation / non obstante or selective non prosecution was already flagrantly illegal and unlawful, as founded in administrative– apartheid or what can be termed back-door-apartheid, even if confined to the civil law and to things that are not inherently wrongful.
Direct-apartheid or front-door-apartheid occurs when, as a simple example, the government of a country makes it illegal for Black people to walk on the public sidewalks, but not White people.
Under administrative-apartheid or back-door-apartheid the same government would make it illegal for anyone to walk on the public sidewalks, and then choose to only prosecute Black people and not White people. If used under the criminal law it is more correctly and accurately described as aggravated-apartheid.
What the Crown in Right of Canada did under s. 347(7) was to violate its contract with the People under the Bill of Rights while concurrently purporting to extend it into the criminal law realm where no previous government had been brazen enough to even attempt it. It is just naked aggravated / administrative-apartheid that allows the entrenched-money-power to loot the little people while the government looks the other way on the criminal law.
It is not like a law that only allows a certain qualified class of people, such as licensed physicians, for example, to write prescriptions for certain classes of drugs. It is a provision of law that has no substantive purpose other than to maintain the economic and financial subservience of one identifiable class of people to another for its own sake.
In 1985, for example, in R. v. McRobb, the Crown sentenced Mr. McRobb (portrayed (rightly or wrongly)) as an apparent common street-hustler (and who claimed he was not even aware that there was such a thing as a criminal interest rate) to a term of imprisonment for entering into an agreement to receive $500 of interest three months after loaning $1,500, for an effective annual rate of interest of 217% (a nominal 133.3%), because the law is the law, and the AG gave the Crown’s consent:
347 (3) Where a person receives a payment or partial payment of interest at a criminal rate, he shall, in the absence of evidence to the contrary, be deemed to have knowledge of the nature of the payment and that it was received at a criminal rate.
It would appear that the general rule applicable to both civil and criminal usury is that there must exist an intent that the lender is to take more than the legal rate of interest for the sum loaned. The required intent does not involve a consciousness of the illegality of the transaction or a specific intent to violate the statute, but only an intent to extract payments in excess of the amount of interest permitted by law.
While the same Crown employs the same illegal (and scandalously wrongful) administrative /back-door-apartheid provision to choose to not prosecute the owners of the privately-owned credit / charge-card industry who are currently employing pretended merchant fees to harvest about $10 million per day in Canada at average rates of about 150% per annum and routinely as high as 250% per annum (more on this below).
At the next level or strata, the same government concurrently employs the same illegal administrative / back-door device to also look the other way on the owners of the payday-loan industry that receive / exact at least some $2 million per day (in Canada) from the working-poor and rank-and-file military at average annual rates of about 30,000% (and routinely up to 180,000%).
The unlawful and illegal selective-non-prosecution device is used as a social-stratification device to maintain “A place for everyone, and everyone in their place”.
What happened here in 1980/81 was arguably one of the most significant events of the 20th century because (1) it set modern precedent (after more than 300 years) for the reestablishment of administrative / back-door-apartheid by a purported First-World government and (2) directly and expressly extended it into the criminal-law-realm, and (3) it did so in respect of the single most financially significant offence under the entire Criminal Code.
Ever since, Canadian society has been systematically stratified according to the extent and degree to which people are looted of their labour and productive capacity by the entrenched-money-power operating under de facto licence of the Crown.
Administratively, they then regardless compounded their problem by formally and expressly enjoining s. 347 as an enterprise crime or organised-crime offence and international money-laundering offence under several different international treaties to which Canada is a Contracting State Party.
If you take all 800-plus offences defined by and under the Criminal Code of Canada, and rank them according to the total amount of money that is obtained in fact in violation of them, then the subsection making criminal the conversion of unearned interest (credit / loan fees) in advance / from-the-proceeds (s. 347(1)(b)) would be ranked Number 1, and would be at least a hundred times greater than the next closest competitor, and regardless easily greater than all the other offences combined.
Under the cable-TV deal, on just that one day, on just this one deal, just this one small group of bankers, brokers, and solicitors / lawyers will have obtained more unearned money wrongfully, and in direct violation of the criminal law, than all the armed robberies and conventional theft in Canadian history rolled into one.
And they will have done so, notwithstanding multiple domestic and international criminal and anti-racketeering laws and treaties, At the Pleasure of Her Majesty.
It happens millions of times a day throughout the world – big deals and small – while being quietly and systemically concealed and denied (normalized) by falsified securities.
Front-loading and securities falsification is also the driving force and single most important criminal / racketeering device by which the world’s nominal credit / charge-card issuers (overwhelmingly Visa and Mastercard banks) quietly skim (actually drain) the USD-equivalent of about $2,000,000,000 per day ($2 billion a day) from the global economy through concealed-credit-charges called Merchant Fees or Merchant Discount Fees. At its current rate the total global rake-off is $1 trillion roughly every 18 months.
And about 10% of that, or $200 million per day, is a direct rake-off from VAT, GST, HST, and other forms of government sales taxes that are run through their system. Many banks skim more money directly from the government sales tax revenue than they nominally pay in nominal income taxes.
The bankers then pay a kick-back from the rake-offs to the federal political parties that have been co-opted (literally paid-off) since the late 1980’s into going along with it.
The following newspaper article explains just one of the multiple independent arrangements that all of the major political parties in Canada have or have had with the private banks, individually and collectively. The only thing missed or overlooked by the otherwise diligent reporters was the 2% to 5.75% concealed credit-fee rake-off from which the 1/4% kick-backs are paid to the political parties. For some reason they forgot to mention that, while directly implying that there is no such charge. At the time (1989) the private banks in Canada were obtaining about $3 million per day in such concealed credit charges:
Liberal party Visa cards newest fundraising plan
OTTAWA (CP) – The cash-strapped Liberal party wants to charge its way out of more than $4 million in debt by using plastic. *** Party and banking sources said yesterday the Liberals have forged a financial partnership with the Royal Bank of Canada to offer “affinity cards” – Visa credit cards with the Liberal [Party] logo. *** In return for promoting the Royal Bank product among its members, the party would get to keep most of the annual renewal charge of about $12 for every new cardholder signed. *** A bank industry source said the plan also would give the Liberals a small percentage [e.g., 1/4 of 1% (reported elsewhere)] of the volume of sales rung up on the card. *** The idea could offer multiple benefits for the party and its members, especially at fundraising events. *** A Liberal could pay for tickets to a fundraiser using the card. The party would get the initial amount for the ticket, a percentage back from the bank for using the card and the party member would still be eligible for a tax benefit for making a contribution to a recognized political party. *** It’s also possible that a Liberal MP, travelling on parliamentary business paid for by taxpayers, could help raise funds for the party by using his or her affinity card to pay for hotels. (Toronto Star – June 1989)
About 30% (about $1 million per day) of the gross concealed credit charge revenue at the time was received by the banks in violation of the criminal interest rate law, but – surprise – surprise – the card-carrying provincial AG’s chose not to prosecute them for it.
More generally, since the criminal law amendment in 1981 the federal government has conducted no fewer than five official Parliamentary Investigations into the broadly-defined credit / charge-card industry in Canada.
In every case the respective Committee has concluded that the bankers’ public explanation is correct – that they are forced to charge such outrageously high interest rates on outstanding monthly balances because they lose money on every transaction where the card-user pays off their full-balance within the statement / grace-period so as to effectively receive a free-loan from the bank / card-issuer. From the various official conclusions / final-reports:
- …the effective yield to card issuers is below the posted rate on credit cards…
- ..someone [“interest payers”] is financing credit card balances that are repaid before the end of the grace period..
- What this discussion does highlight is that the grace period is costly to the card issuer – someone must be paid for the funds used to finance a purchase made with a credit card…
- This practice is obviously costly for financial institutions. The bonus card-users receive by taking advantage of the grace period is a cost to the card issuer….
- So, how do card issuers allow for the cost – the lost potential revenue – from those card-users who take advantage of the grace period?
- That some cardholders receive what is in effect a free loan should not lead others to believe that they too deserve a free loan.
But fully 2/3 of the gross interest revenue received by a card-issuer is normally in the form of concealed-credit-charges that are claimed / labelled “Merchant Discount Fees” or “Merchant Fees” but which all of the card-issuers are legally required to (and do) account for and record as interest / credit charges received from the card-users from whom the issuers actually receive them, and not from the merchants. The merchant has to agree to the rate, but it is the card-users who actually / physically pay it (the fees). Amex Bank of Canada, for example, makes the following legally required declarations and disclosures in its Annual Reports (and corresponding Cardholder Agreements):
Interest income is capitalized into the loan balance [“cardmember receivable” balance] in accordance with the terms of the Cardmember agreements. [Amex Bank of Canada Financial Statements/Annual Report]
All amounts charged to the account, including purchases, …and … [otherwise concealed nominal / pretended merchant] fees [concealed interest/credit charges] will be called Charges in this Agreement. [Amex Cardmember Agreement] [i.e., all Principal and Interest-capitalized-in-advance will be called “Principal” in this Agreement].
Amex needs / requires the card-users’ legal consent to pay the concealed-credit-charges but absolutely not their understanding or knowledge-in-fact.
So how do they get away with it? Simple: They lie under oath to the Parliamentary Committees who then relay the ridiculously false information to the public.
The official story from the spokespeople for Visa and Mastercard is that the Merchant Fee is a “small administrative charge to the merchant to cover the administrative expenses of processing the transaction.”
But those actual expenses are currently no more than about $10 million per day, while just the aggregate Visa and Mastercard banks globally (about 75% of the global market) are harvesting / receiving $1.5 billion per day – or 150-times more – in concealed credit charges.
And if that were not a sufficient smoking gun of itself, the official spokespeople then explain to the committees that the actual administrative procedure is deliberately complicated to otherwise facilitate the approximate 50/50 splitting of the gross concealed-credit-charge revenue between the card-user’s bank and the merchant’s bank!!!:
As explained by the Canadian Bankers Association to the 1992 Canadian House of Commons Committee investigating the credit/charge-card industry in Canada:
The interchange system [e.g. Visa International or MC International] co-ordinates the activities of the merchant bank and the card user’s bank. It is similar to the cheque clearing system,… The interchange system also allows the splitting of the merchant discount. The splitting is complicated and varies for the different bank cards. The complications arise because the split cannot be a constant proportion of the discount (say, a 50/50 split) or each financial institution would quickly learn the discounts that all other financial institutions charge. Discounts and changes in discounts are proprietary information. The split can take the form of a fixed percentage of the purchase price less a fixed interchange fee (say 1.75 per cent less 25¢ per transaction) going to the card user’s bank; the merchant’s bank receives the 25¢ per transaction and the remainder of the discount.
In the example of a $100 purchase [and 3.25% nominal discount], the card user’s bank receives $1.50 (($100 x 1.75%) – 25¢) and the merchant’s bank receives $1.50 (($100 x (3% – 1.75%) + 25¢) [plus 25 cents to the interchange]. This is a 50/50 split, but the proportion could differ with a different purchase price and a different merchant discount. With this method of splitting the merchant discount, only the merchant’s bank knows the discount involved.
But the same witnesses had taken the position that the Merchant Fee is solely between the Merchant’s Bank and the Merchant, and has nothing to do with the Card-user or the Card-user’s Bank (to avoid about a dozen prima facie racketeering offences), therefore the Committee need not investigate any further. That alone is sufficient for a criminal conviction under the Criminal Code (giving contradictory testimony under oath).
Also note that the witness for the banks also got it exactly backwards, because it is the Card-user’s Bank that physically receives / obtains the “Merchant Discount” as a rake-off from the Card-user’s payment at the end of the grace-period, and then shares or transmits more or less half the revenue (concealed-credit-charge) back to the Merchant’s Bank.
If the Card-user does not pay, then the banks never receive the “Merchant Fee” at all – and that reality of the credit business cannot be avoided by a label.
And quite obviously at the macro-level, all of the aggregate revenue comes from the income of the Card-users. That is what is being captured and harvested by the aggregate system.
Even Inspector Clouseau of The Pink Panther movies could have done a more competent job of investigating the bankers. In theory, no one could be that profoundly incompetent. In practice, they are. It is as if the bankers and the entrenched-money-power more generally are engaged in a competition among themselves to see who can foist the most outrageously stupid story on the public and get away with it.
Perhaps the best way to grasp what is going on is to observe that in 1973 Howard Hughes’ $1 billion fortune represented the intergenerationally-accumulated-fortune of the world’s purported single richest human. Forty-six years later in 2019 the aggregate private banks are skimming twice that amount every single day from the global economy to cover their purported administrative expenses of accounting for the new credit that they are creating (actually reinsuring – see Part 2) – again every single day. The banks don’t actually pay the merchants – they only agree that they owe them – and they still owe them even after the card-user pays off their full balance at the end of the month / statement-period. It is just one massive on-going pyramid / ponzi-scheme.
Here again, the aggregate card-issuers are skimming approximately the USD-equivalent of $1 trillion from the global economy roughly every 18 months. And broadly-defined consumers are overpaying by the same $1 trillion every 18 months. Except to bankers and government this isn’t rocket science. For every such bonus $1 trillion pocketed by the bankers, we all have to overpay by $1 trillion.
Much more on credit / charge-cards under Part 5.
And it has been going on for centuries. Unlawful and illegal front-loading and falsified securities are the primary means, for example, by which private bankers and the English Crown looted the Suez Canal from the Egyptian People in the latter 1800’s (emphasis added):
The British finance expert, Cave, asserted that the state revenue of Egypt for 1864-75 comprised £94,000,000, while expenditure, including construction [of the Suez Canal], the expenses of the Khedive’s court, bribes for the Turkish Sultan and his attendants, the cost of the Sudanese and Ethiopian wars, amounted to an overall sum of £97,000,000. The entire real deficit for twelve years thus comprised only £3,000,000.
How was it that Egypt came to owe the European bankers nearly £100,000,000? The debt was made up of the following items: (1) £16,000,000 spent on the Suez Canal; (2) £22,000,000, which Egypt never actually received, went to the bankers as “differences in exchange value,” commission, and so on [i.e., loan fees or cross-leveraged double-counting and accrual-acceleration fees], but was included in the nominal sum of the debt [i.e., of the falsified securities]; (3) no less than £50,000,000 had been paid by Egypt up to 1876 as interest on the basic loans and promissory debts; [and] (4) £5,000,000 – 6,000,000 spent on public works. Thus it can be seen what a small portion of the [alleged/falsified/inflated] loan actually benefited Egypt.
The criminal intrigues of de Lesseps, Oppenheim, Frühling and others were responsible for the greater part of Egypt’s debt. The Egyptian people, who had to bear the burden of the debt, received no return on the [alleged/falsified/inflated/relatively-non-existent] loans they were forced to pay back threefold.
At the end of 1875, in order to meet the payments due on the foreign loan, [(puppet) head-of-state] Ismail decided to sell Egypt’s shares in the Suez Canal. Proposals were made to England and France. While France hesitated, the British Government acted quickly and decisively. Without notifying Parliament or even the members of his cabinet, Disraeli (Lord Beaconsfield), the British Prime Minister, borrowed £4,000,000 from his friend, Rothschild, and bought on behalf of his government 176,000 shares in the Suez Canal. The transaction was made on November 25, 1875. The shares passed into the hands of the British Government and on December 8, 1875, de Lesseps invited British representatives to take their seats on the Administrative Council of the General Company of the Suez Maritime Canal.
Egypt’s interest in the canal, which had cost her £16,000,000 to build and had led to her being saddled with a debt of £100,000,000, that cost the Egyptian people £300,000,000 in principal and interest paid off to foreign bankers, was sold for only £4,000,000. Subsequently, the Suez Canal yielded its owners unusually high profits; the shares that had been purchased in 1875 for £4,000,000 were worth £35,000,000 by 1910. (Modern History of the Arab Countries, by V.B. Lutsky (1969), Chapter XV – The Financial Enslavement of Egypt).
Nominal loan / double-counting / accrual-acceleration fees or unearned interest illegally and unlawfully capitalised in advance effectively bears interest in perpetuity. We Peoples of the world, and most certainly the People of Egypt, on just this one deal, are still effectively paying interest to the descendants of the bankers who first obtained it by criminal means and spent it circa 1870. The sun never sets on the accrual of interest. That is why they provide for the systemic falsification of the securities to hide it and to deny it.
Assume that the net / actual investment by the Crown / bankers were to have yielded an exceptionally generous return of £100,000,000 (including repayment of actual / net principal), such that the £200,000,000 (£200 million) difference, and as at 1910, had represented the net financial value carry-forward of the front-loading on the original falsified transaction / balances (at the end of the forty-year-compounding period from circa 1870, to 1910).
If the Crown and the bankers were to have treated it as a separate fund that was then invested to yield (and accumulate new assets at) 6% per annum, then in 2018 (108 years later – potentially within a single lifetime) that fund would be worth almost £200,000,000,000 (£200 billion) to their descendants. From just this one act or episode of illegal front-loading and securities falsification by their great-great-grandfathers. For the entrenched-money-power, illegal front-loading is the intergenerational gift that keeps on giving.
It is also how they are able to both live like kings spending money like drunken sailors – while still having it and more, from one generation to the next.
And the people who do the deals on behalf of their People are most often themselves installed or otherwise become the de facto agents / puppets of the entrenched-money-power whose interests they serve. As observed in The Decline and Fall of the British Empire 1781 – 1997:
The following year  [Britain] got the Sultan to depose the spendthrift Khedive Ismail, who went into exile with his yacht, £150,000 in gold for immediate necessities, thirty large chests of jewels, twenty-two of the best dinner services from the Abdin Palace and the seventy most attractive members of his harem, and eventually died as extravagantly as he had lived, after trying to drink two bottles of champagne in a single draught. [Piers Brendon, (2008) p. 164].
But for official purposes, this same man was thinking clearly and acting in good faith when he signed away the Suez Canal for a relative pittance to foreign money interests on behalf of the Egyptian People, and with or without an actual gun to his head. And then more or less gave the pittance right back as more interest anyway (it doesn’t take long for another £4 million of new interest to accrue on a pretended £100 million debt).
Returning to the present (and post-1981) situation, and again, not only is selective-non-prosecution in itself an illegal and unlawful (malum in se) dispensation or non obstante – and a breach of the Crown’s contract with the People under the English Bill of Rights of 1689 – but it does not solve the bankers’ problem because with or without criminal prosecution of the offender, the contract is, and forever remains, wholly void and unenforceable in a civil court.
The underlying problem is that the entrenched-money-power (and its puppet administrators) are made up of human-units and de facto professional-schizophrenics who function by a process of managed-mental-illness that allows them to commit even crimes against humanity while remaining in a general state of denial over the fact of it.
Front-loading was already prima facie illegal / criminal under not just the Bank Act (and all other enabling legislation for broadly-defined financial institutions) but (at least_) both the general fraud section (s. 380) and more specifically offensive-in-practice to s. 386 and / or s. 397(1)(b):
386. Every one who, as principal or agent, in a proceeding to register title to real property, or in a transaction relating to real property that is or is proposed to be registered, knowingly and with intent to deceive,
(a) makes a material false statement or representation,
(b) suppresses or conceals from a judge or registrar, or any person employed by or assisting the registrar, any material document, fact, matter or information, or
(c) is privy to anything mentioned in paragraph (a) or (b),
is guilty of an indictable offence and is liable to imprisonment for a term not exceeding five years.
s. 397 (in material part):
Criminal Code (R.S.C., 1985, c. C-46)
397. (1) Every one who, with intent to defraud, (b) omits a material particular from,…a…valuable security_ or document is guilty of an indictable offence….
How can a $90 million kick-back on the cable-TV deal (or any required payment by side-agreement on any mortgage-secured transaction), for example, not be a material particular when it is an express condition of the deal in fact, and the fraudulent purpose is automatically established in law by the fact of the disclosure laws and the myriad Bank Act and accounting law violations_ that are so concealed / avoided / evaded and defeated by the omission of it from the securities? Well it can’t.
It is just that the fraud had been normalized and the Crown prosecutors (and the judges / Courts) essentially trained and habituated never to go there or to ask those kinds of questions.
The reason Lord Kames identified front-loading in the 1700’s as extortion is because it reduces to: “As a condition of the loan, you the borrower, have to agree to assist me to commit several frauds against the laws against it that are binding on me as a lender, and to help me to conceal them from everyone else (including and especially modern financial markets).” By 1981, that process of concealment had become a virtual art-form in the financial world.
The primary means by which the bankers and the judges had dealt with the civil laws against front-loading was to rule in virtually every case that the particular law at issue did not happen to apply in this particular case, and therefore no further questions need to be addressed.
To any reasonably intelligent observer it was abundantly clear that the judges / former-bank-lawyers were protecting themselves and the legal profession more generally from the financial and criminal liability of having aided and abetted their financial-institution clients to evade or ignore the multiple civil laws against front-loading and / or the nominal method.
Front-loading reached a crisis again in the 1920’s as creditors continued to ignore the 1880 laws against it, until the Ontario Court of Appeal held in 1926 that the federal securities law could not be avoided by undisclosed side agreements.
In Lastar v. Poucher the actual / net loan had been $3,000 at 75% per annum, while the registered mortgage claimed that the principal amount was $5,000 and that the rate of interest is 7%. There was also claimed to be an undisclosed (and regardless unregistered) side-agreement for a $2,000 payment / kick-back from the nominal proceeds to the creditor for “making the loan” (but from the facts established at trial the side-agreement was not real but only a pretense – there is no evidence by which to believe that Mr. Lastar ever had more than $3,000 to put into the transaction). More critically the civil law evasion technique of omitting to mention the side agreement is unquestionably a separate and distinct criminal offence when the first law evaded is itself a criminal law.
This is the point at which the system in fact breaks down. The lawyers think that the way to get around the disclosure law is to actually advance the pretended full amount but with an undisclosed side-agreement for the kick-back. It is criminal regardless, but under the criminal-law that process undeniably defines multiple additional criminal offences, including and especially money-laundering. The lawyers are essentially taking the position that the way to get around the first criminal offence is to commit another.
But regardless of whether the alleged side-agreement was real or fictitious, any rational society would have immediately prosecuted the creditor for the myriad self-evident or prima facie criminal offences involved:
Hypothetical Prosecutor: As I understand it Mr. Lastar, you agreed to loan $3,000 to Mr. Poucher at an interest rate of 75% per annum, on condition that he would agree to the falsification of the mortgage security to claim that you had loaned him $5,000 at 7%. You then provided for the registration of that falsified security at the public land-title registry. Is that correct?
Mr. Lastar: Yes, that is correct. You see, I use my investments in mortgage-secured-loans as security for other transactions of my own, and a registered security claiming that I have invested $5,000 at 7% is much more valuable to another creditor than one truthfully disclosing $3,000 at 75%. Also, this way I can misrepresent the $2,000 difference as capital gain on my tax returns instead of having to declare it as interest income. And if Mr. Poucher were to go bankrupt, as here, then I can use the falsified security to claim to be a secured creditor for $5,000 when I had only actually loaned or advanced / invested $3,000. The unsecured creditors get burned but, hey, it’s a rough world out there. And of course there is the pure public embarrassment of registering a mortgage-secured loan at the public land-title registry with an interest rate of 75% per annum – makes me look like some kind of sleazy opportunist – and $5,000 at 7% is much more socially acceptable.
Hypothetical Prosecutor: But don’t you realise that what you just admitted to involves at least half a dozen felonies related to fraud and to the creation and trafficking in falsified securities?
Mr. Laster: Well yes, but everyone knows that the criminal law in that respect only applies to the little people and not to the entrenched-money-power. I’m just a fringe player in all this, but as long as I employ the same criminal techniques and devices as the major institutions, the Courts will be forced to protect me. My lawyer advised me that even if we were to get caught, the civil court will still act as an apologist for the system, and the worst I would do is to get my $3,000 back, and while collecting interest on $5,000 in the meantime. As an absolute worst-case scenario, the civil court judges may even decide against me because of the non-compliance with the federal securities law but they won’t go anywhere near the criminal law.
The civil court was indeed happy to oblige and / but did the right thing up to a point. The flaw in the judge’s reasoning is that the federal law does not require that a mortgage contain a statement of “an” annual interest rate – it requires a statement of “the” annual rate measured against the amount “advanced”-in-fact and expressly regardless of the amount “secured”:
These contentions all seem to converge on one and the same point, namely, that if a mortgage prima facie conforms to the [federal securities disclosure] statute in naming a sum as principal and providing for a specific rate of interest thereon, the genesis of the indebtedness cannot be inquired into – a mixture put into a labelled bottle must be what the label calls it. But parties cannot make substantive law for themselves by agreement: Rex v. Paulson,  1 A.C. 271.
By securing the repayment of the money lent by an “agreement,” [double-counting-side-agreement for making the loan] it is sought to avoid the effect of the Interest Act [federal securities disclosure legislation] upon a loan secured by a “mortgage.” The agreement is part of the mortgage transaction, and therefore, cannot be separately considered. Any other conclusion would be contrary to the intent and purpose of the Act. If the express intention of these sections is to be overcome by some parallel undertaking, simply because it is termed an “agreement” and not a “mortgage,” but forming part of one transaction, then these sections would be rendered meaningless. (Lastar v. Poucher Weekly Court, Toronto, April 3, 1926; 58 O.L.R. pp. 589-597).
Notwithstanding the judges’ apologist posture and failure to identify several prima facie criminal law violations, with the subsequent appellate court decision the financial law community was in serious trouble because the then current version of the mainstream money-increment / pyramid scheme was into about its fifth year with the illegal unearned-interest-capitalized-in-advance largely rolled-over into an ever more (pyramided) falsified securities portfolio, all coordinated and administered by mainstream financial lawyers / solicitors.
So the mainstream financial law specialists were forced to either come clean and fix the problem, or else go double down on the falsification of the securities. They went double down.
The Editor(s) of Dominion Law Reports (a privately-owned arm of the entrenched-money-power that reports and summarizes court decisions as a service to the legal profession (like a 1926 version of Google for lawyers)) responded to the appellate Court in Lastar .v. Poucher (1926) with a panic-induced Editor’s Note urging the legal profession to continue recklessly engaging in illegal front-loading and securities falsification by undisclosed side agreements, implicitly to force / coerce the Supreme Court of Canada to overturn the unanimous Ontario Court of Appeal.
You have to read between the lines, but the essential message was that if this decision is allowed to stand, then we lawyers and bankers are all going to jail because we have been recklessly falsifying mortgage securities for the last five years while also pyramiding the gains. We cannot go back, and so our only hope is to ramp-it-up.
Note also that the word “principal” is a question of fact and not of the agreement of parties. It is a noun and not an adjective. Yet the Editor oscillates back and forth between the two as a cognitive device by which to avoid using the term forgery and the objective reality of multiple criminal offences in his advice on how to evade the federal securities law and the criminal law more generally (Red indicates fraudulent / adjective (opinion) use of the term, while Green indicates proper noun (fact) form) .
Editor’s Note: [to 1926 Ontario Court of Appeal decision in Lastar v. Poucher (emphasis added)] –
In view of the extensive practice of stipulating for a bonus in advancing money on second mortgage, this judgment is of far-reaching effect. The most important finding of fact is that a bonus is “interest” within the meaning of the Interest Act,… The effect of this judgment would then seem to be that if the usual practice is followed of making the mortgage for a larger sum than the amount actually advanced [the criminal-law definition of false documents / forgery] – in fact of adding the bonus to the amount advanced and so making up the principal on the face of the mortgage – and if is as also usual, the principal is payable in instalments, the mortgage falls within the Act as it is then one providing for blended payments of principal and interest and the fact that interest is stipulated for in addition makes no difference as such interest is calculated on the basis of the bonus being part of the principal. …It would be beyond the scope of a note such as this to suggest a means of avoiding the consequences of this judgment
[Read: Pay close attention because we are about to tell you how to [presumably but directly contrary to what the Court said] avoid the consequences of this judgment while still concealing your illegally-capitalized bonuses and fees from the registrar, from your investors, from the financial markets, from the taxman, from your regulators, and from the public generally]
but an analysis of the judgment itself shews two facts; firstly that the stipulation for a bonus in itself is not of itself illegal
[Yes it is as a fraud against the real transaction (equity), against GAAP, and against unsecured creditors, against the taxman, against your regulators, and against the financial markets, and cannot be accomplished in practice without falsifying the securities, and every competent lawyer knows it.]
and therefore semble a separate clause as to bonus would not infringe the Act, and secondly that the inquiry of the Court must be directed to the principal actually advanced and so presumably if the full face value of the mortgage is advanced and the bonus then and there deducted the transaction would then not be affected by the statute. The latter method would merely be an extension of the almost universal practice of deducting from the mortgage money the fees and expenses of the conveyancing matters necessary in connection with all mortgages and need only amount to a bookkeeping entry, involving of course a separate assignment by [the borrower] of the necessary portion of the principal advanced.
There is enough evidence of managed-mental-illness in the Editor’s Note to support a PhD thesis in the psychiatry of mens rea (guilty mind) but the legal profession took it generally as a consensus agreement that the disclosure law could be avoided by committing constructive and actual forgery, notwithstanding the decision being explained that expressly held that it could not.
But the legal profession generally appears to have understood the Editor’s coercion strategy and climbed aboard the front-loading and securities falsification band-wagon for the euphoric final three years leading up to the Great Crash.
Meagher v. London Loan [1922 – 1930]
Then, in December of 1929, and about six weeks after the stock market price collapse, a virtual disaster for the financial solicitors occurred when a unanimous five-judge panel of the Ontario Court of Appeal upheld the 1925 ruling of the trial judge in Meagher v. London Loan and Savings Co. [of London, Ontario], applying the federal statute (s. 6 of the Interest Act) and Lastar v. Poucher requiring a financial security to state its true and complete terms. For the lawyers it meant – “Oh sh*t!!! Now we’re really screwed!! We should have followed what the appellate court said in Lastar v. Poucher instead of that idiot Editor at Dominion Law Reports!”
In Meagher, the actual loan had been $25,500 (round numbers) at 17% per annum, but management of the financial institution had made it a condition of the loan that the nominal debtor agree to falsify the security (registered mortgage) to claim $30,000 at 7.5%, and / or to omit to disclose either the fact or amount of a $3,000 bonus / kick-back to the financial institution (by undisclosed side-agreement), and a $1,500 rebate / kick-back to its solicitor for “examining title and putting through the loan”.
But then, although it had taken some five years to get to the Ontario Court of Appeal after the trial decision, just 88 days later an equally unanimous Supreme Court of Canada overturned them both. So why would they do that?
Why would a unanimous five-judge panel of the Supreme Court of Canada take a diametrically opposite view of the same simple words requiring financial securities to state their true and complete terms? Well they told us why, right at the end, after a litany of non sequiturs and incoherent rambling:
The [trustee’s (Meagher’s)] argument, if acceded to, involves very far-reaching consequences. …..It might even be argued that the [full and truthful disclosure] principle would extend to the common transaction of the retention by [the creditor] of the amount of his solicitor’s bill for examining title and putting through the loan.
Notwithstanding all of the criminal activity and offences by the lawyers, that is what it is all about. If the Courts were to uphold the plain language and rational intent of the law that security instruments must state their true and complete terms, then the legal profession would not be able to provide for the falsification of securities to conceal rebates / kick-backs to the legal profession, with exponentially leveraged profits for the financial institutions. It is called quid pro quo. This isn’t financial-market and socioeconomic rocket science.
A mortgage for $30,000 with interest at 7.5% per annum and a 25-year amortization will require a monthly payment of $219 for a total of 300 (months) x $219 = $65,841. But if the same monthly payment as to be made by the debtor is applied against the actual / net advance of $25,500, then the mortgage is paid off in only almost exactly 17 years instead of 25 years.
So the front-loading of $4,500 of bonus and a solicitor kick-back cross-leverages the total cost of credit by 8 years (96 extra monthly payments) and a total of $21,000 or more than a 4-to-1 ratio and accounting for roughly half of all the interest to be paid over the 25 year period.
This is truly the most critical point to grasp; that in an environment that accommodates the ex-temporal fraud of front-loading or leveraged-super-fraud the more money the private financial system channels to the private legal profession as kick-backs, the exponentially more money / profits made by both the solicitors and the creditors. It absolutely turns conventional economic theory upside down. In a front-loading financial universe, higher costs mean exponentially higher profits.
On its face, the federal securities law applies to virtually all mortgages of real estate, but the Supreme Court ruled in 1930 that due to a bizarre set of unusual circumstances the law did not happen to apply to this particular mortgage, and therefore no further questions need be examined. The lawyers then started front-loading again in earnest, and that was essentially the last time that the Courts ever ruled on the federal securities law other than to conclude that it does not apply.
That is how the judges of the courts communicate policy to the legal profession. It was the irrational and incoherent nominal reasoning of the Court / judges that told the lawyers that this law is not to be applied under any circumstances, period, and as a signal that they could go back to falsifying securities to hide their fees and other forms of kick-backs to the bankers / creditors.
That is why back in 1880 certain members of the appointed and not elected Senate had insisted on needlessly complicating the language of the law to spell out every form of mortgage then in effect – except one where it made no difference regardless, instead of making it applicable to all mortgages, period. They knew that the nominal creditors had no intention of keeping to their agreement and that it would be only a matter of time before the Supreme Court would have to play the “law does not apply here” card.
And for the same near 90-year period, from 1930 to today, every time the question of mortgage fraud has been raised in Parliament, the government’s answer has been that there is no need for any new laws because the public is well protected by the federal securities law (that never applies). That is how real organized crime works. The Mafia are amateurs.
But, and regardless, that civil-law approach or strategy of the law not applying does not work under the criminal law.
In that sense, the new criminal interest rate law in 1980/81 would have had the appearance of a change-up pitch or off-speed pitch in baseball, to the administrative-wing of the entrenched-money-power.
More critically, the new law, and especially a new criminal law (and international racketeering offence), once enacted – directly defeats and eliminates the defence of a common practice or business custom.
The English appeal court gave a concise statement of a court’s structural limitation in this respect in Snell v. Unity Finance (1963) (emphasis added):
The principle of law is clear. The courts, which exercise the judicial power of the Crown, will not enforce a contract that Parliament, which exercises the legislative power of the Crown, has made unlawful. In the words of Lord Mansfield in Holman v. Johnson :
“The principle of public policy is this: Ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act.”
Again, this is a pretty basic rule, sometimes pronounced foundational.
Whomever came up with the idea of reviving dispensation and extending it into the criminal law realm was likely so full of their own apparent cleverness at it, that they absolutely failed to think it through very far, as subsequently (quasi) pointed out by the finance lawyers themselves as for example (in material part, emphasis added):
[F]ees and commissions for arranging the loan were paid by the borrower at the time of the advance. Are you [the banker and / or the bank’s solicitor] committing a criminal offence?
Of greater concern to the lender is the apparent illegality of the transaction where the transaction offends the Criminal Code, which can result in restrictions on recovering principal and interest in civil actions…
In response to the question of whether you [bankers and / or bank solicitors] are participating in the commission of a criminal offence in the loans described, the answer, in many instances, is yes – bankers, and possibly even their solicitors, may well be participating in a criminal offence.
The chain-of-reasoning and general conclusion is directly deterministic, however, and the word “possibly” is non sequitur. There isn’t any maybe about it.
To be clear on this aspect, and without prejudice to the issue of the relative morality of it, in terms of the official criminal-law-and-international-racketeering-status of the offence, there is no difference here to taking the position that sexually molesting a child, or human-trafficking for the purposes of child-prostitution, is not wrongful as long as the offender has obtained the consent of the child’s parents. Or that trafficking-in rocket-launchers is ok as long as the purchasers agree to the terms. There is apparently something about money, and especially large amounts of easy-money, that completely destroys a solicitor’s ability to reason these things through.
With respect directly to the dispensation aspect, and with my apologies for the seeming inflammatory nature of the analogy or comparison, in terms of its basic legal elements under the criminal law, there is no difference to adding a provision requiring the AG’s consent to a prosecution for rape, so that the Crown / government can prosecute Black men for raping White women, but not White men for raping Black women.
It is critical to appreciate just how dangerously incompetent government has become under the direction and control of the entrenched-money-power. These people live in a general state of being where the very concept that the criminal law might apply to them is beyond their normal comprehension. They get the importance of publicly pretending that it is does – but they don’t truly believe it.
Also contrast with the language and clarification before the banking committee, before the amendment, or going in:
Senator Barrow: Surely the choice of the words “criminal rate” is unfortunate here, is it not?
Mr. Gibson: I think the choice of the words “criminal rate” was most definite. It was to definitely indicate that this was seen as a crime, not as something that was simply unfair or inequitable, but something definitely criminal. (SSCBTC transcripts; 4-12-1980, 28:31)
Also conspicuous by its absence from the article (and all other similar articles) was any direct mention that the Criminal Code also directly defines the solicitor(s)’ act of counselling or aiding and abetting (assisting and encouraging) their clients to commit an enterprise-crime / racketeering offence as itself an enterprise-crime / racketeering offence by the solicitor(s):
[462.3] “enterprise crime offence [now (and post 2001) called (renamed) a “designated offence”]” means
(c) a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a), (b) or (b.1) [e.g. ss. 462.3(a)(xiii.1) (s. 347)(criminal interest rate)].
Given that the Canadian financial system is saturated with the unlawful and illegal front-loading (criminal-rate-conversion / acceleration) of unearned-interest, and that the resulting rake-offs are converted in fact (money laundering-in-fact and in-law) as among the most significant sources of income to at least certain members / factions of the legal profession, it seems extremely odd that these highly sophisticated finance lawyers / solicitors who wrote the article would fail to mention either or both of the separate racketeering offences by the lawyers, or that the private Bar Associations and Law Societies are thereby both in fact and in law objectively-and-precisely-defined “criminal organizations” under the same Criminal Code (it would be criminal negligence if they were advising / working for a client instead of mere legal commentary in a financial-law trade publication).
And, critically, the more relatively powerful a given lawyer or solicitor is within the organisation-so-defined, the more likely it is that they are obtaining income directly or indirectly from the criminal-law-violations and from the resulting proceeds of crime. It’s not just a technicality.
The definition of a “criminal organization”, domestically, is by s. 2 (Definitions), and by ss. 467.1(1), of the Criminal Code of Canada, and which is extended more or less globally through several independent international treaties (emphasis added):
“criminal organization” means a group [e.g., private Bar Associations and / or Law Societies], however organized, that
(a) is composed of three or more persons in or outside Canada; and
(b) has as one of its main purposes or main activities the facilitation or commission of one or more serious offences that, if committed, would likely result in the direct or indirect receipt of a material benefit, including a financial benefit [nominal legal-fees paid from the falsified securities and criminal rate conversion proceeds], by the group or by any of the persons who constitute the group.
“serious offence” means an indictable offence under this or any other Act of Parliament for which the maximum punishment is imprisonment for five years or more [which includes (also) s. 347], or another offence that is prescribed by regulation.
- Facilitation – For the purposes of this section and section 467.11, facilitation of an offence does not require knowledge of a particular offence the commission of which is facilitated, or that the offence actually be facilitated.
- Commission of offence – In this section and in sections 467.11 to 467.13, committing an offence means being a party to it or counselling any person [management of financial institution or nominal borrower / debtor] to be a party to it.
One highly salient aspect is the cross-compounded-nature of the problem / offences. The client’s (bank’s) act is a criminal act and which is also an enterprise-crime / racketeering-offence. And the solicitor’s act of counselling or aiding and abetting their client is itself a criminal offence under s. 22 (aiding and abetting), and also a specified racketeering or organised-crime offence (by s. 462.3(c)) when the offence aided and abetted is itself an enterprise crime / racketeering offence; and the bank’s subsequent or concurrent payment to its solicitor is (normally) an independent act of laundering of proceeds of crime / money-laundering.
Another important technical aspect with respect to the solicitors is under the definition of “Commission of [a serious] offence”, above, where it provides that “committing an offence means…counselling any person to be a party to it.” (same under s. 462.3).
Technically / legally, the bank (and its employees / officers) and its solicitors are jointly committing the racketeering offence directly (and which they are in fact anyway), and the solicitors are not merely aiding and abetting the banks / bankers before the fact. That means also that the Bar Associations and Law Societies are direct joint participants in the offences. In law, they are a joint-criminal-organization or all members of the same criminal-organization.
Perhaps more significantly, here, every time a banker commits a racketeering offence under the criminal law, their solicitors are committing two offences, because the solicitor / lawyer also commits an independent offence under the specific counselling offence (s. 462.3(c)) as well as being a joint-party to the banker’s offence. And three offences if and when they are paid by the bankers directly from the proceeds of crime (money-laundering).
Also, many people are under the erroneous belief (or general cognitive impairment) that the criminal-interest-rate law is principally an anti-loan-sharking law, where the real, or at least most dominant, evil is assumed to be physically violent collection methods.
But the term loan shark, or any derivative of it, does not appear in the legislation, and the well-documented reason s. 347 is expressly / directly included / designated as an enterprise-crime offence (now (and as at 2001 forward)) called a designated offence, under the international treaties to which Canada is a Contracting State Party, is because it is more directly and materially an anti-money-laundering law.
If there is no limit on the rate at which interest can accrue under a legal contract, then any two or more human or corporate parties can arbitrarily and otherwise legally transfer assets anywhere, merely by structuring the transactions as loans or credit with whatever rate of interest or fees is / are necessary to drain / move the value quickly, and even near instantaneously, from one jurisdiction (and / or venue) to another.
The CEO of the Bank of Montreal put it this way before the Senate finance committee even already in 1984 (in material part, emphasis added):
You can move money around so fast now to so many different places through several legal jurisdictions, some of which may have very strict laws against disclosure, that it isn’t even funny. I can hide money in the twinkling of an eye from all the bloodhounds that could be put on the case, and I would be so far ahead of them that there would never be a hope of unraveling the trail. (…) Technology today means that that sort of thing can be done through electronic means. In a day, money can be moved through Winnipeg, Toronto, New York, Miami, the Cayman Islands, the Bahamas, and into Switzerland and I defy anyone to unravel the trail. The best thing to do is to create a structure where there is created as little incentive and as much inconvenience as possible for that sort of thing. (11:24)
– W. D. Mulholland, CEO of the Bank of Montreal to Senate finance committee (Towards a More Competitive Financial Environment) 1st Session (11:24:84) 33rd Parliament 1984-5-6.
The criminal-interest-rate law under s. 347 does exactly that – it creates a structure that materially limits the potential for money laundering through a criminal-law-limit on the rate at which interest money can accrue or be converted under a financial contract. With a criminal threshold of 60% per annum, it takes a minimum of about 20 months to convert / move an asset through such interest bleed-off stream(s).
And, critically, s. 347 expressly provides that the rate of interest is to be measured according to “generally accepted actuarial practices and principles”, and that means in accordance with the per diem principle (same as GAAP, but under the criminal law they can’t just ignore it (or purport to gain the nominal debtor’s consent to ignore it) as they do with GAAP).
And the actual / true per diem principle (as required under the legislation and already used internally by all financial institutions, and not the lawyers’ bastardized version of it that the public is normally exposed to), in turn, demonstrates just how monumentally the current administrators for the entrenched-money-power have messed-up as a function of their own greed, incompetence, and, above all, egos.
What we are at first conditioned and then habituated, to call and perceive as interest-bearing-debt is a wholly fictional cognitive concept or construct that cannot exist as something real in this universe, because of what is called entropy. Entropy is a physical law, like the speed of light or gravitational constant of the universe, that holds that time is the enemy of all things real. Entropy holds that all higher order systems must tend to disorder over time.
An ordinary drinking-glass, for example, given enough time will eventually break and / or tend toward the small pile of sand from which it was created by the addition of energy. But a small pile of sand will never spontaneously become a drinking-glass by the mere passage of time. Interest-bearing-debt is based on the precise opposite – that with the pure addition of time interest-bearing-debt will grow or reach higher orders without any other input or added energy.
In effect, interest-bearing-debt comes from a negative-universe where time runs backwards.
And we collectively allowed the entrenched-money-power to import this impossible (and massively dangerous) thing into our universe on one condition, and that one condition is that it be contained by a GAAP-Rule-temporal-containment-field or per diem principle that holds that time can only effectively run backwards in daily (per diem) increments, and that no interest or interest-bearing-debt can be created or allowed outside of its temporal-containment-field.
When a lender or nominal creditor deems or provides for themselves to receive pretended interest-in-advance (bonuses or nominal loan fees) they are not merely technically and actually criminal / racketeering – but they are also violating in fact the one rule by which they obtained this massive and massively unfair advantage over the rest of us.
“Hey look, over the next year you are going to owe me 10% more than I am loaning to you, so what is the harm of letting it out of its temporal containment field to pretend that I’ve already earned all or a part of it today? In fact, I’m going to make it a condition of the loan that you agree to do so, so that I can get a literally super-cross-leveraged something-for-nothing to help fuel my Ponzi scheme, while we both pretend that the resulting massive socioeconomic damages are really your fault for agreeing to it. Yea. That works.
And while we’re at it, let’s also agree to hide-it and deny-it by falsifying the securities. After all, the markets might get nervous if we were to spell-it-out on the face of the securities.”
The entrenched-money-power could have taken over the entire planet by simply obeying the already grossly unfair rules. But the current generation-or-so have jumped the gun to materially accelerate the process so that they can be the generation that gets the glory for completing the establishment of the so-called new world order (and whatever that might mean – I don’t have a sufficient psychiatry-background to fully comprehend these people).
Front-loading already involves the egregiously fraudulent violation and non-compliance with GAAP and other legally-binding accounting laws and principles, and they really are robbing us all blind in active violation of them and have been doing so for generations. All that s. 347 did was to make the same act expressly criminal (and racketeering) with or without GAAP. But the bankers could not protest without giving away the financial importance of them having been getting away with violating GAAP. That is why they built the policy-escape-hatch into s. 347 in seeming ignorance of the unlawful and illegal substance of it (because of the anti–non-obstante / anti-apartheid-principle).
And, again and without going into too much of the details, here, in 1980 the entrenched-money-power had backed itself into a corner where they simply ran out of time (in both the real world, and in terms of Parliamentary procedure), and were forced to accept the amendment to the Criminal Code in order to have the existing federal Small Loans Act repealed (which they desperately needed to get rid of). They either had to accept the defective selective-non-prosecution solution, or else have the bill returned to the Commons where they risked actual debate in the House (which had been avoided to that point). And, again, they had run out of time regardless in the real world.
But perhaps the most prescient statement on the whole process was by the then former federal Minister of Justice (Mr. Flynn) who observed before the banking Committee: “It seems to me that this [criminal-law] route is full of dangers.” Full of dangers indeed.
At this point, the owners of the financial institutions, and especially their solicitors and their bonding / malpractice-insurance underwriters were (and remain), to use the vernacular, screwed.
As already seen, the principle is quite foundational as pointed out by the English Court in Snell v. Unity Finance:
The courts, which exercise the judicial power of the Crown, will not enforce a contract that Parliament, which exercises the legislative power of the Crown, has made unlawful
That is even before considering the criminal law. The principle is so fundamental that there is really no way to get around it. But then we have to add the criminal law to the equation.
As a general / initial frame-of-reference, in Burrows v. Rhodes and Jameson  1 Q.B. 816, the judges of the English Court referred to the procedure adopted / followed in a much earlier case where during the course of a civil lawsuit, the judge(s) of the Court in that case came to discover / realise that both parties were in fact highwaymen looking to the civil Courts to resolve a dispute over the splitting of the spoils / profits (emphasis added):
“Perhaps it may be that the learned counsel were afraid to refer us to this case lest the same results should happen, namely, that the counsel who signed the bill [brought the civil lawsuit] was made to pay the costs of the bill, and the solicitors were fined, and the plaintiff and defendant were both hanged.”
The judges of the civil Courts are required to take the criminal law seriously. What is most truly notable is that, in terms of the total relative and absolute take, the modern-day front-loaders make the old highwaymen look like amateurs.
The civil court issue, however, is really somewhat more simple than that. The reason it only appears to be complicated is because the judges of the Courts are often compelled to cover for certain members of the entrenched-money-power who don’t seem to know when to back-off when they get caught doing something illegal.
A full understanding of our modern system and situation requires an appreciation for what is called locus standi in curia (standing before the Court) and the doctrine of equity known as the clean hands principle.
In Bank of Toronto v. Perkins (1882) the bank had nominally advanced credit on the security and conversion of real estate, which it had been directly prohibited from doing under the Banking Act then in effect. The action was by the bank to foreclose / realise on the illegal security.
The bank’s management had obviously been well aware of the illegality and had tried to disguise the nature of the transaction by way of demanding a back-dated promissory note then said / claimed to be merely “secured” by the mortgage of real estate a year after the fact. The bankers pretended to have made a legitimate industrial (or whatever) loan a year earlier, and then taken / demanded the mortgage as additional security a year later, when in fact they had converted the mortgage directly and illegally in the present.
Lawyers for the bank had argued that the purpose of the statute was merely an internal affair of the bank, and that the security should not be rendered void by the technical violation, which was somewhat odd in itself because the statutory prohibition all but defined the business of the bank.
The general prohibition against banks owning real estate in their own right, other than their immediate places of business, and / or of advancing (reinsuring / converting) credit against real estate, had always been a core principle of banking more or less throughout the broadly-defined English system.
Real estate values (market prices) have long been recognized as the sponge that soaks up money / credit-supply inflation in favour of the property-owning class (London today remains a prime example, and also highly skewed toward soaking up conventional proceeds of crime. Also, more generally this is why our system went off the rails beginning around 1968 when this restriction was simultaneously removed in multiple countries).
And by prohibiting banks from owning or dealing in real estate, the banks / bankers also had a vested interest in the long-term stability of the real (industrial) economy.
But it made no difference regardless to the result, as explained by Chief Justice Ritchie of the Supreme Court of Canada (emphasis added):
I agree with Chief Justice Dorion [of the provincial appellate court] that the transfer made to the appellants [i.e., the bank] of a mortgage to secure an advance made on a promissory note discounted at the same time that the transfer was made, was on the part of the bank in violation of the Banking Act, a clumsy attempt at evasion of the 34th Vic., ch. 5, sec. 40, which enacts that:
The bank shall not, either directly or indirectly lend money or make advances upon the security, mortgage or hypothecation of any lands and tenements.
As a result the nominal-mortgage was recognised as having been null and void from its inception, and this was held unequivocally (emphasis added):
This prohibition, as Chief Justice Dorion justly remarks, is a law of public policy in the public interest, and any transaction in violation thereof is necessarily null and void; no court can be called upon [has jurisdiction] to give effect to any such transaction or to enforce any contract or security on which money is lent or advances as thus prohibited are made.
It would be a curious state of the law if, after the Legislature had prohibited a transaction, parties could enter into it, and, in defiance of the law, compel courts to enforce and give effect to their illegal transactions.
Also bear in mind that (at least on the face of it) the banks themselves are created by, and only exist as, an Act of Parliament.
In closing, however, Justice Gwynne of the Supreme Court would clarify that, as a point of procedure, (and a fortiori (an objectively / logically stronger position) regardless) the clean hands / locus standi principle prevails / dominates such that the unenforceability (or legal nonexistence) of the illegal contract is a subordinate or secondary issue.
That is, the bank’s act (through its employees / officers) of offending the statute (the illegal object) and / or of demanding / taking the falsely-dated promissory note (the illegal means) precludes it from acquiring or maintaining the necessary standing (for lack of clean hands) to request the assistance of the Court / state in the enforcement of the mortgage / security said to secure it.
It would not alter the (winner / loser) result, but in a system defined by precedent strict adherence to due process or procedure is critical – rule of law means literally due process (emphasis added):
Upon the whole, therefore, as I have said, I can come to no other conclusion than that the [back-dated promissory] note was given existence for the sole purpose of upholding and giving colour to the [illegal] mortgage and its transfer, which latter contained a false recital of a debt due for the purpose of eluding a discovery of the true nature of the transaction; for this reason, I am of opinion that the bank has no locus standi in curia, and that, therefore, we should not express any opinion upon the other points, which can only come into judgment if the bank had a locus standi,…
Had the Bank of Toronto sold / assigned the illegal loan / credit security document to an innocent third party who had then attempted to use the Courts to enforce it, then the tainted nature of the document itself (as evidence of an illegal transaction) would have become the deciding factor (and the burned third party would then have sued the bank and its solicitors who had provided for the falsification of the securities (i.e., for having sold them a forgery-in-law)).
Note also that the bank and its management were already getting away with (i.e., escaping punishment for) several crimes that may have gotten a poor man hanged (and most certainly imprisoned) at the time. The Court / judges use terms like “a clumsy attempt at evasion” for what were prima facie acts of securities falsification / forgery, uttering, and conversion by the bank (or rather its management).
Almost a century later, the English Court in the aforementioned Snell v. Unity Finance  referred to, or rather was still referring to, the same essential crime of forgery / falsification-of-securities as “a dishonourable trick”. In Dunphy Leasing Enterprises v. The Bank of Nova Scotia , the civil Court judge preferred the term “unlawful trespass and conversion” to describe an act of robbery by the bank / bankers via its agent-receivers.
Each of these terms used by the judges of the civil / business courts is a kind of cogno-linguistic containment field or firewall to avoid using the word criminal in a civil court to describe the actions of a moneyed plaintiff (almost always a financial institution aided and abetted by mainstream solicitors). Such organized accommodation of criminal activity has quietly been going on for at least 300 years.
In Bank of Toronto v. Perkins, the bank’s (lawyers’) final offensive maneuver / position had been to say in effect: “Ok so the mortgage is invalid – then give us an unsecured judgement on the promissory note and we will find another way to get our money”. The bank’s lawyers took the at least constructive position that if the mortgage were held by the Court never to have had any legal existence, then the back-dated promissory note was no longer tainted by an illegal purpose!! Welcome to Wonderland Alice! Have a cup of tea!
The lawyers were essentially (or at least constructively regardless of their actual state of mind) saying to the Court / judges: “You don’t have the guts to charge us for our criminal offences, and so we are going to turn that around and use it to manipulate you so as to salvage something from this illegal deal.”
Justice Gwynne responded by bringing the bank’s lawyer(s)’ rapt attention (in a way that they could understand) to the fact that the bank and the people who ran it had committed several prima facie criminal offences (felonies), and would be well-advised not to push it any further.
Even the flamboyant, and otherwise-member-of-the-club, Henry Fauntleroy, was hanged in 1825 for an act of forgery in fraud of the Bank of England, even though the Bank of England itself loots the masses with impunity.
Since 1990 I have read in excess of a thousand broadly-defined English-law credit-law decisions covering a period of some 400 years, and I believe that Bank of Toronto v. Perkins is among the most significant.
The case is an enigma or form of paradox because, on the face of it, it represents a perfected convergence of equity, law, policy, and logic (also what used to be called common sense) with respect to the dispute that it purports to resolve. In effect, the decision (taken as a whole and eventually) tells the truth, the whole truth, and nothing but the truth, with respect to the matters of law and equity that it purported to address (albeit only up to and without directly crossing the criminal threshold).
At the same time, the same decision stands as prima facie evidence of a deeply entrenched corruption of courts convened in admiralty (civil / commercial) law jurisdiction, because it demonstrates conclusively, and at the highest level, that they know how to do it right when they want to, or perceive that they need to.
Over a roughly two-year period in the late 1990’s, I researched and compiled a collection of 150 broadly-defined English law decisions (although more or less limited to Canada and the U.K.), dating back to the 1600’s, on broadly-defined illegal contracts coming before the civil / commercial courts (The Clean Hands Collection). And which I believed at the time (and still do) to be relatively exhaustive of the extant cases on the subject (perhaps 200 in total).
It does not come up all that often (or at least it never used to) because it is a risky proposition from the position of the plaintiff to engage the civil justice system when, in order to succeed, the plaintiff must reveal their own illegal actions to the Court.
Again as in Burrows v. Rhodes and Jameson , the judges of the English Court referred to the earlier case where upon realising that the plaintiff and defendant in the civil action were in fact highwaymen looking to the civil court in a dispute over the splitting of the profits: “… the solicitors were fined, and the plaintiff and defendant were both hanged.”
In most of the other 149 cases, the objectively correct legal answer was the same as was given by Justice Gwynne in the Bank of Toronto case. And that was that the facts of the case dictate that the court had no jurisdiction to grant standing to the offending plaintiff, and everything else becomes immaterial (in essence the application of the all-or-nothing principle of contracts). But they almost never said so directly.
At its core, the judges of the commercial / money courts are loathe to admit any ultimate limitations on their own powers, and so pretend to have jurisdiction even when they objectively do not, and notwithstanding that they may otherwise reach the correct conclusion regarding the non-enforceability of a given illegal contract. In Bank of Toronto it was (to me) only the persistence and inherent arrogance of the bank’s lawyers that compelled Justice Gwynne to openly play the locus standi card.
That the private Crown courts have no power under certain circumstances is a very dangerous idea to the entrenched-money-power and they would prefer that the public not generally be exposed to or made aware of it. They prefer that the larger flock of sheep should believe that the private Courts have ultimate and unlimited authority over them come hell or high water.
It started with Plato of Athens circa 400 B.C.:
The greatest principle of all is that nobody, whether male or female, should be without a leader. Nor should the mind of anybody be habituated to letting him do anything at all on his own initiative; neither out of zeal, nor even playfully. But in war and in the midst of peace – to his leader he shall direct his eye and follow him faithfully. And even in the smallest matter he should stand under leadership. For example, he should get up, or move, or wash, or take his meals…only if he has been told to do so. In a word, he should teach his soul, by long habit, never to dream of acting independently, and to become utterly incapable of it.
Beings of conscience / equity are repulsed by this idea. Corporate creatures embrace it. Those who are repulsed know why. Those who are not are utterly incapable of it.
As a good example of such reticence, and also in terms of more plainly obvious conventional / literal organised crime, in The Manufacturers Life Insurance Company v. Anctil  S.C.C. Vol. XXVIII p.122, an agent for the insurance company had sold a life insurance policy to a relatively wealthy investor (Mr. Anctil) on the life of a destitute man who was otherwise unknown to the investor.
The insured man had received a small payment up front to go along with it. The investor then also paid the monthly / periodic premiums, and if the destitute man died sooner rather than later, then the investor would theoretically profit. But if and when a given investor actually won because the destitute man died sooner (as in this case), the insurance company would refuse to pay on the ground that the policy itself was an illegal wager and void ab initio.
To make the investments appear more attractive, the insurance company contracts also contained a clause that, after a year of premiums, the insurance company could not refuse to pay for any reason. Although it was not strictly necessary to go that far, the Supreme Court of Canada explained why that clause in and of itself legally voided the agreement from the outset (emphasis added):
The instrument sued on contains this clause:
“After this policy has been in force one full year it will be indisputable on any ground whatever, provided the premiums have been promptly paid, and the age of the insured admitted.”
The death occurred after the year had expired….
Thinking as I do that it means what it says – and it being admitted that it means what it says – let me discuss for a moment the only answer that is set up in respect of it. That answer is that any contract stipulating whether directly or indirectly that the question of fraud shall not be raised, is against public policy and therefore void.
And even without the disclaimer, the policy remained an illegal and therefore unenforceable wager:
The facts that the insured lent himself to the device of ostensibly insuring his life and undertaking to pay premiums that he knew were far beyond his means and position in life, and that the [insurance] company’s agent connived at the contrivance, cannot alter the essence of the policy. From its inception it was a wager by the [investor] on the length of another person’s life. The [investor’s] interest was not in [the insured’s] life but in his death”.
Either way – the illegal wager and / or the disclaimer clause – and even though the insurance company people had deliberately set out to defraud Mr. Anctil (who was clearly not innocent either – he had himself hoped to profit from the anticipated early death of a stranger), the Supreme Court held that the law is the law and that the contract was void and that the Court did not even have the power (jurisdiction) to compel the insurance company to return the premiums:
The [insurance] company’s… position in this case is certainly not a deserving one, but a defence like theirs to an action of this nature is allowed not for the sake of the defendant, but of the law itself. There can be no waiver of such an objection.
More generally, the contract was void and unenforceable, and to get the premiums back, Mr. Anctil must ask the Court to exercise its equity jurisdiction.
The most general principle is that when a legal agreement fails, equity is automatically revived. Normally if parties merely enter into an agreement that is legally void, then the Court is supposed to order that both parties recover whatever it was that they brought to the transaction. In this case the insurance contract would have remained void and unenforceable, but the insurance company would also have had to pay back the premiums to Mr. Anctil.
But because Mr. Anctil did not have clean hands in the matter, he could not maintain the necessary standing (locus standi in curia) to ask for equity, and the Court was compelled to leave both parties exactly where they were, and the insurance company got to keep the premiums.
But although the Court reached the correct result, it failed to directly explain that Mr. Anctil’s lack of ability to maintain locus standi was the foundational reason why he could neither enforce the contract nor recover the premiums.
The same result may also be characterized as a result of the doctrine of particeps criminis (partners-in-crime), that one party to a criminal act cannot sue another party to the crime (which is really just mutual lack of locus standi). But, here again, the judges of the Courts almost never say so directly when one of the parties is a financial institution or has been advised and assisted by a mainstream solicitor.
More generally, real justice would have required the Crown to have prosecuted the insurance company management (and Mr. Anctil) for fraud / illegal-wagering in criminal law jurisdiction – but for whatever reason the former financial-law professionals who become prosecutors and judges do not seem able to form that thought.
Of perhaps greater overall significance is that insurance law generally has since further developed (or rather deteriorated) into a highly deceitful game of obtaining premium money from the targets, and then finding a reason not to pay out on claims.
Consider the following more contemporary newspaper accounts of civil lawsuits involving technical or alleged misrepresentations by the little people: It is also critical to focus on the general form of exploitation by the insurance companies rather than the details of the alleged misrepresentations. And bear in mind that the same entrenched-money-power that owns the insurance companies also owns the newspapers that report the stories to the public.
The first article, especially, contains a direct contradiction regarding the circumstances that can only be resolved by assuming that the man was verbally asked if he was a smoker, and then signed the policy application without realising that the actual question was very different:
Where there’s smoke there’s a smoker, court rules
The Canadian Press – Montreal
A smoker is a smoker even if he takes only an occasional puff, the Quebec Court of Appeal has ruled in upholding an insurance company’s refusal to pay death benefits. The court ruled Wednesday [the Insured’s wife] was not eligible for her husband’s $150,000 in life insurance because he had made a false declaration to the insurers that he was a non-smoker. *** [The Insured] took out the policy in November 1984, making his wife a beneficiary. He died in a car accident the following August. On his application, [the Insured], who had quit smoking 18 months earlier, had answered No to the question “Have you used tobacco, in any form, in the previous 12 months?’ *** The L’Industrielle-Alliance insurance company gave him a non-smoker’s policy, with a premium which is less than half what smokers pay. The problem was that [the Insured] indulged in an occasional small cigar. He didn’t consider that smoking. But the insurers did, and rounded up four witnesses who had seen him puffing. The company argued [the Insured] had made a false declaration, and his policy was invalid. (Edmonton Journal, February 16, 1993; reported by Canadian Press, Montreal.).
Often the first inclination is to perceive the above decision as being unfair (which it is if the misrepresentation was unintentional). Many assume that the court should have awarded at least the amount of insurance which the insured would have received under a smoker’s policy for the same premium. But that is not the civil court function. It is not up to the courts to make a new agreement between the parties – only to determine whether the agreement which the parties have made can be enforced. In this case the parties had an apparently valid agreement for life insurance. The insured died in a car accident, but the insurance company (management) held that since there was a misrepresentation in the signed contract, it would not honour the policy. The law is the law.
Likewise, and more or less concurrently, an insurance company in Ontario declared a murder victim’s life insurance policy void because he had failed to disclose a mild previous heart attack of which he himself had apparently not even been aware (emphasis added):
Life policy void, widow told
The Canadian Press – Toronto
A woman whose husband was slain last fall  has been denied his $50,000 life insurance policy. *** Since [the insured] hadn’t told the insurance company about a previous heart attack, the policy was ruled invalid. *** “He was murdered” the 56-year-old widow said Monday. “Somebody took my future. And now the (life insurance) security blanket has been pulled out from under me.” *** [The insured] was killed last Sept. 14 , when armed robbers used his vehicle as a getaway car after fleeing a shoot-out at a sports store in nearby Oshawa, Ont. *** His body was found in nearby Pickering last January. The case is still under investigation. *** After his death, [his wife] was sent a letter from Metropolitan Life Insurance Co. declaring her husband’s policy “null, clear and void” along with a check for $2,700 for reimbursed premiums. *** A Metropolitan Life spokesman said the company wouldn’t have insured [the man] in the first place if proper medical information had been provided. *** The company first learned about [the insured’s] heart attack when police sent in his file a few months ago, said Jim Hiller, an agent in Whitby, Ont., for the insurer. “Do we make an exception and pay out the money or go by the rules and the law,” asked Hiller, who said the decision has caused him some sleepless nights. (Edmonton Journal, June 13, 1995; p. A4.)
The legal principle itself is simple and clear – a material misrepresentation – even by omission / deficiency (and certainly a material illegality), whether intentional or unintentional, and no matter how otherwise unrelated, renders a civil contract unenforceable. The law is the law.
Also note that, in both cases, the insurance company management had made no attempt to determine whether the representations on the respective applications were accurate before taking the premium money. Like the people who run all insurance companies, they wait until a claim is made before doing such due diligence. It is much more efficient and profitable that way. And such is considered a virtue by those in the industry.
Among the most significant decisions in English law history was by the House of Lords in The Amicable Society for a Perpetual Life Assurance Office v. Bolland et al.  4 Bligh N. S. 194. Very briefly, the insurance company held approximately £6,000 (an enormous sum at the time) belonging to a customer who had died (a de facto deposit and investment account, and not a death-benefit account), but whose executor could not sue the company due to a legal technicality (lack of locus standi). The company management therefore argued that it had an obligation to willfully breach its contract with the deceased so as to provide for the unearned / unjust enrichment of its own shareholders. The Lords agreed.
By the same reasoning, if an aircraft manufacturer cannot sue due to a legal technicality, then it is acceptable to provide otherwise defective parts under a supply contract. I won’t go any further into the details here, but it was at this point in 1830 that broadly-defined corporate domination of the planet became inevitable because both breach-of-contract and unjust-enrichment of the possessor class was henceforth deemed in law to be virtue instead of vice.
Banking and insurance are conceptual mirror-images of one another, and the true extent to which we are all being manipulated by the entrenched-money-power that owns both of them is revealed in how the rules are changed from one case to the next to ensure that the institutions always win regardless of circumstances. It is one big game of Heads I win – Tails you lose.
The main point here is that we do in fact live under a legal system where life-altering financial contracts are routinely ruled null and void due to seemingly minor violations of law or represented fact.
The underlying socio-economic-control device (a variation of all-or-nothing) remains as it has for centuries, at least as it is most generally applied to the little people. From Parkin v. Dick  where a small quantity of illegal war material / contraband was included in the cargo of an insured voyage (emphasis added):
Lord Ellenborough. – The objection is fatal. I have got a clause declaring [insurance] policies on prohibited voyages, introduced into acts of parliament, for the purpose of warning the public. But it is clearly unnecessary. The illegality of such [insurance] policies is a consequence of law. Nor can I separate one part of the subject matter insured from the residue. It may be a hard case if only a small quantity of naval stores [war material / contraband] be included in a cargo which is insured ; but the smallest quantity renders the adventure illegal, and I have no scales to weigh degrees of illegality. The contract is entire, and is wholly void. Plaintiff nonsuited. Parkin v. Dick  3 Taunt. 6
The Court of Admiralty had no jurisdiction over the contract / policy because it was illegal. And here too the insurance company would also have retained the premium money. And of course, strictly speaking, by procedure, the locus standi issue was most dominant – but the Court / judge did not say so.
Police today employ the same illegality principle systematically, especially in the U.S., to confiscate the property of the little people – especially when illegal drugs are involved (or even merely alleged to be suspected of being involved). The primary reason that most so-called recreational drugs are made illegal is that the entrenched-money-power know that people are going to use them anyway. The laws against them are really only to perpetuate domination for its own sake, and to justify taking away / harvesting their property.
In addition, both of the nominal beneficiaries in the examples described above would have been effectively penalised or further financially ruined by the costs of the lawsuits. That is why these two stand out (normally the denied beneficiaries do not even attempt to sue the insurance company). Not-paying-claims is a de facto industry in itself for insurance companies, and their contracts / policies and application practices are as deceitful as the nominal loan contracts created by bank solicitors (much more on this aspect under Part 3).
Every once in a long while, however, a case comes before the civil courts involving individual human members of the entrenched-money-power going up against their corporate counterparts. In those cases, and especially when significant portions of the public are watching, the judges are forced to carefully adhere to these established rules – even applied against an otherwise member-of-the-club.
In Guiness PLC v. Saunders  2 A.C. 663, one of the directors of the beer conglomerate (and public (stock-market-listed) company) Guiness Plc. (Mr. Ward) had entered into a nominal contract with / through two other directors of the company under which Mr. Ward would be paid a commission on the purchase / acquisition price of Distillers Plc. purportedly in exchange for his expertise and negotiation skills. After the purchase and sale was complete Guiness paid the resulting commission of £5.2 million to Mr. Ward (or rather his own private consulting company).
It was later discovered or raised as an issue that under the legally binding Guiness corporate / public-company bylaws directors could only receive such special remuneration / payments under a contract pre-ratified by the entire board of directors. Guiness (led by its minority shareholders) sued to recover the £5.2 million on the ground that it had been paid over pursuant to a legal nullity – a non-existent or illusory contract.
[at p. 689, Lord Templeman] If the bid for Distillers had not led to allegations of misconduct by Guiness it is possible that the payment of £5.2 m. to Mr. Ward’s company, apparently for services rendered by his company, would not have been questioned or, at any event, that Mr. Ward would not have been required to repay that sum. But there never was any contract by Guiness to pay special remuneration to Mr. Ward for services rendered in connection with the bid for Distillers.
[p. 693] The fact is that Guiness never did contract to pay anything to Mr. Ward. The contract on which Mr. Ward relies is not voidable but non-existent.
[at p. 696, Lord Goff of Chieveley]. In the Court of Appeal  1 W.L.R. 863, Mr. Ward’s appeal against that decision was dismissed. It was said of him, at pp. 870-871, that he had “succeeded in getting his hands on the company’s money,” and that the company had never ceased to own the money which he had been paid. Accordingly Mr. Ward was a constructive trustee of the money which he had received, and must pay it back.
[at p. 702] Finally, I cannot see any prospect of success in a claim by Mr. Ward to relief under s.727 of the Act of 1985. Given that Guiness’s claim must be one for the recovery of money paid to Mr. Ward under a void contract and received by him as a constructive trustee, there is no question of his being able to claim relief from liability for a breach of duty, as might have been the case if Guiness’s claim had been founded upon breach by Mr. Ward of his duty of disclosure. [i.e., Mr. Ward is estopped (legally prevented) by the fact of the by-law from a defence based on the equitable doctrine of quantum merit.]
I have been very conscious, throughout this case, that Guiness is seeking summary judgment for the sum claimed by it, without any trial on the merits. Even so, I have come to the conclusion that Mr. Ward has no arguable defence to Guiness’s claim. The simple fact emerges, at the end of the day, that there was, in law, no binding contract under which Mr. Ward was entitled to receive the money and that, as a fiduciary [constructive trustee], he must now restore that money to Guiness. For these reasons I would dismiss the appeal.
Also bear in mind that what Mr. Ward had done, as a member of the Board of Guiness, was also prima facie a criminal offence (constructive embezzlement and / or breach of trust (the law is theoretically exceptionally harsh on misappropriation of funds by trustees / fiduciaries), but no one officially said so.
For civil law purposes, however, it was sufficient that he had violated or failed to comply with the company’s by-laws, in the means by which he had obtained £5.2 million of the public-company’s money, to establish the constructive trust in favour of Guiness. (Although if he had received and genuinely relied upon legal advice, the same liability would ultimately default to the solicitors / lawyers (or potentially both as particeps criminis (partners in crime) if there had been any collusion. I.e., Why would anyone (especially a fiduciary and legal trustee) put the necessary resources into a bona fide enterprise for which they would truly earn and be paid £5.2 million of the company’s money (enough at the time to fund over one million hours of labour at £5 per hour (for the little people)), without even making rudimentary inquiry into whether it was legal?).
Also, if the situation were reversed, and Mr. Ward had sued Guiness because the company had discovered the defect before paying the money, then Mr. Ward’s non-compliance / violation of the by-law would have stripped him of locus standi and he would have technically lost on that basis.
So, returning to Canada, where a mortgage or other nominal loan security contains a criminal / racketeering provision, and / or is falsified to conceal it, there is theoretically not even a triable issue. And normally (virtually always) the violation of s. 347 is compounded by up to several collateral offences to conceal it (otherwise there is not much point to it). Not to mention the criminal liability of the solicitors who themselves first violate the criminal / anti-racketeering laws by providing for it (aiding and abetting their clients to do it) and who are also joint-parties with the banks in the commission of the offence(s) itself.
And this is where it gets especially interesting.
The Ontario Court of Appeal stated the straightforward liability principle plainly in Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills; 1991, 68 O.R. (2d) 165:
Very simply, a solicitor who practices commercial law is responsible, if he undertakes to draft a promissory note [or any other financial security], to see to it that it expresses the interest rate in a form that is enforceable.
The financial institution’s (Elcano Acceptance’s) solicitors had drafted promissory notes for the institution’s borrower-customer(s) that called for interest at the rate of 2% per month, only. The federal Interest Act requires that all such instruments must also contain an express statement of the annual rate to which such other (sub-annual) rate is equivalent, otherwise no more than 5% per annum can be enforced.
The law (s. 4) itself was enacted in 1897 to compel disclosure of the real interest rate and to prevent the nominal method fraud on non-real-estate-secured loans, but here the solicitors had neglected to provide any purported annual rate equivalent at all, and so there was no way for the judges to interpret their way around the failure to comply (by ruling that “the law does not happen to apply” “in this particular case” – an otherwise favourite technique).
The solicitors were found to have been negligent, and they were ordered to reimburse / pay damages of $177,000 for the constructive loss to the financial institution from the reduction in the enforceable rate (from 2% per month (or 26.8% per annum) to 5% per annum). And that is in respect of a mere civil form of contract / disclosure statute.
The omission issue was the same in Niagara Air Bus v. Camerman which immediately followed Elcano Acceptance at the Ontario Court of Appeal – the promissory notes called for interest at 2% per month only.
The Court of Appeal ruled here too:
The purpose of s. 4 of the Interest Act is to limit recovery of interest to 5% [per annum] on contract debts if there is non-disclosure of the annual rate….As Draconian as it may seem in today’s interest climate, it is clear that if disclosure of the true annual rate is not expressly made, the lender’s rights are limited.
The liability for the constructive loss would have then automatically attached to any solicitor who had been paid to draft the agreements. Most critically, however, the judges clearly and unambiguously admitted that the Court is bound by the law and that they had no power to interfere.
Strictly speaking the prima facie controlling factor is not that “the lender’s rights are limited” but rather that “the Courts’ powers are limited”.
Relatively just prior to that, in 1986, the Supreme Court of Canada had ruled in another (and extremely important / high-profile) case of solicitor negligence that not only were the solicitors legally and financially liable, but also notwithstanding certain clauses in their contracts that the client agrees that the lawyers are not responsible for anything – including their own negligence!
Here too, Central Trust Co v. Rafuse,  2 S.C.R. 147 had officially involved a mere negligence-based violation of a provincial statute (and where all parties involved had otherwise agreed to it).
In Rafuse, the solicitors had provided or arranged for a business (Stonehouse Motel and Restaurant) to issue a mortgage to a local financial institution for close to the purchase price (i.e., to finance its own acquisition / takeover) with the proceeds (about half) used to pay out all other debt of the business and the residual (the other half) as a net payout to the vendor / current owner (who had wanted to cash-out his equity and retire)).
A problem arose, however, when it was later discovered or raised as an issue that despite the seemingly regular / innocuous appearance of the arrangement to those who do not understand it, it was and remains both unlawful and illegal.
It was illegal because the Nova Scotia Companies Act made it expressly illegal for a company created under it (as here) to give any form of financial assistance – including issuing the mortgage – for the financing of its own takeover / acquisition. The provision is a kind of anti-corporate-raider law that eliminates a great potential for minority shareholder fraud by corporate management and / or by majority-shareholders.
It also recognises the corporation’s legal and equitable rights as a separate person-in-law from its shareholders.
The decision of the (Supreme Court) judges was twofold: (1) that the solicitors were responsible for the entire financial consequences of the voiding of the illegal mortgage / security, and (2) notwithstanding a provision in its client contract that the client agrees that the law firm is not responsible even for its own negligence (in material part, emphasis added):
With respect, I am in agreement with the conclusion of the Appeal Division on the issue of negligence. The fact that the capacity of a corporation to borrow and give security may be limited or subjected to certain conditions by the provisions of the applicable Companies Act [or obviously the Criminal Code, etc.] is such basic knowledge that a reasonably competent solicitor must be held to possess it, whether he is a general practitioner or a specialist. It is knowledge which a solicitor who undertakes to do the legal work to obtain a mortgage or other security from a corporation must possess, and with it there is a duty to exercise reasonable care and skill to ascertain by an examination of the relevant legislation what limits or conditions it imposes upon the capacity of a corporation to give security.
Rafuse was in fact a monumental and marathon case that had taken 18 years (from 1968 to 1986) to reach a final decision from the Supreme Court of Canada. Most critically, the Supreme Court ruled that the client could ignore its contract with the lawyer, and sue independently in tort (the tort of negligence) based solely on whether it was more advantageous for them to do so. Now the lawyers were well and truly screwed.
From the larger position of the entrenched-money-power, from the initial gambit of playing Parliament to create a criminal rate of interest to get rid of the anti-front-loading preamble to the 1939 law (and to jack-up credit-card-account interest rates), to reviving illegal and unlawful dispensation / administrative-apartheid, to extending it into the criminal law realm, to failing to consider the voiding / unenforceability of illegal / criminal contracts in the civil courts, to neglecting to account for the solicitor(s) as ordinary parties-to-an-offence, to the independent racketeering offence(s), to the unanticipated civil court decisions holding the financial solicitors responsible for at least civil / professional negligence, the entrenched money-power had essentially gone double-or-nothing multiple times in a row, and had lost every time.
And it had all occurred over a relatively very brief period of about six years, including the icing on the cake which was the 1986 S.C.C. decision / ratification in Lor Wes Contracting v. The Queen that overturned the 400-year-old rule excluding evidence of legislative intent in civil actions.
De facto social-control by managed-mental-illness has certain drawbacks that cannot be avoided forever.
So how, then, could the broadly-defined legal profession, and the entrenched-money-power more generally, possibly get themselves out of such a monumental mess? Answer: as always, Policy. Or as the cartoon character Bullwinkle Moose used to say on The Rocky & Bullwinkle Show: “Hey Rocky! Watch me pull a rabbit out of my hat!”.
Just as the respectable-gangster Michael Corleone would simultaneously take care of all five of his rival crime-family-opponents at the end of The Godfather Part I, the Canadian Courts would dispose of all of these mistakes by the entrenched-money-power under a single decision of the Ontario Court of Appeal.
The former finance solicitors and lawyers who run / dominate the Ontario Court of Appeal ruled / upheld in 1989 (and were subsequently unanimously ratified by those of the Supreme Court in 1990) that unfortunately the criminal law cannot be applied to creditors and their solicitors / lawyers because it only provides that offenders will be severely punished but does not expressly state Don’t do it!!!
The Plaintiff in the case, Thomson Associates Inc., (or rather its owner / manager) had also maneuvered itself into an equally monumental no-win situation because it had directly offended both subsection 347(1)(a) (because the whole agreement defined a rate or yield of 145% per annum) and s. 347(1)(b) (because the company and its solicitors (a “leading Toronto law firm”) had concealed it by converting / front-loading $45,000 of interest in advance as nominal loan fees (and which is also a concurrent money-laundering offence under s. 462.31(1) even without s. 347(1)(b)), and had also falsified the contract and securities to conceal it.
And Mr. Thomson was only a constructive middleman who had obtained his own funds as a nominal loan from the CIBC (Canadian Imperial Bank of Commerce) where bank management had apparently been aware (and / or legally deemed to be aware) of the real terms of the illegal / criminal agreement. Technically it all converged at racketeering-central.
Also, many of the judges in the system by that time had been directly appointed or elevated by the then current Prime Minister, Brian Mulroney, who had himself been a director of the CIBC more or less up until becoming Prime Minister.
Rather than employ their normal technique of denial / avoiding / evading the issue, the Court / judges were more of less compelled to (or more likely chose to) take-the-bull-by-the-horns and directly concede the fact of the criminal offence by the Plaintiff, Thomson Associates Inc.:
“[T]here is no doubt that the corporate plaintiff [Thomson Associates Inc] committed an offence under s. 347(1)(a) by entering into an agreement or arrangement to receive interest at a criminal rate”
At this point the Court was confronted with our foundational principle of English law:
The principle of law is clear. The courts, which exercise the judicial power of the Crown, will not enforce a contract that Parliament, which exercises the legislative power of the Crown, has made unlawful.
And of course, procedurally, at this point the Court was compelled by law to deny the plaintiff locus standi in curia for want of clean hands in the matter, and to effectively disclose and emphasise its own lack of jurisdiction. The unenforceablilty of the criminal contract was a subordinate issue to the plaintiff’s lack of capacity to maintain a civil action to enforce it. And Thomson’s lawyers ought to have been at least fined and / or disbarred for attempting to enforce a criminal contract through the Courts (technically money-laundering by the lawyer(s)). But where there’s a will, there’s a way. The criminal law at issue provides (in material part, emphasis added):
347. (1) Notwithstanding any Act of Parliament, every one who
(a) enters into an agreement or arrangement to receive interest at a criminal rate, or
(b) receives a payment or partial payment of interest at a criminal rate,
is guilty of
(c) an indictable offence and liable to imprisonment for a term not exceeding five years,…
The Court ruled / upheld (in material part, emphasis added):
…[The criminal law [Section [347(1)(a)]], … provides only for punishment of persons agreeing to receive interest at criminal rates but does not prohibit agreements providing for such rates….
“The purpose of [the criminal law [s. 347(1)(a)]] is to punish everyone who enters into an agreement or arrangement to receive interest at a criminal rate. It does not expressly prohibit such behaviour, nor does it declare such an agreement or arrangement to be void. The penalty is severe, and designed to deter persons from making such agreements. … It is designed to protect borrowers … It is not designed to prevent persons from entering into lending transactions per se…. Therefore the agreement [which the Court / judges have found and acknowledged to be contrary and offensive to the criminal law] is not fundamentally illegal.” (Thomson, (William E.) Associates Inc. v. Carpenter  34 O.A.C. 365).
English translation: “These are not the droids that you are looking for. Move along.”
The Court / judges themselves then or concurrently committed another precisely-defined and unambiguous racketeering offence (laundering proceeds of crime) contrary to ss. 462.31(1), in material part (emphasis added):
s. 462.31 (1) Every one [the Court / judge(s)] commits an offence who… alters, disposes of or otherwise deals with, in any manner and by any means, any property [$75,000 promissory note] or any proceeds of any property with intent to… convert that property [to a judgement money order] or those proceeds and knowing that all or part of that property or of those proceeds was obtained or derived directly or indirectly as a result of (a) the commission in Canada of an enterprise crime offence [“[T]here is no doubt that the corporate plaintiff [Thomson Associates Inc] committed an offence under s. 347(1)(a) by entering into an agreement or arrangement to receive interest at a criminal rate”]
So what then is the proper procedure to follow when Her Majesty’s Courts / judges, with full and admitted knowledge, commit acts of laundering of proceeds of crime?
Well, broadly-defined English law has no contingency to deal with it at all, because, here again, a civil / commercial / court-of-admiralty has no jurisdiction over criminal subject matter.
And again, this is no ordinary criminal offence – but that which is fairly sui generis or in a class of its own – the One Ring that Rules them All and controls and creates an amount of money and power globally that dominates all other sources (And in the darkness binds them).
For hundreds of years the foundational rationale had been encapsulated in the Victorian-era manifestation of it that: “Her Majesty is not to be seen getting into bed with criminals.”
Under Thomson, the judges of the Canadian Courts created a new Godfather-personality to the English Crown that now openly and admittedly acts as the muscle to enforce criminal-contracts on behalf of criminal offenders.
Based on the precedents established in Thomson, the civil Courts in Canada can now issue orders compelling payment for a contract murder.
Extending the metaphor from Queen Victoria’s time, and with my apologies here too for the seeming inflammatory nature of it (but there really is no other way to put it under these circumstances), as of Thomson, Her Majesty today is not merely seen to be getting into bed with criminals, she is openly performing fellatio on them, in the middle of Bay Street, and in broad bleeping daylight!
Upon the Court’s / judge’s finding / discovery of the facts that prima facie established the criminal offence(s) (and / or on the Plaintiff’s own pleadings and evidence), by law the judge(s) were required to provide for the arrest of the controlling mind of the Plaintiff (i.e., Mr. Thomson), and of the respective lawyers / solicitors involved (from the “two leading Toronto law firms”), and to seize the property / asset ($75,000 promissory note) that had been obtained by them in the commission of an offence contrary to the enterprise-crime / organised-crime / anti-racketeering sections of the Criminal Code.
The Court / judges were also bound by the federal Evidence Act to take judicial notice of the multiple additional offences that were automatically (prima facie) established on the same facts, including and especially, laundering of proceeds of crime, constructive forgery, fraud, and the solicitors having counselled (and independently aided and abetted) their clients to commit several enterprise-crime / racketeering offences, and to conceal it through falsified securities and / or falsified collateral documentation (emphasis added):
Judicial notice shall be taken of all Acts of Parliament, public or private, without being specially pleaded. R.S., c. E-10, s. 18.,
Such is one of the primary and at least official reasons given for appointing judges almost exclusively from the ranks of lawyers. They are presumed and required to know the law so as to prevent the Courts themselves from being used for illegal or degrading purposes, and more generally to prevent the administration of justice from being brought into disrepute.
It is also why one heroin-street-dealer, for example, cannot sue another in civil court for non-payment on the drugs. Even if the parties agree between themselves not to raise the issue of illegality – the court / judge is bound to do so of their own volition.
Note also that this law is in the form of a direct order that the judges shall do it. By their own purported reasoning in Thomson, the judges’ omission / failure was “fundamentally illegal”. A racketeering and sedition-level Catch-22.
In fact the civil court(s) all committed sedition (against Parliament) under s. 59 of the Criminal Code by even asserting jurisdiction (with knowledge) over a criminal contract.
Further to the issue of sedition and to the technical criminal status of the Bar Associations and Law Societies, not only did the judges of the Courts fail to take judicial notice of both the ordinary and racketeering-level offences independently committed by the respective solicitors, they actively and expressly relied upon those offences as purported mitigating circumstances to downplay the fact and extent of the offences by Mr. Thomson. (Roughly translated: “Yes, the plaintiff did technically rob a liquor store, but it is ok because he hired a member of the BAR as wheel man to drive his getaway car.” – They just don’t get it – which is what prompted the former Minister of Justice to make his full of dangers caution / observation).
Such was also at least constructive criminal negligence by the judges because the lawyers and the plaintiff really were joint-parties to the same racketeering offences under the domestic and international criminal law definitions and provisions, and they had in fact falsified the securities and laundered the proceeds to conceal it. It wasn’t an accidental or unintended violation of the criminal law – even if there were such a thing.
Overall, or more generally, within the general rubric of court intrigue, the Crown Court (of Appeal), through its judges, held / endorsed that the solicitors’ membership in the Bar/BAR Association as making them legally superior to the Crown (and the converse that the Crown is legally subordinate to the Bar/BAR Association).
In practice, the judges asserted or claimed the authority to unilaterally extend the authority of the court of civil law / admiralty law into the criminal law, so as to disregard / suppress the criminal law (and the international treaties) as lawfully enacted by “Her Majesty, by and with the advice and consent of the Senate and the House of Commons of Canada”, provided that the offender is advised and assisted (aided and abetted) in so doing by a member of the Bar/BAR.
And, also somewhat more than coincidentally, further delivering up Canada to international financial interests that have been systematically bleeding us white for generations, while they concurrently loot our broadly-defined natural resources.
Seventy-four years ago, at the end of World War II, we were fewer than 12 million people in possession of about one-tenth of the world’s broadly-defined diverse natural resources.
Today we have ever-increasing widespread poverty while a relatively tiny controlling elite have done very well for themselves – by selling out the rest of us to domestic and international (and highly-organised and flagrantly criminal) financial interests.
There was regardless a time when heads may have literally rolled as a result of such a move. Even Charles I in 1649 lost his head for far less significant acts of treason against the People / Parliament. Today it (apparently) simply goes unnoticed (either that or the implied or de facto coup d’etat against the Crown / Parliament / People has been successful – more on this aspect below).
But, and again, the Courts / judges failed to even mention any of these automatic / additional / collateral and strict-liability offences by Mr. Thomson and his “leading Toronto law firm”. Do you think maybe they just forgot? Or were they even capable of forming the thought of it?
The judges of the Courts were also bound by multiple international treaties on money-laundering and on the disposition of proceeds of crime to which Canada is a Contracting State Party. Under the various treaties – which directly and / or indirectly name and enjoin s. 347 – Canada is legally and contractually obligated to seize proceeds of crime, and most certainly not to convert them into judgement money-payment-orders in favour of the criminal offenders.
It is a recognised principle of international customary law that a state may not invoke the provisions of its internal law as justification for its failure to perform its international obligations. (Zingre v. The Queen et al.  2 SCR 392)
So even if the administrative-apartheid provision under s. 347(7) requiring the consent of the AG were not itself unlawful and illegal (and in fact a Nuremberg-level offence / crime-against-humanity), it still could not be used to negate Canada’s international treaty obligations to treat it as a racketeering offence, and to seize whatever proceeds of crime are involved.
The same goes for the multiple independent offences that automatically precede or follow the violation of s. 347, (and several others that are wholly independent of it) such as, most notably, money-laundering and falsification of securities to conceal it, and which do not require the consent of the AG’s for criminal prosecutions (and which are also enjoined as enterprise-crime / designated offences under the treaties). Either way, they were theoretically dead-in-the-water and several times over.
Instead, the judges / Courts enforced the criminal contract anyway, and converted Mr. Carpenter’s promissory note, directly obtained by Thomson Associates in the commission of, and as security for, an enterprise-crime / racketeering offence, into a judgment-money-order (plus costs for Thomson’s lawyers!!!).
The judges’ purported reasoning is, by objective / clinical / medical standards, criminally insane, but no one material ever questions former-bank-lawyers once they are appointed judges by the prime-minister / former-bank-lawyer / former-bank-director.
That too is policy.
But how then would the Courts / judges henceforth deal with the criminal law at all? Every material or substantive section of the Criminal Code is of the same form – none of them expressly state: “Don’t do it”.
If criminal acts and indictable offences generally are “not fundamentally illegal”, then how will the entrenched-money-power now control the little people?
Well, the former-bank-lawyers and bank-solicitors also used Thomson to spell-it-out for us while concurrently dealing with all of the other loose-ends and non sequiturs from the new doctrine of criminal / racketeering but not-fundamentally-illegal.
To accommodate such a massive paradigm shift on the one side, something equally massive and important must give way on the other side.
Henceforth (as of 1989/90) in Canada, whether a contract / security that is offensive to the criminal law remains valid as an asset to the nominal-creditor / criminal-offender, and a binding liability on the nominal-debtor / indentured-servant / financial-fraud-victim, depends upon the judges’ (former-bank-lawyers’) opinion of:
The serious consequences of invalidating the [criminal] contract, the social utility of those consequences, and a determination of the class of persons for whom the [criminal] prohibition was enacted…
Welcome to Apartheid 2.0.
That, too, is policy.
It was also prima facie an act of high treason under which the Crown in Right of Canada (and its Parliament) was in fact, or at least constructively, deposed by the private lawyers and others behind the private Bar/BAR Association(s).
Otherwise, the people / players in the domestic Canadian financial system regardless and indeed took it as a general policy decision by Her Majesty’s Courts that anything goes and rapidly fell over themselves providing for ever more flagrant and brazenly criminal provisions in financial securities, and eventually exported (and added them to the existing pipeline) the falsified securities and criminal practices to an eager and ultimately insatiable global financial world under the guise of commercial normalcy, while the judges (former-bank-lawyers / solicitors) of the civil / commercial Courts kept pace with ever more cartoonish and absurd explanations and justifications for each new round of escalation.
In most if not all of the following burst of decisions which so rapidly followed Thomson (to quickly entrench the new policy), the respective nominal Plaintiffs (as a front for management / owners (the true offenders – where do you think all the money comes from to pay their aggregate multi-billion dollar bonuses?)) had been assisted and encouraged (aided and abetted) to commit the criminal offences by mainstream lawyers and solicitors (who then completed the circuit by laundering the proceeds of crime):
BCORP Financial v Baseline Resort Developments Inc. (1990), 46 B.C.L.R. (2d) 89 (B.C. S.C.); J.D.M. Capital Ltd. V. Smith (1997) , 39 B.C.L.R. (3d) 340 (B.C.S.C.); Loghlean v. McNabb,  I.L.R. I-3482 (Ont. Gen. Div.); Milani v. Banks (1997), 32 O.R. (3d) 557 (Ont. C.A.); Pilan Properties Ltd. & Carpentry Ltd. V. Masnyk (April 2, 1996), Doc. 27695/91/U (Ont. Gen. Div.); 271053 N.B. Ltd. V. Burton (1996), 183 N.B.R. (2d) 155 (N.B. C.A.); Keevil v. PT Southern Cross Aqua Culture Indonesia (1995), 15 B.C.L.R. (3d) 45 B.C.S.C.); Olympic Enterprises Ltd. V. Dover Financial Corp. (1995), 147 N.S.R. (2d) 121 (N.S. S.C.); Barrie v. 687844 Ontario Ltd. (1994), 43 R.P.R. (2d) 267 (Ont. Gen. Div.); Hajek v. Riedelsheimer (March 2, 1994), Doc. CA C12640 (Ont. C.A.); Painter v. 745100 Ontario Ltd. (January 14, 1994), Doc. Hamilton 955/89 (Ont. Gen. Div.); Standard Trust v. Brillinger (September 19, 1994), Doc. CA C9872 (Ont. C.A.); T.F.P. Investments Inc. (Trustee of) v. Beacon Realty Co. (1994), 17 O.R (3d) 687 (Ont. C.A.); Terracan Capital Corp. v. Pine Projects Ltd. (1993), 75 B.C.L.R. (2d) 256 (B.C. C.A.); Ingram v. Dorian (1992), 22 R.P.R. (2d) 198, (Ont. Gen. Div.); Kebet Holdings Ltd. v. 351173 B.C. Ltd. (1992) 25 R.P.R. (2d) 174, (B.C. S.C. [In Chambers]); Terracan Capital Corp. v. Pine Projects Ltd. (1991), 20 R.P.R. (2d) 187 (B.C. S.C.); Affordable Payday Loans v. Harrison, 2002 ABPC 104,  2 W.W.R. 757 (Alta. Prov. Ct.); 1512759 Ontario Ltd. v. OLE Canada Inc., 2002 CarswellOnt 4060 (Ont. S.C.J.); Dunlap v. Iveszic, 2001 CarswellOnt 2656 (Ont. S.C.J.); Garland v. Consumers’ Gas Co., 2001 CarswellOnt 4244,  O.J. No. 4651 (Ont. C.A.); Fernandez v. Colucci, 2000 CarswellOnt 5225 (Ont. S.C.J.); Degelder Construction Co. v. Dancorp Developments Ltd., 1998 Carswell B.C. 2246  5 W.W.R. 797 (S.C.C.); L & M Downtown Legal Services Inc. v. Ontario Realty Corp. 1998 CarswellOnt 322,  O.J. No. 379 (Ont. Gen. Div. [Commercial List]; Roberts v. Buhr, 1998 CarswellBC p. 1962 (B.C. S.C.);
And of course these cases are merely the de facto autopsies of the nominal human or corporate borrowers who were legally killed or destroyed in the respective attempt. For every case that came before the civil courts, there were hundreds if not thousands (actually / technically millions of transactions per day including Visa and Mastercard transactions that are flagrantly criminal to the nth-degree (a global USD-equivalent of a $1 trillion ($1,000,000,000,000) rake-off roughly every 18 months)) where the bankers and other nominal creditors simply got / get away with it.
The truly most salient aspect in the vast majority of these cases were the paradoxically flagrant yet normalized forgery and racketeering offences committed by the lawyers and solicitors in their attempts to conceal and disguise the underlying financial frauds and violations against GAAP and against s. 347.
And the former bank-lawyer / judges aided and abetted by simply going along with it (“Hey, look, the AG is not going to prosecute for the first criminal / racketeering offence anyway, so what is the harm of falsifying the securities to hide it as well? And once we get to that point, we’re pretty much compelled to launder it too. And of course even mentioning the multiple racketeering offences by the financial solicitors, before, during, and after the fact, would be a public-relations nightmare – best to just leave it alone and let the market take care of itself.”).
The only sound to be heard was that which echoed off the skyscrapers on Bay Street (and Wall Street in the U.S., and The City in the U.K. etc., etc.):
Woo-Hoo! Free Money!! Let’s Party!!!!
Like a T-Rex that could only perceive movement, per se, and did not otherwise see its prey, a financial solicitor would only see or perceive three material facts / outcomes from Thomson:
- The Court recognised that the corporate plaintiff had committed a criminal offence (actually about a dozen of them including the lawyers and the bank as ringleader(s)), and which offence is an enterprise-crime or designated (domestic and international racketeering) offence (“There is no doubt that the corporate plaintiff committed an offence under s. 347(1)(a)…[etc.]” );
- The Court granted standing (locus standi in curia) to the criminal offender anyway, and
- The Court enforced the contract and security anyway, and gave the offending plaintiff everything that it claimed / asked for (plus / including costs!).
As it was in 1880, the driving force and modus operandi of the system remained, as it remains today, the all-or-nothing principle of contract law.
Nothing is more important, or more often lost sight of, than the proper aim of the court. The court is not to remake the contract for the parties or to tell them what they should have written. Still less is it to give a fair or just result. That may be the aim in torts, but here the parties are the legislators, and their decree must be followed. If the parties have indicated in their contract what is to be the result, then the result is to be followed, whether it seems a wise or a just result or not. (J.E. Cote (also (later) a judge of the Alberta Court of Appeal), An Introduction to the Law of Contract (1974) p. 150).
“That [pick and choose after the fact] is not the way that the law of contract operates. There are some very basic principles of contract law: 32262 B.C. Ltd. v. 411676 Alberta Ltd., 29 Alta. L.R. (3d) 415 (M), pp. 421-22:
However, some of the very basic principles are still there. One is that the offeror decides who he will make an offer to…. Two is that the offeror decides what he will offer. Three is that the offeree cannot pick and choose [i.e., later or after the fact]. He cannot choose to accept some parts of the offer and reject other parts. The offeree accepts all or he accepts nothing [i.e., and the court enforces all or it enforces nothing]. The highly prized consensus ad idem [i.e., meeting of minds] creates the contract and there cannot be that consensus unless what is offered, not something else, is accepted. Four is that the offeree must communicate his acceptance of the offer.
But if any of it is illegal, then the whole contract is void. The all-or-nothing principle is the theoretical lynchpin of English civil law that is supposed to keep the system honest.
So Mr. McRobb goes to jail, and the widow of a murdered bystander is thrown under the bus, along with the family of a man who had very nearly stopped smoking – but not quite completely. The law is the law. Even the Member of the Board Mr. Ward had to pay back the £5.2 million he had taken from the company till – but only because it was seen as a one-off or unusual situation (and most probably because the public were carefully watching).
But not so otherwise for the entrenched-money-power. In practice, every time a bank lawyer goes before a civil / commercial Court they are saying in essence, in defence of any given illegality presented or claimed by the nominal debtor as a defence: “Look your honour, is this particular industry practice legal?”
“If you tell me No, then the contract / security is wholly void and essentially all financial institutions everywhere will become instantly insolvent and collapse, and the legal profession as a body, including and especially you and me, will be held liable for the legal, financial and criminal law consequences.”
“And if you tell me Yes, then we will take it as policy and compound our frauds / felonies with yet another new and escalated round of leveraged racketeering activities until we ultimately own and / or control virtually everything on Earth.”
The entrenched-money-power has in fact both systemically and systematically employed that rule / principle / dilemma to loot the equity of the masses for at least the past 300 years. It is just that since Thomson and not fundamentally illegal – they’ve been doing it on steroids.
Meanwhile, however, the owners and management of the private financial institutions and their solicitors nominally compensated for, and advanced the process of normalizing, their ever increasingly brazen criminal / racketeering activity (and general illegality – both civil (regulatory) and criminal) by adding and / or expanding general / blanket illegality disclaimers (which are themselves illegal and unlawful) to their financial contracts / securities while also adding more specific disclaimers corresponding to specific criminal law violations, such as in respect of the aforementioned s. 347 of the Criminal Code (criminal interest rate or criminal rate of conversion) – also a designated enterprise-crime or racketeering offence, and automatic (strict liability) money-laundering offence under ss. 462.31(1) and under the international treaties:
NOTWITHSTANDING the provisions of any Statute [any lawful Act of Parliament or of the provincial Legislatures] relating to the rate of interest payable by debtors [e.g., s. 347 of the Criminal Code, s. 462.31(1) of the Criminal Code, s. 2 of the Interest Act, s. 4 of the Interest Act, s. 6 of the Interest Act, s. 8 of the Interest Act, GAAP, IFRS, Bank Act, Trust and Loan Companies Act, federal Insurance Companies Act, etc., etc., etc.] this contract [and security] shall remain in full force and effect whatever the rate of interest received or demanded by [the bank / nominal creditor].
4.3 If the Interest Rate stipulated herein [7.75%] would, except for this clause, be a criminal rate or void for uncertainty or unenforceable for any other reason, then the interest rate chargeable on the credit advanced or secured by this mortgage will be ONE (1.00%) percent per annum less than the rate which would be a criminal interest rate calculated in accordance with generally accepted actuarial practices and principles [i.e., 60% – 1% = 59% per annum].
Now, an ordinary sane man or woman may well ask: “But that’s crazy isn’t it?”
And the answer is: “Yes. Yes it is.”
Beyond the pure in-your-face audacity and absurdity of it, the essence of the above criminal interest rate and general (“for any…reason”) disclaimer clause is that if the contract is otherwise criminal, then the parties agree to amend it, and that provision in and of itself voids the whole agreement (just as in (or similar to) the 1898 life insurance contract / wager (in Anctil)).
It is analogous to declaring in a bill of lading that the goods carried under it consist of bags of flour and sugar, but also that if it should be discovered or raised as an issue that the bags actually contain heroin and cocaine, then the parties agree that a certain chemical shall be added to the contents so as to react and change the chemical / molecular structure to something that is not illegal.
Beyond the pure absurdity of it, the fact that parties put such a clause in an agreement is prima facie evidence of bad faith / criminal intent (either mutual or unilateral) and it voids the entire agreement (or like putting extremely small print on a counterfeit bill stating that all holders agree that the counterfeit is valid notwithstanding that it may be counterfeit).
On its face, the criminal rate disclaimer clause is bizarre in the extreme (sometimes pronounced “batsh*t crazy”). If, as the Supreme Court put it in 1898, “it means what it says” then it means, for example: “We have complied with the federal securities law by disclosing / declaring to you (and the Registrar, and the financial markets, and everyone else) that the interest rate is 7.75% per annum. If it should be discovered or raised as an issue, however, that we have lied and that the actual rate is, say, 9% (as it was (or rather pretended to be (see Part 2)) in this particular case), then you agree to pay us 59% instead.”
Based on the objective facts, and existing medical / psychiatric standards, the solicitors really are legally / criminally insane (and / or at least criminally incompetent).
What is more generally dangerous is the organised pretense by the lawyers that the criminal law offences are accidental or unintended, when the foundational principle of the criminal law has always been mens rea – there is not supposed to be any such thing in law as accidentally offending the criminal law. At least one of their multiple-personalities is well-aware that these contracts are saturated with criminal law violations, and the disclaimers are an essential and material element in a process of managed-mental-illness founded in irrational denial (by their other constructive personality).
The first disclaimer, however, is not a disclaimer at all. It is a direct and unambiguous declaration that the parties will not obey the criminal law, nor Canada’s international treaty obligations on racketeering and money-laundering, and this is clear and unambiguous even without my emphasis and reference notes:
NOTWITHSTANDING the provisions of any Statute relating to the rate of interest payable by debtors this contract shall remain in full force and effect whatever the rate of interest received or demanded by [the bank / nominal creditor].
What is critical to appreciate is that the nominal debtor is the issuer-in-fact and in-law of the security, but it is the bank (management and solicitors) that makes the above declaration-of-lawlessness a condition of the transaction, and that makes it sedition, contrary to s. 59 of the Criminal Code (The King v. Boucher (1951) S.C.C.).
The plain and obvious intent is to undermine the lawful authority of the criminal law in order to accommodate an equally clear and unambiguous criminal conspiracy and / or criminal enterprise.
A typical financial security in Canada (and ever increasingly the rest of the world) today is constructively and / or prima facie (on its face) offensive to domestic and international laws / treaties against one or more (and normally most) of falsification of an account, fraud, GAAP / IFRS-fraud, breach of trust, breach of fiduciary duty, embezzlement, constructive and actual forgery / making-false-documents, uttering false / forged documents, omitting material particulars from valuable securities, receiving / converting payments or partial payments of interest at a criminal rate, mail fraud, laundering proceeds of crime, and racketeering / wagering.
And all nominally justified by disclaimers to the effect that the parties know and understand that the agreements and securities are illegal and criminal, but if such should be discovered or raised as an issue, then either (1) they simply don’t care, and / or (2) they were just kidding.
But members of the broadly-defined financial law community are incapable of seeing it, by reason of cogno-linguistically-induced diminished capacity. You can take the most obviously and transparently fraudulent and harmful practice on Earth, and as long as those who traffic-in and profit from it agree to label it as “Not-Stealing”, they – or at least one of their multiple personalities – become functionally incapable of perceiving its wrongful and harmful nature and substance.
But doesn’t that make them profoundly dangerous?
Yes. Yes it does.
And of course that is just in respect of, or as a general reaction to, the multiple criminal offences relating to front-loading. Both the nominal method of interest calculation and the front-loading cross-leverage or cross-compound against the other, meaning that the deceptive whole is much greater than the mere sum of its parts.
It is not that the existing system will not bear close scrutiny, but rather that it will not bear any scrutiny.
Overall it had been historically a rather creeping process with variations around two or three critical anchor frauds, but ever since Thomson and the new doctrine or business model of criminal / racketeering but not fundamentally illegal, the scope and scale of criminal provisions / activity under financial securities has very materially and rapidly increased, some would say exploded, such that today virtually every mortgage, for example, contains one or more (and normally most) of eleven primary and positive criminal devices (and one constructive (no. 12)). They are:
- False receipt for payment of, and receipt of, money / proceeds;
- False denials of nominal / pretended creditor (credit insurer / reinsurer) liability;
- False declaration of property ownership and / or registration-status of ownership;
- Fictitious and / or illusory consideration;
- Bait and switch;
- Wagering / racketeering provision(s);
- Increased rates upon default / maturity and / or late-payment penalties;
- Illegality disclaimers;
- Deemed / pretended-damages provision(s) / jurisdictional fraud;
- Unearned interest (credit / loan fees) illegally capitalised in advance (Front-loading);
- Use of the nominal (“false and seriously misleading”) method of interest calculation; and
- Concealment / suppression of any or all of the above by splitting the agreement into two or more separate documents.
And which is / are prima facie offensive to at least the following indictable offences / felonies (most are “serious offences”) and most of which are international-treaty-enjoined racketeering / designated offences:
- s. 206(1)(a) (scheme or proposal to loan or to advance credit by any mode of chance),
- s. 347 of the Criminal Code (entering into agreement or arrangement to receive, and / or receiving, payments or partial payments of, interest at a criminal [infinite or astronomical] rate),
- s. 362 of the Criminal Code (obtaining credit (underwriting / assumption of debt from nominal borrower) by fraud or false pretence),
- s. 363 of the Criminal Code (obtaining execution of valuable security by false pretence),
- s. 366 of the Criminal Code (making [and / or soliciting] false document with intent (forgery-in-law)),
- s. 368 of the Criminal Code (uttering forged-document-in-law),
- s. 375 of the Criminal Code (obtaining by instrument based on forged-document-in-law),
- ss. 380(1) of the Criminal Code (fraud),
- ss. 380(2) of the Criminal Code ((incipient) fraud upon the (financial) markets).
- s. 386 of the Criminal Code (false statement / omission of material particular to deceive registrar),
- s. 388 of the Criminal Code (false / misleading receipt),
- s. 397(1)(a) of the Criminal Code (falsification of an accounting record),
- ss. 397(1)(b) of the Criminal Code (fraudulent omission of material particular from valuable security),
- ss. 462.3(c) of the Criminal Code (counselling to commit enterprise crime / designated offence(s)),
- ss. 462.31(1) of the Criminal Code (laundering proceeds of crime).
By 1996 the Canadian financial system had become positively surreal. Although the following particular transaction is discussed in much detail under Part 3, the backstory is that in late 1996 two experienced businessmen in B.C. had a very solid concept with the realistic potential of a gross $15 million in operating profits over ten years, and all of the assets and equity needed to implement it, except working capital (needed to obtain / borrow about $2 million).
Between them, their two companies had a combined $10 million in broadly-defined assets, including near-clear-title to the $2.6 million appraised value property and buildings, and no material liabilities.
After much searching and evaluation, the businessmen settled on the following offer that they had received / obtained from a major multi-national Canadian financial institution, in exchange for literally the bare chance of obtaining an alleged loan of a net (circa / rounded) $2.05 million. Although technically in the form of an offer to wager / game-of-chance it was the best deal they could get in the Canadian environment.
The essential and material elements of the nominal Offer Letter or Commitment Letter (dated December 20, 1996) were as follows:
- First, you will obtain $46,000, and deliver it to us at the address designated below. This entry fee is non-refundable.
- You will then register an unconditional charge in the amount of $2.1 million in favour of us, and against your property, at the Land Title Office.
- You will give us a sworn and notarised receipt declaring and acknowledging that we have already paid you $2.1 million of lawful money of Canada, and that you have received it from us.
- You will legally restate and ratify our payment, and your receipt, of the above indicated $2.1 million payment, by providing for the registered securities to claim compliance with the federal securities law (Interest Act, s. 6); while concurrently denying by omission that there was any entry fee.
- You will give us a sworn and notarised undertaking that you will pay us an additional $2.1 million on or pursuant to the named Maturity Date or On Demand.
- You will provide and register a conveyance of the legal title to your land and buildings to us as security for all of your undertakings.
- You will provide and register a conveyance of the legal title to your ongoing gross business revenue by a separately-registered sworn and notarised Assignment of Rents in favour of us.
- You will give us a sworn and notarised undertaking that if any of the above terms are illegal or unenforceable for any reason, then the agreement is still valid and amended seven-fold (7x) in favour of us.
- And, once you have unconditionally done / conveyed all of the above money, assets and property to us, you will agree that anything that we give you, or are contractually obligated or required to give you, in return, shall be at our sole discretion.
It is near inconceivable as to what the solicitors for the bank could have been thinking. But it is what it is. Virtually every nominal or pretended mortgage-secured transaction today follows the same equally inconceivable Godfather business model:
Godfather: First, as a sign of your respect, I want you to legally sign over everything that you own to me. Then I will decide what and how much, if anything, that I will give you in return. It’s a good deal. It’s an offer you can’t refuse.
All of it is systemically and systematically coordinated by “commercial, corporate, and financial law specialists” and the legal profession more generally, both domestically and globally – again, a precisely defined criminal organisation both in theory and in fact / practice (in law and in equity).
As a final coup de grâce for the Rule of Law, however, the former bank lawyers required one last bit of tweaking to get it right
In Beer et als. v. Townsgate Developments I, et al.  152 D.L.R. (4th) 671, certain nominal purchasers of high-rise condominium units (Beer, et. al. (and others)) were already suing the developer / vendor for rescission (legal nullification / cancellation) of contracts-of-sale due to (conventional / civil) fraud and / or misrepresentation, when it came to light during the civil trial that the developer / vendor had also not been licensed as directly required by provincial statute.
Very briefly, the condo developer / vendor appears (to me) to have had been scrambling to sell out the completed Tower I of the proposed / planned two tower development to book their extraordinary profits on the real-estate-price-bubble-du-jour. They had employed a number of sharp and allegedly fraudulent practices to sell the relatively high-end units to the proverbial anyone who could fog a mirror. So someone like a cab driver, for example, would be pressured into buying a luxury condo that he could not afford on the representation that all he needed to do was: “Sign here and you’ll flip it within 60 days to make a quick $20,000 profit”.
But interest rates spiked, the bubble collapsed, and the market value of the development dropped precipitously. But it was not necessary to have an expensive separate trial (for each plaintiff) on the alleged (and variable) fraudulent sales practices because the developer had also jumped the gun and had sold the units before being issued a licence to do so as required under provincial statute.
The trial judge held the contracts-of-sale to be void and unenforceable therefore (technically they were legally non-existent – just as in the Guiness case in the U.K., and the Rafuse case in Canada, and all of the insurance company cases of course), and more so because, citing Thomson, the provincial statute (s. 6) expressly prohibits the sale of any units by an unlicensed vendor (emphasis added):
6. No person shall act as a vendor or builder unless he is registered by the Registrar under this Act.
The trial judge noted that these particular contracts “are fundamentally illegal” under the stated reasoning of Thomson. Again citing Thomson she concluded that the provincial legislation is “a clear and unambiguous prohibition” against sale prior to registration, and that such “prohibition in s. 6 of the Act is fundamental to the nature and purpose of the regulatory scheme”.
At that point the vendor’s mainstream (corporate) solicitors became liable for some very substantial financial losses (and potential criminal charges (under s. 363, for example (obtaining credit by false pretences), initiated by management of any financial institutions (who had nominally financed any of the sales) that may have been burned).
The vendor then appealed to the Ontario Court of Appeal, which judges then unanimously overturned the trial judge / decision by radically expanding and quasi-complimenting-yet-contradicting the new doctrine / policy of criminal / racketeering but not fundamentally illegal.
From the headnote summary (emphasis added):
On appeal to the Ontario Court of Appeal, held, allowing the appeal [i.e., reversing the trial decision], the effect of the breach of the statute was not to render the contracts void. Public policy required that contracts should not be rendered void on account of technical deficiencies. [!!!]
Ever since, the civil / commercial / money-claim (Admiralty) Courts / judges in Canada have adopted an oscillating duology for dealing with illegal provisions in commercial contracts and especially financial securities. If the provision is criminal, then (with the curious exception of Garland v. Consumers Gas (class-action), see Part 4) they cite Thomson as authority for the doctrine of criminal but not fundamentally illegal, and enforce the contract (or rather non-contract) anyway.
Alternatively, if the illegal provision is expressly prohibited by statute, then they cite Beer et al. as authority for enforcing the contract anyway, because even expressly prohibited contracts should not be rendered void on account of such technicalities or technical deficiencies.
There exists in Canada as a result a literal and de facto codified two-tiered civil / money justice system that turns on the person of the offender. The whole policy of the appointed judges of the Courts is now officially to maintain living humans as inherently subservient to a corporate superstructure that is itself owned by the entrenched-money-power. Whatever it takes to keep the little people in their place.
At one point in the early days of English law, a practicing lawyer was not allowed to later become a judge. It was well recognised that practicing lawyers are in essence professional language manipulators and who are not just unqualified – but actively and uniquely disqualified from becoming interpreters of the law.
With all due respect, even allowing lawyers to later become judges, is like allowing convicted child molesters to run daycare centres. Making it essentially mandatory is a form of societal madness.
If we could go back to those earlier days and show the people at the time the situation we have arrived at today, they would reply: “Well what did you think was going to happen?”
Thomas Jefferson wrote (privately) of the U.S. system (of appointed judges):
The germ of destruction of our nation is in the power of the judiciary, an irresponsible body – working like gravity by night and by day, gaining a little today and a little tomorrow, and advancing its noiseless step like a thief over the field of jurisdiction, until all shall render powerless the checks of one branch over the other and will become as venal and oppressive as the government from which we separated. (Letter to Charles Hammond, August 18, 1821)
In Voltaire’s Bastards – The Dictatorship of Reason in the West (1992), Canadian author John Ralston Saul warned now approaching thirty years ago (in material part, emphasis added):
When contemporary legal wisdom speaks of law as contract, one is tempted to reply that the power of money – legal and illegal – thinks that contracts are a joke;… They are playthings to be manipulated by professionals such as lawyers, who are trained to do so….. The idea that a civilization could function with its elites as the principal abusers of the contract is impossible. And yet that is precisely what we have. (Voltaire’s Bastards (1992)).
More or less as Mr. Saul wrote his seminal analysis of the situation to that point, the Ontario Court of Appeal and the Supreme Court of Canada effectively cross-compounded and super-charged the underlying causes by holding / ruling that prima facie criminal acts committed by creditors and their solicitors / lawyers are not fundamentally illegal, which the bankers and their solicitors and lawyers took to mean what it says: not illegal, and fundamentally so, meaning Anything goes.
For people who are promoted and who promote themselves as the keenest legal minds in the country, and in the world for that matter, they don’t seem to think these things through very far. And, here again especially, it is not just the disclaimers / open-denunciations of lawful authority and the law itself. To a reasonably educated observer, these so-called securities are simply rife with criminal law violations.
In fact, and although I have not yet otherwise said so directly, there is a more or less direct line of causality and of at least vicarious legal liability between Thomson in 1989 / 90 and the global so-called credit-crisis / collapse in 2008 (and beyond).
Whether the same would have happened without the machinations and manipulations of Canada’s banker / lawyer / judges is not essential to prove with certainty, as explained by the House of Lords in 1928 on appeal from (and endorsing) the Supreme Court of Canada (emphasis added):
It might have been possible, as no agreement was entered into, that even after the original proposal the two heads could have been separated, and two independent agreements might have been prepared,…, but that is not, in fact, what was done. (Banking Services Corp. v. Toronto Fin. Corp. Ltd. et al. H.L Imp. P. C.  3 D.L.R. 1).
All that matters is that the Canadian Crown Courts did in fact rule that criminal / international racketeering offences are not fundamentally illegal, Canada did in fact fail to perform its international treaty obligations, Canadian banks / institutions did in fact flood the international markets with technical and actual legal-forgeries and / or proceeds of crime, and those falsified / tainted securities / funds were in fact leveraged multiple times. And all of the world’s domestic Bar / BAR Associations and Law Societies are in fact and in law responsible for the damages as partners-in-crime with the bankers.
All roads would thus appear to lead to the City of London, as the apparent business arm and liability (malpractice) underwriter of the English Crown and its BAR.
It would regardless be ironic if the human species were to succumb to rank incompetence while the people debated corruption. We are equally regardless saturated in both, and not paying sufficient attention to either.
Nor are these three primary examples anomalies, and notwithstanding that any one of them, by itself, currently accounts, by total amount, for all outstanding debt everywhere throughout the world, and most certainly all debt in Canada, and by several times over.
In practice there is no law at all. It is all policy. There is only policy. The law is a pretence used to maintain the subservience of the productive masses to the entrenched-money-power.
And to rub all of our cognitive noses in it, the administrative agents of the entrenched-money-power almost always refer to it as (wait – for – it): The policy of the law.
But it is not the policy of the law – it is the policy of the judges / Courts as agents of the entrenched-money-power who directly appoint them, and that owns government – and the entire system for that matter – lock, stock, and barrel.
The policy of the law is: “No …penalty… shall be stipulated for…”.
The policy of the entrenched-money-power is: “Financial pacing enforced by financial punishment is a foundational element of our asset-harvesting and socio-economic control system, and it will be maintained regardless of any law of the Parliament or of the (provincial) Legislatures to the contrary.”
The policy of the law is: “The nominal method is egregiously fraudulent and shall not be used.”
The policy of the entrenched-money-power is: “The nominal method is an essential and material element in maintaining the working-poor and the rank-and-file military in a state of perpetual poverty, subservience, and political powerlessness, and it will be used throughout Canada regardless of any law of the Parliament or of the Legislatures to the contrary.”
The policy of the law is: “Unearned interest compounded in advance under any name, form or pretence is a massive-cumulative-and-perpetual-cross-leveraged-double-counting-fraud and it shall not be done, period.”
The policy of the entrenched-money-power is: “Cross-leveraged-double-counting by unearned interest illegally and unlawfully capitalized / compounded in advance is how we have gained and maintain ownership and control of this planet, and it shall not be interfered with, period.”
Rule of Law my butt.
It would be a curious state of the law if, after the Legislature had prohibited a transaction, parties could enter into it, and, in defiance of the law, compel courts to enforce and give effect to their illegal transactions. (Bank of Toronto v. Perkins (S.C.R. [Vol. VIII], April 30, 1882)).
And a curious state of the law indeed.
All of the above is more or less premised on the entrenched-money-power being comprised of lenders who actually make equity investments as loans to borrowers.
But in about 98% of all cases the pretended lender is in fact the lead-debtor who obtains credit from the nominal borrower (as lead-underwriter under their promissory note), strips off the security as a premium for itself, and then flips back or nominally reinsures unsecured credit back to the lead-underwriter and creditor-in-fact / equity.
Part 2 explains how this monumental sleight of hand and of mind works.
- The operating margin was such as to just make it worthwhile for a farmer to rent the land from an owner. The sale or market price of the land would then be determined (again in practice) as a function of the rental rates. ↑
- Based on the discussions and understandings of certain Members of Parliament as recorded in Hansard (Official record of debates in Parliament). I have not done my own independent survey of contemporaneous farmland prices. ↑
- In terms of broadly-defined value-added by the Crown. The farmers were not far removed from having to be 100% self-reliant and did not receive a lot of help from the outside (infrastructure and technology-based) world as they do today. Also, many of the affected farmers would likely have been first and second generation descendants of Irish who had fled or been transported to Canada during the nominal Irish potato famine during which massive amounts of food was exported from Ireland by English absentee landlords who owned the land due to the Crown having claimed it there too. ↑
- “Nothing is more important, or more often lost sight of, than the proper aim of the court. The court is not to remake the contract for the parties or to tell them what they should have written. Still less is it to give a fair or just result. That may be the aim in torts, but here the parties are the legislators, and their decree must be followed. If the parties have indicated in their contract what is to be the result, then the result is to be followed, whether it seems a wise or a just result or not. (J.E. Cote (also (later) a judge of the Alberta Court of Appeal), An Introduction to the Law of Contract (1974) p. 150). ↑
- The financial system in the U.K. is just as criminal as in Canada and most everywhere else – they just use different fraudulent techniques to adapt to different circumstances such as the banning of the nominal method. ↑
- Meaning of course certain several Members of Parliament (MP’s). As a composite body, the House of Commons has no single conscious intent, or conscious intent at all. In fact, during the debates in the House, some MP’s were accusing other MP’s of being directors of the loan societies outside of their duties as MP’s. ↑
- And already (at this level) more than 22-times the maximum legal-accuracy-variance of 1/8th of 1% (under multiple collateral regulations and accounting / disclosure / declaration laws). ↑
- Visa and mastercard Merchant Service Charges (concealed-credit-charges of circa $1.5 billion per day globally (USD-equivalent) likewise target small business and entrepreneurial-class cash-flow and working-capital. The global total is circa $2 billion per day when all the other card-issuers are included. ↑
- Although even in the U.K. the creditors only obey it up to about 60% per annum, and then habitually default to the illegal nominal method (to spare the working-poor the trauma of knowing the truth). ↑
- It is difficult to obtain precise figures (it is growing so fast that it like trying to hit a moving target) but this is a very conservative estimate / extrapolation based on (among others) the 2016 report from the Financial Health Network in the U.S.: “This year, we report that financially underserved consumers in the U.S. spent approximately $173 billion in fees and interest during 2016 to borrow, spend, save, and plan across 29 financial products in this diverse and continually growing marketplace.” Also bear in mind that although the average may be $1,000 there is also a high standard deviation or average variance, meaning for example that the local averages in the U.S. will be much greater than those in India. ↑
- The article advances a rather odd use of the term adhesion contract. I first encountered the term in the early 1990’s. It was then used to describe the practice of credit card companies in the 1970’s of mass-mailing unsolicited credit cards to people with bank accounts with the provision that if they chose to use the card, then they also agreed to be bound by its terms. The term adhesion contract had the same sense as a bait contract where if the target took the bait, then they were bound by the terms. That basic business model has since become so entrenched that there may be an organised or consensus effort to redefine the meaning of the term to distract from its original meaning. ↑
- =(((1+($100/$300))^(365/14))-1) = 1807.5417 = 180,754.17% (^ means “raise to the power of”). ↑
- The article also used nominal loan fees to reduce the nominal annual rate from 780% to exactly half or 435%. Apparently even the true nominal rate was deemed too high for public consumption. ↑
- Re: Miglinn and Castleholm Construction Ltd. (1977). By direct and accurate analogy here, imagine that you are observing two automobiles driving down the street where one of them is moving 60% faster than the other. The judge, however, says: “No, they are both moving at exactly the same speed and it only appears that they are moving at different speeds because one has a speedometer denominated in miles-per-hour, while the other’s is denominated in kilometers-per-hour.” ↑
- Illegal without concurrent disclosure of the real interest rate which of course would defeat the purpose of them. But they were already illegal as an offence against the accounting law and the per diem principle. the same applies to s. 4 and the nominal method. ↑
- Notwithstanding that there is in fact a strong correlation between the number and severity of criminal law violations in a given security, and the purported legal fees to the solicitor who provided for it. The normal practice appears to be a kick-back to the solicitors equal to about 1/3 of the amount by which the securities are falsified (e.g., Meagher v. London Loan (1922, S.C.C. (1930)) where the lawyer’s fee increased from a normal perhaps $40 (about a week’s pay for an ordinary worker), to just under $1,500 (enough to buy two brand new automobiles), where the sole apparent reason was the concealment of a $4,500 kick-back to London Loan (of London, Ontario)). ↑
- The vast majority of nominal creditors are not lenders, but lead-debtors and credit-reinsurers, which is the primary subject of Part 2. ↑
- GAAP is Generally Accepted [and legally binding] Accounting Principles/Practices, and IFRS is International Financial Reporting Standards. ↑
- The date / event is significant because most banks were consequently legally allowed into the residential mortgage business which had been prohibited to them under the prior legislation. The trailing 32-year period to the year 2000 represents just a single snapshot-in-time of a process that has been going on for more than 300 years in the modern era. ↑
- That is, if all debt were considered as one big mortgage. Actual land / property mortgage rates, per se, are generally lower than the average rate on all debt. ↑
- All financial institutions are required to, and do, recognise the nominal loan fees as interest income. ↑
- Toronto Star; January 31, 1994. Based on documented industry practice, the financial solicitors / lawyers involved would be expected to receive about one-third or $30 million, of the total amount front-loaded. ↑
- Assuming a fixed 25-year amortisation and a fixed stated interest rate of 12% per annum, reflecting the rates in effect at the time. Also 12% per annum was the approximate average prime interest rate over the 30-year period 1974 to 2004. Based on the same required payments, the contract is paid off after 20.5 years, but 25 years with the $90 million front-loading. The extra 4.5 years of payments total $1.2 billion. The actual terms of the Roger’s deal may have been different, but the central point is to demonstrate the effects over the whole period. If the whole financing of the economy were charcterised as a single loan of $2.15 trillion, with a $90 billion loan fee, then that loan fee would add $1.2 trillion bonus interest for the bankers over the 25-year amortisation. (In practice Rogers is unlikely to have locked-itself-in to a 25-year amortisation at the relatively high rates in effect at the time (1994)). ↑
- Over the same period, the price of a Big Mac at McDonald’s (in downtown Toronto where I am now / today), for example, has increased from 60 cents to $7, representing about a 12-times increase in prices for the little people supported by their only 5-fold increase in wages. Not the most scientific of observations, but a reasonable measure of the general purchasing-power squeeze wrought upon the working-poor. Although, to be fair, over the same period, the price of the entry-level Ferrari has increased about 15-times from about $15,000 to $225,000. Perhaps a better metric is that when I got my first part-time job in 1973, I earned the minimum hourly wage of $1.75 in Winnipeg, and could purchase almost exactly three Big Mac’s with an hour’s wage. Someone earning $10.50 per hour today can only purchase 1.5 Big Mac’s with an hour’s wage (I am taking a general average of min. wage in Canada and the U.S.). ↑
- “Nominal rate” is used here in its ordinary meaning sense which is simply that it is not the real interest rate. In the same way that an actual dog can be described as a nominal cat. The word nominal is just a general escape-hatch employed after-the-fact by the entrenched-money-power whenever it gets caught stealing. “We didn’t lie – we just gave you nominal information”. “Nominal” means (in this context): “Existing in name only – not real or actual”. ↑
- 2.(a) “cost” of a loan means the whole of the cost of the loan to the borrower whether the same is called interest or is claimed as discount, deduction from an advance, commission, brokerage, chattel mortgage and recording fees, fines, penalties or charges for inquiries, defaults or renewals or otherwise, and whether paid to or charged by the lender or paid to or charged by any other person, and whether fixed and determined by the loan contract itself, or in whole or in part by any other collateral contract or document by which the charges, if any, imposed under the loan contract or the terms of the repayment of the loan are effectively varied. [Small Loans Act of 1939] ↑
- Small Loans Act of 1939 ↑
- Lawyers are trained in how to deceive people, and they carry their skills from private practice when they are appointed judges. The better they are at it, the further they go in the system. They then use those same skills to deceive the public in favour of the entrenched-money-power that appoints them. It is a truly nasty vicious circle. ↑
- Even then still, the entrenched-money-power was powerful enough to prevent the preamble from dealing with the purely coercive bonuses and other gratuitous leveraging devices – the preamble only deals with or specifically mentions broadly-defined (and presumably legitimate) expenses. ↑
- Although a preamble does technically survive the repeal of the statute to which it is attached. A preamble is founded in equity more than law, and once Parliament has identified a specific evil via a preamble, the wrongful act does not cease to be wrongful with the repeal of the statute; it was only taken out of immediate public view. ↑
- Bill C-44, to amend the Small Loans Act and to provide for its repeal and to amend the Criminal Code. ↑
- The example was also premised on the payer of the standby fee later choosing not to draw upon it, but that is both wholly irrational and irrelevant either way. The criminal act is complete as and when the nominal creditor receives the illegal payment as defined under the section. ↑
- A standby-fee is a de facto insurance premium that is paid up front from the nominal / potential borrower’s own funds for a standby-letter-of-credit which is a de facto insurance policy that pays on proof of non-performance (unlike an ordinary letter-of-credit that pays on proof of performance). What the more sophisticated committee members wanted to avoid was any example where the credit advanced also creates the loan fee money itself, as in the later cable-tv example where the banks used their bank charters to create the extra $90 million for their own accounts (but laundered through Rogers). In the cable-tv example the rate of interest conversion would be based on 4.3% over one-day, or about 3.3 billion percent per annum (3,300,000,000%), and it would be very difficult to explain that before the banking committee without revealing the racketeering substance of all such transactions. Easily 99%-plus of all loan fees are like that, and only a tiny tiny percentage are paid in advance from the borrower’s own funds such that the rate of conversion is technically infinite. ↑
- “interest” means the aggregate of all charges and expenses, whether in the form of a fee, fine, penalty, commission or other similar charge or expense or in any other form, paid or payable for the advancing of credit under an agreement or arrangement, by or on behalf of the person to whom the credit is or is to be advanced, irrespective of the person to whom any such charges and expenses are or are to be paid or payable, but does not include any repayment of credit advanced or any insurance charge, official fee, overdraft charge, required deposit balance or, in the case of a mortgage transaction, any amount required to be paid on account of property taxes; (s. 347(2)) [and]”credit advanced” means the aggregate of the money and the monetary value of any goods, services or benefits actually advanced or to be advanced under an agreement or arrangement minus the aggregate of any required deposit balance and any fee, fine, penalty, commission and other similar charge or expense directly or indirectly incurred under the original or any collateral agreement or arrangement; (s. 347(2)). ↑
- The section was originally enacted a s. 305.1 and later amended to s. 347, but I will refer to it throughout by its current designation as s. 347. ↑
- The practice is unlawful and wrongful as founded in apartheid. An apartheid or non-obstante-based government could, for example, make it an offence for anyone to walk on the public sidewalks, and then choose to only prosecute Black offenders and not White offenders. The Crown conceded in perpetuity under the Bill of Rights in 1689 that the law means the law of the land, and not the law of the person. Most generally, Apartheid is the act of using the law to create different classes of people with different legal rights solely or substantively for the purpose of keeping them superior or subservient respectively. ↑
- 347 (7) No proceedings shall be commenced under this section without the consent of the Attorney General. ↑
- R. v. McRobb (1984), 20 C.C.C. (3d) 493 Appeal dismissed (1986), 32 C.C.C. (3d) 479 (Ont. C.A.) ↑
- $2 million a day is a very-low-estimate to remain conservative. It is getting ever more difficult to obtain aggregate industry figures in Canada (for obvious reasons). But we can conservatively estimate from the U.K figures. In 2012, for example, over 12m short-term cash advance or ‘payday’ loans were arranged in the UK. A total of £3.7bn- worth of credit was extended in this way and UK borrowers paid over £900m in interest and charges. (Estimates based on lenders’ financial statements and Office of Fair Trading (2011a) estimates of market shares.) If Canadian figures are one-third of what they are in the UK, then total interest charges would have been about $3 million per day in 2012 – and likely approaching $5 million per day in 2020. ↑
- At an average 3% concealed-credit-charge, the visa-banks alone are currently (2019) skimming almost $1 billion per day from a gross (Visa) throughput in excess of $11 trillion ($11,000 billion) per year. Do not confuse the approximate 8% of the gross rake-off that goes to Visa International with the 92% that is retained and divvied up by the card-issuer-bank and the nominal-merchant’s-bank. ↑
- The word “forged” in this context is quite interesting. Because of the concealed credit fees and / or the criminal rates that are so concealed, the securities are legal forgeries or forgeries-in-law (“false documents”). It is difficult to know whether the use of the term is a Freudian slip, or if the owners of the newspapers are merely rubbing our noses in it. ↑
- Amex is different because for the first approximate 40 years of its existence in this area, virtually 100% of its on-going interest revenue was in the form of pretended “Merchant Fees”. Apparently it never occurred to anyone to ask – “If all you do is make free loans, then why are you in business at all?” ↑
- Note the manifest absurdity of the assertion. A discount is akin to a void or a shortfall or an amount of credit that is not advanced. It is not a kind or species of credit but a kind or species of nothing. So how do two banks split a shortfall or amount of credit that is not advanced? “The interchange system also allows the splitting of [the amount that the merchant does not receive]”. How do you split an amount not received? The real question is not as to where the so-called merchant revenue comes from but rather when does the bank receive it. The bank does not actually receive it until the card-user pays the full balance at the end of the concealed-credit-charge-accrual-period or grace-period. And yes, the people who operate the banks do in fact have a God Complex that allows them to grant grace periods and/or redemption periods and on occasion to forgive loans. And of course those upon whom the banking system smiles are a special class of people who are deserving of “free loans”. As one criminally incompetent Parliamentary investigation into the credit/charge-card business in Canada concluded: “That some cardholders receive what is in effect a free loan should not lead others to believe that they too deserve a free loan”. The rank stupidity of the government investigators is nothing short of breathtaking. ↑
- This last assertion is absurd and ridiculous. There are dozens of ways for one bank to statistically determine the so-called discount rates of the others. Also, this particular explanation neglected to mention the fixed charge or rake-off of 25 cents to the interchange (e.g., visa international) which at the time was owned (as a co-op) by all the visa banks pro rata to the number of cards issued by a given bank/member and throughput per card). ↑
- Actually 100% of the revenue was received at a criminal rate because of the means by which it was concealed. The yield on about 30% of the transactions was above 60% per annum, but all of it was converted in advance at the time of the transaction in violation of GAAP and at astronomical (and criminal) rates. ↑
- This account may be qualified as follows in The Oxford History of England 1870 – 1914 by R.C.K. Ensor (published 1936) where it states (under “The Suez Canal Shares”, at p. 38): “It is possible as Mr. Buckle, his [Disraeli’s] biographer, suggests, that through the Rothschilds he had been partly prepared for it; the terms (criticized by Northcote), on which he obtained the money from their firm, rather hint some obligation toward them [Life of Beaconsfield, v (1920), 439-41]. Be that as it may, there is no doubt that the decision to purchase was entirely Disraeli’s, and that he carried it in the cabinet against strong opposition.” (The most likely explanation for the discrepancy is that the cabinet was presented with a fait accompli with (alleged) strong opposition after the fact). ↑
- Snell v. Unity Finance, Court of Appeal,  3 All E.R., pp. 50-61, at p. 59. Although it should be noted that the Court / judge should have used the word “illegal” and not “unlawful”. Things that are unlawful are wrongful with or without a law against them, and so cannot be made unlawful by Parliament. A big part of the larger problem is that there is something about the legal profession that accommodates misuse of specialized terminology to an extent that would not be tolerated in any other profession. ↑
- Although, to be fair, their financial situation at the time was so desperate that they may not have had any choice either way. It may be equally well characterised as “grasping at straws”. ↑
- National Banking Law Review, Vol. 9, No. 3, p. 43 (Part I), No. 4 (Part II)), PARTICIPATORY LOANS: THE CRIMINAL PROBLEM, by Alison Manzer and Rose Marie Ip of Robins, Appleby & Taub. ↑
- Although in truth there is vastly more aggregate human misery caused by the general level of poverty induced by front-loading than by all the world’s child-sexual-predators / deviants combined. ↑
- E.g., Zeigel, Jacob, S. “Bill C-44: Repeal of the Small Loans Act and Enactment of a New Usury Law” (1981), 59 Can. Bar Rev. 188. See also the follow-up article in Canadian Business Law Journal, [Vol. 11 1986] “The Usury Provisions In The Criminal Code – The Chickens Come Home to Roost”, by Jacob S. Zeigel, pp. 233 to 246:“The danger to creditors will arise not from the fear of criminal prosecution, which may be slight because of the provision under section 305.1(7) [now 347(7)] that no prosecution shall be commenced under the section without the consent of the provincial Attorney General. Rather the danger lies in the probability that the debtor will plead violation of the section as a common law defence in a civil action by the creditor to collect his debt.” See also THE CANADIAN BAR REVIEW [Vol. 73, 1994] WHITE COLLAR USURY ↑
- Among the more comprehensive of which is the United Nations Convention on Transnational Organised Crime. ↑
- Also, the balance of the testimony and evidence before the Senate banking committee (SSCBTC) in 1980 was related to the effect of the new law on commercial practices and not conventional street lenders / loan sharks. ↑
- But just under 18 months if you let it compound, and then take it all at once when the accumulated interest reaches 100% of the initial principal balance. ↑
- Assume that you were to purchase a one-year Term Deposit from a bank and at a fixed interest rate, and that you then request a printout of the interest that accrues for each day during the period. The first thing that you would note is that the same amount of interest never accrues on any two days in the period. In fact, the amount of interest will slightly increase every day from the first day to the last day. If the rate is constant, then the amount has to increase every day. And if the amount is constant, then the rate slightly declines each day. But if you ask a lawyer for a per diem statement of interest for a partial month on a mortgage payout, for example, then they will provide you with a statement of a fixed amount for every day in the period. It is all part and parcel of the managed-mental-illness or diminished capacity of lawyers who deal with money. It also reinforces their irrational belief in the nominal method. Essentially the lawyers are throwing an intellectual temper tantrum – No! No! No! That is too complicated. It is much easier and more profitable for us to assume that both the rate and the amount are constant and that there is no such physical law or reality. But the insurance company people have been doing it right for centuries because it is more profitable for them to do so – Funny how that works. ↑
- (SSCBTC transcripts; 4-11-1980, 28:31). The real danger here to the entrenched-money-power is because a corporate-entity is incapable of committing a true mens rea criminal act. Only the directors, officers and employees can commit, and be charged with, a criminal act, and in their personal capacity and not their official capacity. More on this world-altering aspect in Money-lending my butt. ↑
- In a court of law that purely enforces contracts – we are not addressing equity here (which is a very different matter). ↑
- Robbery is a more serious crime than theft as it also implies a threat of physical violence if resisted. In Dunphy the agent/receivers working (unlawfully) for the bank were backed by the threat of violence for non-acquiescence and were therefore technically committing robbery. ↑
- The Bank of England, Old and New. London, Vol. 1, originally published by Cassell, Petter & Galpin, London, 1878. ↑
- Although here too I may have it backwards because the Courts may have held the policy void on the basis of the disclaimer, thus making it irrelevant whether it was also an illegal wager. ↑
- Also, imagine if hotshot young stockbrokers on Wall Street could take out, say, $1 million life insurance policies on homeless people in New York City. Do you think that a sudden spike in what are called margin calls in the markets might be matched by a sudden increase in the mysterious deaths of homeless people? Without a genuine interest in the life of the insured, a life insurance contract is prima facie tainted by what is called moral hazard. Conversely, the existence of such contracts of insurance would tend to lead to more reckless wagering in the markets. ↑
- An insurance company does not own its nominal assets – the insured parties who pay the premiums do. It is therefore doubly criminal for the directors or officers of the company to wager with such assets. ↑
- These two were from newspaper articles in the early 1990’s shortly after my win against Eaton’s and when I started paying attention to such things. ↑
- The article contains a fundamental contradiction. It implies that the man had deliberately lied on the application form, while concurrently stating that it was a matter of misunderstanding as to what constitutes a smoker. Most agents, however, are trained to fill out the forms for the applicant and to simply ask whether they are a smoker rather than read out the actual question. Just as with the majority of people who swear mortgages under oath, they have no idea what the contracts actually say or provide for. By the time a claim is made, the original circumstances are normally long forgotten. I have only ever taken out one life insurance policy, but I do recall that the agent asked me the questions and filled out the application for me, and then just had me sign it. It may be that the man actually intended to pull a fast one on the insurance company (as implied from the flippant headline to the article) by a deliberate false statement but he would have had absolutely no incentive to do so. ↑
- Because the man had been murdered, he was automatically given an autopsy, and that apparently revealed some minor scar tissue on his heart that was a remnant of a mild previous heart attack. There was no indication that the man had knowingly lied or concealed the fact that he had technically experienced a heart attack. Nor would there be any incentive for him do so. Also, had he been aware of it and concealed it, then the insurance company would not have refunded the premiums. Just as in Anctil, the man would not have had clean hands and his widow would not have even got the premiums back. Also note the early assertion that “the policy was ruled invalid”. But “ruled” by whom? By the insurance company management. ↑
- On its face there is a case made out for a criminal charge of embezzlement against Mr. Ward in that he obtained £5.2 million of the company’s money on the basis of a non-existent contract – that is embezzlement by definition when committed by an insider. ↑
- The court / judge is referring to Mr. Ward’s legal status as a fiduciary of the trust that arose with the illegal delivery of the cheque. The reference is otherwise unrelated to Mr. Ward’s independent fiduciary status as Chairman of the Board of Guiness. The reference to the offence of embezzlement, however, would involve Mr. Ward’s status as a trustee / fiduciary as chairman of the board. ↑
- The nominal creditors would simply claim the nominal annual rate as the equivalent or real annual rate and the courts would rule that because the contract contained a statement of an annual rate, then the law did not apply to it. Literally that the law did not apply to any contract that failed to comply with it. The entire sordid affair is the subject of Nominal my butt, Part 2. ↑
- Although, here again, it was technically (and flagrantly if you truly understand it) criminal and may have been prosecuted as such if it had been done by one of the little people (i.e., without a lawyer being involved). It was expressly illegal, there was a financial gain from it to the perpetrator, and prejudice to the corporate-person it was enacted to protect, and that makes it fraud / criminal. In fact, and as seen throughout, our system is more or less saturated by prima facie criminal activity by mainstream institutions – the true phenomenon is managed-mental-illness by selective willful blindness – the abject inability of the judges to perceive prima facie criminal activity by certain classes of people. ↑
- One of the reasons it had taken so long was that the court had originally ruled that the law firm was only liable for the half of the proceeds that had been applied to the purchase of the shares and not to the half that had been used to pay down the corporation’s debt. But that was ultimately overturned because all-or-nothing means all-or-nothing (i.e., No scales by which to measure degrees of illegality, as in Parkin v. Dick (1809)) ↑
- The reason it may have (according to certain outside / non-court commentary) gotten by the entrenched-money-power was that it was apparently championed by a member of the uber-wealthy McCain family (of McCain french fries fame) for reasons that went much further than the specific case before the Courts. ↑
- Known as Heydon’s Law or Heydon’s Case , under which the judges became the sole authority on the meaning of words used in a statute. This rule was also the underlying reason for the preamble to the 1939 Small Loans Act. The S.C.C. and Federal Court of Appeal were essentially forced to abandon it in 1986 (Lor Wes Contracting) because the judge in the case was otherwise compelled to essentially guess at the meaning of safety regulations in legislation regarding the construction of a nuclear power plant. ↑
- Almost all civil law jurisdictions channel, as a matter of policy, so-called complex financial cases to judges who were previously “commercial, corporate, and financial law specialists”. ↑
- In 1990 the S.C.C. refused “leave to appeal” the unanimous 1989 decision of the Ontario Court of Appeal, and at that point it became the law binding on all Courts across Canada as if the S.C.C. had made it itself (but without attracting any media attention). ↑
- Technically the $45,000 in loan fees was 22% of the net loan of $205,000, and accrued over one-day for a truly astronomical rate of conversion – but not quite infinite. ↑
- Mr. Mulroney stepped down as a director of the CIBC in 1983 to begin the process of running in the 1984 federal election in which he ultimately became prime minister in September of 1984 (and remained as such until 1992), and then became a director of Amex Bank of Canada. In fact, based solely on the timing, it appears that Mr. Mulroney was brought on board (at the CIBC) in 1981 (July 15) shortly after the enactment of s. 347, groomed for two years, and then stepped down in 1983 to begin his run for the prime minister’s office, and after obtaining same proceeded to directly appoint an extraordinary number and proportion of “commercial, corporate and financial law specialists” as judges, especially to the appellate courts. That’s why they call it organised crime. ↑
- Based on the Court(s)’ findings of fact and law the lawyers for the plaintiff were literally asking the Court to launder their proceeds of crime. Lawyers are not supposed to do that. ↑
- The section was originally enacted as s. 305.1. ↑
- Note here that management at the (Mr. Thomson’s) bank (CIBC) had offended the same anti-money-laundering provision by converting the promissory note (taking it as a security / premium), directly or indirectly, into a new advance of credit to Thomson Associates Inc. (thus technically making the CIBC the ringleader of the resulting criminal enterprise). Also, virtually every material section of the Criminal Code is of the same form. None of them directly state: Don’t do it. Also, in this case the plaintiff Thomson Associates, Inc. had violated both ss. 347(1)(a) and ss. 347(1)(b). The whole agreement defined a rate / yield of 145% per annum, but which had also been concealed by converting $45,000 in advance at a criminal rate (infinite or at least astronomical rate). ↑
- Such as falsifying the securities to hide the loan fees even if there were no criminal interest rate law – it still fraudulently misrepresents risk in the markets and remains a fraud against GAAP, and also constructive forgery or forgery-in-law. ↑
- Also note that Mr. Carpenter’s note was a constructive indemnity or personal guarantee of the borrower-corporation’s criminal-rate debt. He did not receive anything directly in return. He was just a junior member of the board of directors that included also Mr. Thomson! Regardless, at more or less the same moment, the same Courts are ruling that a non-material inaccuracy in the life insurance contracts are sufficient to void the policies, but a half-dozen direct intentional full-blown racketeering offences are not sufficient to void Mr. Carpenter’s de facto insurance / guarantee of the credit contract. Justice is blind my butt. ↑
- Thomson, (William E.) Associates Inc. v. Carpenter  34 O.A.C. 365. Note also how quickly (in the same decision) the Court / judges commit the constructive Freudian slip of referring to the criminal law as a “prohibition” notwithstanding the substance of their core ruling in the same case that there is technically no such prohibition. It is criminally insane either way of course, but that’s policy. ↑
- To the extent that the Bar Association qualifies as a “foreign power”. Otherwise it is internal sedition. ↑
- Which is not to say that they were any more or less fraudulent than the rest of the global financial system. ↑
- The Manufacturers Life Insurance Company v. Anctil  S.C.C. Vol. XXVIII p.122 (“Any contract providing directly or indirectly that the question of fraud shall not be raised, is against public policy and therefore void.”) ↑
- Technically the clause stipulates for 59.4% per annum because “ONE (1.00%) percent less” than 60% is 0.6% and not 1%, but the bank’s solicitors likely intended 59%. Basically, the clause provides that if the declared interest rate [of 7.75%] turns out to be false, then the nominal borrower agrees to amend the contract to increase the interest rate to 59% on the amount secured, regardless of how much is actually advanced. The clause also demonstrates that the solicitor who provided for it does not have an understanding of even junior-high-school level mathematics. ↑
- Actually, as and when the security was executed and delivered the rate of interest was infinite because no credit had been advanced at all. That is why the disclaimer attaches the 59% to the amount “secured” regardless of the mount advanced. This is just the tip of the iceberg – with at least three more levels of fraud to review (under Parts 2 & 3). ↑
- The declaration is from the nominal Personal Guarantee(s) later demanded by the bank from the human owners of the nominal corporate debtor. ↑
- In this context, constructively means that an observer needs to have knowledge of the actual or real transaction in order to determine the fraud in the nominal documentation / securities, while prima facie means that the documentation / securities are criminal on the face of it regardless of the real transaction. ↑
- Normally a banker will claim that a bank is not a fiduciary, but the illegal or criminal status of one or more provisions means that the writing cannot pass as a financial instrument and instead creates a trust in favour of the issuer / nominal-debtor, and that automatically makes the bank a constructive trustee and fiduciary (Saunders v. Guiness Plc. (1990) H.L.). The two example disclaimers are from a standard Sun Life security (Personal Guarantee) and a Sun Life mortgage, respectively. Virtually all financial institutions in Canada have adopted variations of the same essential provisions. ↑
- See Part 3 for a detailed explanation. What we have been conditioned to call banking is in substance credit reinsurance. ↑
- If loan fees are received by the nominal creditor in advance from the nominal debtor’s own pre-existing funds, then the rate of conversion is infinite (because of divide-by-zero (and / or zero time)). But if the nominal loan proceeds are themselves the source of the nominal loan fees, then the accrual period is one-day, and the rate of conversion is usually astronomical, but not infinite. E.g., 5% accrued over 1 day is about 5.4 billion % per annum. If a virus, including and especially a debt-virus, grows at 5% per day, then it grows at an annual rate of 5.4 billion per cent. ↑
- This offence is constructive, see Part 2. The section contains an otherwise obviously deliberate structural flaw. ↑
- Assets and capacities that could be converted by the banking system, but not all directly accessible to the two businessmen / owners of them. ↑
- The $46,000 was comprised of a $4,000 nominal “Loan Processing Fee” and a $42,000 nominal “Commitment Fee”. According to the Offer Letter the Commitment Fee was potentially refundable, but a Commitment Fee is normally not refundable and according to one of the two nominal co-borrowers was not refunded. ↑
- The term was a nominal 8 years, but the additional terms and conditions essentially provided that if for any reason you make us nervous, then we can call it. ↑
- Strictly speaking, the nominal contracts never had any legal existence and so were incapable of being rendered void. Here again, the judges play fast and loose with these legal technicalities because they are committing a fraud against jurisdiction. ↑
- In the class-action, the Supreme Court found yet another new and technically batsh*t crazy way to justify the institution / gas company getting to keep well in excess of $2 billion of fully-admitted proceeds of crime (but without directly relying on Thomson because so many ordinary people were watching). The initial direct proceeds of crime were circa $100 million, but it had been going on for some 26 years in total such that the whole trust would have been well in excess of $2 billion and possibly / technically as much as $15 billion. But (as I understand it from my conversation with them) the lawyers for the class-action customers cut-a-deal with the lawyers for the gas company that if the customers would only ask for their $100 million back and not the gains from it (the minimum additional $2 billion) then, in return, the gas company would not raise the Statute of Limitations as a defence (which was irrelevant anyway). The lawyers for the customers pocketed about $25 million from the deal, and the gas company got to keep the $2 billion to $15 billion that it held in trust for the customers. The (estimated) 500,000 or so customers divvied up the remaining $75 million or so (about $150 each – what a racket indeed). The whole point of the constructive trust that arises when assets are obtained by criminal means is that the offender / constructive-trustee under no circumstances gets to keep the property / money so obtained (or any gains made from it). ↑
- In the majority of cases the judges actually make a new agreement for the parties which is (1) not within their competence for a criminal agreement, and (2) is functionally indistinguishable from the judge themselves adding a criminal illegality disclaimer clause to the original agreement and then giving it effect. ↑
- What is important here is that it is not possible to make such a ruling in good faith. The judges cannot rely on so-called judicial immunity because their decision is technically and actually criminally insane, and was intended in fact to aid and abet on-going racketeering activity, and to cover for their own previous offences as lawyers. Judicial immunity does not apply to any wrongful / criminal act committed by a judge before being appointed a judge. The judges were also guilty of serial-failure to declare their prima facie conflicts-of-interest. ↑