Of the brand-name pharmaceutical companies that have tussled with businessman Barry Sherman and his generic drug maker Apotex, Canada’s largest pharmaceutical company, the Canadian company Deprenyl Research stood out in my review in Part 1 for the reasons that their conflicts highlighted the aggressive competitiveness of Sherman and Apotex in wrestling market share from a small Canadian company – as opposed to from international Big Pharma as in the public-relations image Sherman and Apotex carefully projected.
The case of Deprenyl Research stood out also because of the unique predicament and character of its owner, Dr. Morton Shulman, a former Ontario provincial Chief Coroner, member of the legislature and media personality, and Parkinson’s disease sufferer who used the drug deprenyl, obtained its Canadian rights and started the company to sell it under the name Eldepryl. Shulman engaged in very public, but ultimately futile, personal and legal struggles to try to fend off the aggressive drive by Sherman to take the deprenyl market through a much cheaper generic version developed by Apotex.
As cited in Part 1, Shulman became so critical of Sherman that he once described Sherman as, “the only person I have ever met with no redeeming features whatsoever”, cited from an April 2018 Maclean’s magazine article investigating the unsolved December 2017 double murder of Sherman and his wife.
That comment was in fact made in a media interview in the early 1990s in relation to Shulman’s dispute with Sherman, here quoted from a news story not long after:
“Sherman contends that the Eldepryl rights held by Deprenyl Research Ltd., the company Shulman founded in 1987, are invalid. Sherman expects federal approval early this year to sell his copycat version.
Shulman, having retired from Deprenyl Research, has had to resort to guerrilla tactics to get back at Sherman. When writing prescriptions last year he began to specify that Apotex medicines could not be used to fill them. Apotex sued for $1 million for defamation. Shulman then modified his manoeuvre so that his prescriptions could be filled only by brand-name or drugs made by Apotex’s rival, Novopharm. But Shulman quit doing even that because of the lawsuit. While a recent settlement forbids him to talk about Sherman, he made his feelings clear in an earlier interview. “Barry Sherman,” he said, “is the only person I’ve ever met with no redeeming features.””
(“A hard pill to swallow”, by Rob McKenzie, February 1994, Canadian Business)
Shulman also hurled an even more demeaning expression at Sherman, referring to Barry Sherman’s initials:
“Just ask Morton Shulman, the Toronto multimillionaire physician, investor and drug entrepreneur. He has viewed Sherman as the sum of his initials since tangling with him over Eldepryl, a treatment for Parkinson’s disease. Shulman, who suffers from the illness, bought the Canadian rights from the the patent-holder in Hungary seven years ago. Sherman wants to copy it. “Let me tell you why I’m upset,” Shulman said last year. “I took five years of my life to bring this drug in. Saved my life, saved the lives of tens of thousands of others. And then this son of a bitch comes along.””
(Rob McKenzie, February 1994, Canadian Business)
Now, while the notion of Sherman having “no redeeming features” was personally offensive but understandable – as reviewed in Part 1, in his drive to take the deprenyl market Sherman made aggressive threats to Shulman and escalated the dispute in manners that were degrading toward Shulman – the “son of a bitch” invective, for someone of Shulman’s cultural creed and social achievements – both he and Sherman were distinguished members of the Jewish community and the Canadian society – was rather off-base.
Barry Sherman, in fact, had a shy and reserved personality since childhood, in contrast to his aggressiveness in business. Joel Ulster, a friend from his high school days who at Sherman’s funeral in December 2017 called himself Sherman’s “oldest friend” as in Part 1, had known it well and talked about it decades ago in 1992:
““It’s always been remarkable for me to see him speaking in public or in business, because socially he’s so much different,” said Joel Ulster, Sherman’s oldest and closest friend. The two met in high school.
Sherman, the younger of two children, was born in 1942 in Toronto and grew up near Bathurst north of St. Clair.
His parents wanted to call him Barry, but thinking that didn’t sound formal enough, registered his name as Bernard.
“He was shy. That’s still true of him today. He’s always very intense, hard-working, highly focused, the most intelligent person I’ve ever come across,” Ulster said in an interview.
And other acquaintances confirm that the same Barry Sherman who now regularly bites the heads off government bureaucrats will show up at a party and stand by himself, barely speaking unless spoken to.
“But in business he didn’t care if it were 1,000 people against one, as long as he thought he was right. He has supreme confidence . . . and there has been personal animosity toward him because he’s direct, aggressive and confident.””
(“One in an occasional series: Brash upstart builds firm into generic drug empire”, by Allan Thompson, February 11, 1992, Toronto Star)
As Ulster said, Sherman had a personality of “supreme confidence” and became aggressive when he thought he was right.
That “supreme confidence” had been validated and boosted early by Sherman’s own experience.
Sherman had graduated from high school as the Ontario province’s top student:
“Not every kid is so fortunate, as Sherman well knows. Look up his picture in the 1959 – ’60 yearbook of Forest Hill Collegiate Institute in Toronto, and you see a shy, studious teenager who listed his activities as the electronics club and the camera club. Even then, though, he was driven to succeed, graduating as the province’s top student.”
(Rob McKenzie, February 1994, Canadian Business)
Such a pinnacle of achievement at high school was attained by Sherman despite having lost his father when he was only 10 years old and having to earn his living during his school years:
“Where did his ambition come from? Let Sherman take a stab at answering: “If you asked a psychologist, they would look into my background. And one thing that stands out is that my father died suddenly when I was 10 years old, [leaving] our family in a quite insecure position.”
In fact, their provider’s heart attack left Sherman, his older sister and his mother with virtually nothing, he recalls, except the mortgage on the house they had moved into a few years earlier in Upper Forest Hill Village, a well-off neighborhood in Toronto. After the death, “my mother went to work right away and I got part-time jobs and my mother took boarders into the house,” Sherman says. “We had someone living in the basement and in one of the upstairs bedrooms, and it was all my mother could manage to hold onto the house and try to put us through school.”
Sherman worked as a stockboy at Honest Ed’s, a discount retail emporium that is Toronto’s contribution to global kitsch. During the summers, he helped out at his Uncle Lou Winter’s small generic-drug company, Empire Laboratories Inc. With this money and scholarships, “I was not a financial burden to my mother,” he says.”
(Rob McKenzie, February 1994, Canadian Business)
The most notable of Sherman’s teenage odd jobs mentioned above was at Empire Laboratories Inc., a small generic drug company owned by his uncle Lou winter, where Sherman worked during the summers.
It shows that Sherman’s generic drug business success had early family influences.
Next, the academically exceling Sherman graduated top of his class in engineering physics from the University of Toronto, and then in only two-and-a-half years completed both a Master’s degree in astronautics and a Ph.D. degree in systems engineering at the Massachusetts Institute of Technology, before returning to Toronto and became an owner of Empire Laboratories at only 25 years old, prior to founding his own Apotex:
“SHERMAN WAS A VERY BRIGHT student. He went to the University of Toronto to study engineering physics and again graduated first in his class. Then he attended the Massachusetts Institute of Technology for a master’s in astronautics and a PhD in systems engineering. He earned both degrees in two and a half years — about half the normal time.
In the meantime, Uncle Lou had died and Empire Labs was up for sale. The 25-year-old Sherman teamed up with a group of investors to buy it in 1967. They sold out in 1973, and a year later Sherman founded Apotex.”
(Rob McKenzie, February 1994, Canadian Business)
Now one may wonder: why did the young Barry Sherman, with a bright scientific and engineering future ahead of him, return home to take over a small generic drug company that had been his uncle’s and where he had only done summer work as teenager?
Surely his excellent performances in years of engineering science studies and his graduate degrees from a world-leading academic institution must have opened up a whole new world in his horizon.
Precisely. Decades later in 1996 Sherman began to write an autobiography, and he recalled his impressive academic achievements in considerable details:
“I did not excel as a student either in primary school or in the earlier years of high school. However, as time went on, not only did I become more motivated and competitive, but I discovered that I had unusually strong skills in mathematics and the sciences. When in grade 13, I won first place in a national physics contest for high school students, and I graduated from high school with thirteen “firsts” (i.e., subjects with an “A” grade), more than any other student in the province of Ontario. …
…
In September 1960, I began undergraduate studies in Engineering Physics (now Engineering Science) at the University of Toronto. I specifically chose Engineering Physics because it was reputed to be the most difficult of programs related to mathematics and the physical sciences.
Grade averages of all students were published annually by the University. Among all students in the Faculty of Engineering, I ranked fourth in first year, third in second year, second in third year, and first in the fourth and final year. Upon graduation, I was thus awarded the Wilson Medal for standing first in Engineering Physics and the Gold Medal of the Association of Professional Engineers for standing first in the entire faculty. It seems that the tougher the going got, the better I did.
…
In 1963, while in my third year of Engineering Physics, I was one of two Canadian students selected by the U.S. National Aeronautics and Space Administration (NASA) for its summer program for promising undergraduates. I spent several weeks in classes at Columbia University in New York City, followed by a several week tour of major NASA installations throughout the U.S., including the launch facility at Cape Canaveral.
After completing the fourth and final year of Engineering Physics in May 1994, I went to work for the summer at the Spar Aerospace Division of DeHavilland Aircraft in Toronto. My assignment related to analysis of the vibrational dynamics of the ISIS satellite, which was then being designed.
My first choice of a university for graduate work was M.I.T. (The Massachusetts Institute of Technology). I was accepted into the graduate program in M.I.T.’s Department of Aeronautics of Astronautics and was awarded a fellowship which covered both tuition and living costs. I thus set out for Boston and M.I.T. in September 1964.
I had expected that graduate work at M.I.T. would be much more challenging than undergraduate studies at the U. of T., and that competition would be much tougher. I was surprised to find otherwise.
… My gradepoint average on leaving M.I.T. was a perfect 5.0.
My Ph.D. thesis was entitled Precision Gravity Gradient Satellite Altitude Control.”
(Bernard C. Sherman, A Legacy of Thought, Preface dated December 27, 1996, posted online by The Globe and Mail)
I especially note that Sherman earned his achievements in exceptional precision and remarkable progression: winning a national physics contest in Grade 13 and graduating high school with a province-leading 13 “firsts”; and ranking 4th in 1st year, 3rd in 2nd year, 2nd in 3rd year and first in final year at university, winning 2 medals and being one of 2 Canadian students selected to travel U.S.-wide with NASA.
More importantly, to understand why he then left the academics to take over a small business back home, I note that Sherman had thought MIT studies would be tough but it turned out to be easy for him. This meant that the aura of aerospace science and engineering was not that “challenging” anymore for Sherman once he had breezed through MIT.
Add to the above point the fact that doing summer work for his Uncle Lou Winter years earlier had given the young boy a taste of ‘business success’, an experience he later told in his memoir in more vivid details than about any of his academic achievements, describing his work there as “of critical importance in my future career”:
“The summer of 1960, 1961 and 1962 were spent working for my mother’s younger brother, Louis Winter. Uncle Lou was a biochemist. He had, some years earlier, founded Winter Laboratories which was a medical testing laboratory, located on Barton Street in Toronto, the bulk of its work being pregnancy tests done on urine samples picked up from drug stores. He had also more recently started Empire Laboratories, which was a small distributor of generic prescription drugs. Empire Laboratories operated out of a converted house on Ossington Avenue. The operation at that location consisted of the repackaging of tablets and capsules purchased in bulk from American generic manufacturers.
I spent the summer of 1960 and 1961 as a driver, picking up urine samples from and delivering pharmaceuticals to pharmacies.
In 1962, Lou established his first pharmaceutical manufacturing operation at 77 Florence St. That summer, I worked at the plant helping set up operations.
Earlier that year Lou’s wife, Beverly, had been diagnosed as having leukemia, and he decided to take off several weeks for a vacation with her in Bermuda. The staff was small and Lou left no one in particular in charge. He was also unreachable by telephone. Before he left, Empire had been awarded a contract to supply ASA tablets under the private label of the recently established Towers Department Stores. Lou had arranged the production of what he thought was ample inventory, but, a few days after he left, the Towers office phoned to advise that sales were larger than expected to ask us to supply much larger quantities.
I took it upon myself to phone Mrs. Pani Relle, at Atlantic Chemicals, who was the supplier of ASA, and negotiated with her purchase a substantially increased quantity at a substantially lower price. I also organized around-the-clock production to fill the orders. Upon his return, Uncle Lou was very pleased with what I had done.
Although I did not know it at the time, these summers at Empire Laboratories would later prove to be of critical importance to my future career.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As recalled above, even though Empire Laboratories was only a small generic drug company, working his summer job there Sherman had taken part in starting its manufacturing operation, and then when his Uncle Louis Winter and sick wife Beverly was away on vacation and an opportunity arose for substantially increasing production for a major contract, the young man took charge to lead all the necessary work, successfully.
And so, after completing his MIT Ph.D., at which time his Uncle Lou and wife Beverley had both died, Sherman found it more alluring to give up astronautical engineering and explore the prospect of taking over Empire Labs, which he referred to as “a scientific business”:
“In the first week of November 1965, during my second year at M.I.T., I received a phone call in the middle of the night. On hearing the phone ring, I expected that it would be a call to tell me that Beverly Winter, my Uncle Lou’s wife, had died, as she was then terminally ill with Leukemia. I was astounded to be told by my sister, Sandra, not that Beverly had died, but that Lou, who was then forty-one years of age had died. He had suffered a heart attack at his office and been taken to St. Joseph’s Hospital where he died soon after arrival. St. Joseph’s was the very hospital in which his wife, Beverly, lay terminally ill. I went to Toronto for Lou’s funeral, and I visited Beverly at St. Joseph’s Hospital. … Three weeks later, I had to return to Toronto again for Beverly’s funeral.
Lou and Beverley Winter left behind four sons, all of whom were subsequently adopted by Dr. Martin Barkin and his wife, Carole.
In their wills Lou and Beverly had appointed as executors and trustees of their estates the Royal Trust Company and two lawyers, David Ward and Martin O’Brien. By the time I obtained my Ph.D. in January 1967, I had decided that I did not want to seek employment as an astronautical engineer. I was interested in both science and business, and I also wanted to return to Toronto to live. Thus, in January 1967, I returned to Toronto to seek out an opportunity in a scientific business.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As one can see, his early family influence and experience were important. Without his Uncle Lou’s business, Sherman might not have had the idea of a generic drug business future in his mind when he completed his academic studies and began his working career.
Going beyond the narrative of Sherman’s memoir A Legacy of Thoughts, a 2008 Toronto Life magazine story republished in December 2017 after the unexpected deaths of Barry Sherman and wife Honey, quoted in Part 1, intimated that Sherman had been made his Uncle Lou Winter’s legal heir until the Winters’ own children came along – adopted son Tim in 1958, and sons Jeffery, Kerry and Dana respectively in 1960, 1961 and 1962:
“If there’s a science gene, Barry inherited it. Two of his mother’s brothers were doctors. A third, Lou Winter, a biochemist with a keen business sense, was the relative he most resembled. After Herbert Sherman’s death, Lou became Barry’s father figure and mentor, bringing him into his drug business, Empire Laboratories, when he was 18.
Barry was made his uncle’s legal heir when it seemed that Lou and his wife, Beverley, couldn’t have children. Then, in 1958, Lou and Beverley adopted a baby boy, Tim, and, as sometimes happens, Beverley became pregnant. She gave birth to Jeffrey in 1960, Kerry in 1961 and Dana in 1962. Shortly after the last birth, Beverley was diagnosed with leukemia, and the couple escaped to Bermuda for a last vacation. Barry, still an undergrad, took charge of the plant. He did an admirable job.”
(“Bitter Pill”, by Geraldine Sherman, December 18, 2017, Toronto Life)
With that pre-history of having at one time been the Winter family heir, after the deaths of Uncle Lou and his wife Empire Laboratories was, in a sense, a ‘family business’ Sherman could feel entitled to.
But Sherman, by this time an MIT Ph.D., considered Empire Labs a “scientific business” that he had working knowledge of, one that in 1967 he and his friend Joel Ulster wanted to acquire:
“When I returned to Toronto in early 1967, Joel Ulster was working toward Certification as a Chartered Accountant and was employed at a firm of accountants. We had an understanding that, if we could arrange and finance a suitable acquisition, he would leave accounting and join me as my partner.
The obvious target was Empire Laboratories, the generic pharmaceutical firm which had been founded by my Uncle Lou. Not only was it a scientific business, but I had knowledge of it, having worked for Lou in the summers of 1960, 1961 and 1962.”
(Bernard C. Sherman, Preface dated December 27, 1996)
I note the curious coincidence that the three years when Sherman worked the summer for his Uncle Lou’s Empire Labs, 1960-1962, were also the years when the Winters’ biological sons were born.
The perspective above, “a scientific business”, was from Sherman’s 1996 memoir.
Ten years later, in an interview for a January 29, 2007 The Globe and Mail story, Sherman recalled a different perspective in his efforts to take over Empire Labs, one that was quite ‘family special’:
“On Nov. 5, 1965, Mr. Winter died suddenly at the age of 41. His wife, Beverley, died a few days later. Their four young children — Dana, Kerry, Paul, Jeffery — were adopted by another family, the Barkins. Royal Trust was appointed executor of Mr. Winter’s estate and took control of Empire.
Shortly after Mr. Winter’s death, Mr. Sherman offered to buy the company but Royal Trust turned him down. Two years later Royal Trust put the business up for sale, and Mr. Sherman and a partner submitted an offer. “I said if you are going to sell it and there are other buyers, I suggest you give me first right of refusal because that’s something my uncle would have wanted,” Mr. Sherman recalled in an interview, adding that the company was facing insolvency. Royal Trust received two offers, according to court filings, and Mr. Sherman’s bid won.”
(“At Apotex, a family feud comes to the fore”, by Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
In the above, one of the Winter sons, the adopted “Tim”, was referred to as “Paul”.
As above, “that’s something my uncle would have wanted”, was an argument that Sherman recalled in 2007 he had made in 1967 to Royal Trust which oversaw his late Uncle Lou Winter’s estate, on why he should be given preference over other suitors of Empire Laboratories.
In other words, when he saw the need, Sherman did not hesitate to emphasize his special family relationship with the deceased owner of that “scientific business”.
Similarly to his knowledge of generic drug business, Sherman’s interest in using lawyers and legal litigation to sustain and further his business – critical for Apotex’s success as reviewed in Part 1 – was also acquired early when he was an owner of Empire Labs.
In his memoir, Sherman detailed two critical legal episodes during that time.
The first was a criminal prosecution of Empire Labs that needed to be fought off.
It came as Empire Labs had just entered a rapid expansion period following the 1969 enactment of a legislation by Prime Minister Pierre Trudeau’s government to let generic drug companies compete more easily with the brand-name drug companies:
“Another major step forward for the generic industry came in 1969. Prior to that time, Section 41 of the Canadian Patent Act provide for compulsory licensing under pharmaceutical patents, only if the licensee produced the chemical in Canada. Few licenses had been issued, because the costs of setting up chemical synthesis were high and the potential generic sales in the Canadian market were relatively small.
In 1969, the Liberal Party was in power in Ottawa, and Pierre Trudeau was Prime Minister. Bill C-102 was introduced by John Turner as Minister of Consumer Affairs. When the Bill was passed and given royal assent, Ron Bassford was Minister of Consumer Affairs and Turner has been moved to Justice. Pursuant to Bill C-102, Section 41 was amended to provide that compulsory licenses could now be obtained for importation of pharmaceuticals.
We promptly incorporated S & U Chemicals Limited as a subsidiary of Sherman and Ulster Limited, and, through that subsidiary, we applied for and obtained numerous compulsory licenses.”
(Bernard C. Sherman, Preface dated December 27, 1996)
In Sherman’s recollection above, the passing of Bill C-102 by the Trudeau government was a “major step forward” for the Canadian generic industry.
In light of this earlier history, it was natural that decades later in 2015 Barry Sherman played a prominent role in Toronto hosting election campaign fundraising for Liberal Party Leader Justin Trudeau, the late Prime Minister Pierre Trudeau’s son who would win and become also prime minister.
Back in the Empire Labs days, the criminal charge the company soon faced in 1970 resulted from a complaint that some of the generic ampicillin capsules newly marketed by the company were subpotent, i.e., they did not contain a sufficient amount of the required active ingredient:
“It turned out that getting the licenses was the easy part.
Pursuant to the Regulations under the federal Food and Drugs Act, it was unlawful to sell a “new drug” without first filing a submission with the Food and Drugs Directorate (“FDD”) to satisfy the Directorate as to safety and effectiveness. A “new drug” was defined as one that had not been sold in Canada for long enough and in sufficient quantity to be generally accepted as safe and effective.
The Directorate began to take the position, somewhat arbitrarily, that if a brandname product was on the market before 1963, a generic equivalent would not be considered to be a new drug, but, if the original brandname product had been introduced more recently, a generic product could not be sold unless the generic manufacturer filed and obtained approval of its own New Drug Submission.
The most significant patented product which was not then considered to be New Drug was ampicillin capsules, sold under the brandname Ampicin and Penbrittin by two brandname manufacturers pursuant to an agreement between them.
At Empire Laboratories we worked quickly to ensure that we could be the first to launch generic ampicillin capsules, and we succeeded to do so in 1970.
A few months later we received a visit by an inspector from the FDD. He advised us that one of the brandname manufacturers had purchased and tested several lots of our ampicillin capsules and found one to be subpotent, the minimum acceptable potency being ninety percent of the amount per capsule stated on the label. The FDD laboratory had confirmed the low potency. The inspector suggested that we recall the lot from all pharmacies to which it had been shipped. We asked the inspector to give us one day to retest the product ourselves. Our retesting indicated the potency to be within the required limits. We so advised the inspector, but he stated that, nevertheless, we would be well advised to recall this lot in view of the low result found by the FDD laboratory and the “politically sensitive” nature of this product, which was the first introduced under the new expanded compulsory licensing provisions.
The inspector assured us, although not in writing, that, if we did the recall, there would be no action against us by FDD. In any event, recalls were commonly done when some problem was detected after sale, and there had never been a prosecution in such a case so long as the manufacturer acted responsibly.
A few weeks later, an RCMP officer served us with a summons informing us that Sherman and Ulster Limited, operating as Empire Laboratories, had been charged with a criminal offence under the Food and Drugs Act for having sold a subpotent product.
It became clear that, notwithstanding the passage of Bill C-102, the brandname companies still had strong influence over the workings of government.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As told, the allegation had originated from a brand-name drug company, and according to Sherman the incident showed that the enactment of Bill C-102 was an exception in a government regulatory system otherwise still strongly influenced by the brand-name drug companies.
On the other hand, I note that, as reviewed in Part 1, lacking sufficient active ingredients has been a repeated deficiency of Apotex generic drugs as found by government health regulators and noted by the court over the years. In the above case in the earlier Empire Labs days, it was also alleged to be a problem and led to a rare criminal charge.
In this case, the legal defence representing Empire Labs was able to prove the prosecutorial evidence’s weakness and win an acquittal, thanks to Willard (“Bud”) Estey, a prominent attorney the company retained:
“To defend us, we retained Willard (“Bud”) Estey, a prominent attorney who subsequently became a Justice of the Supreme Court of Canada. When the matter eventually came to court we were acquitted. The Crown had relied on a single test by a junior chemist, who was shown on cross-examination to have made several errors.”
(Bernard C. Sherman, Preface dated December 27, 1996)
The second major legal case fought by Empire Labs under Sherman was a lawsuit the company launched against a government agency in order to stay in business.
At the time in the early 1970s, the province of Ontario had a PARCOST program, instituted under the leadership of Assistant Deputy Health Minister Dr. Alan E. Dyer in 1968 – a year before the federal government’s enactment of Bill C-102 – allowing generic drugs to be used as substitutes for brand-name drugs:
“Prior to 1968, in every province except Alberta, when a prescription was written by a physician using a brandname, a pharmacist was required by law to use only the brand as written, and could not substitute an equivalent generic product.
In 1968, Dr. Alan E. Dyer was an Assistant Deputy Minister in the Ontario Ministry of Health, and responsible for pharmaceutical policy. Dr. Dyer understood that drug prices of brandname products were excessive, and that, if they were to be reduced, it would be necessary to substitute generic products for brandname products.
However, there was substantial concern about whether or not all generic products were of good quality, as the regulations under the Federal Food and Drugs Act were weak, and did not include sufficient requirements to ensure good manufacturing practices.
Dr. Dyer designed a program entitled PARCOST, which was an acronym for Prescriptions at Reasonable Cost. The Ontario Ministry of Health would establish an expert committee, entitled the Drug Quality and Therapeutics Committee. The Committee would inspect all manufacturers, review product documents and test results, and decide which brandname and generic products were of satisfactory quality. The products meeting the requirements would be listed in a Parcost Formulary. Pharmacists would be entitled to use any product listed in the Formulary in place of an equivalent brandname product, unless the physician specified “no substitution”.
The necessary amendments to the Pharmacy Act were passed by the Ontario Legislature in 1968.
Dr. Dyer and his Committee came to inspect Empire Laboratories. …
…
Despite my apparent gaffe, the first edition of the Parcost Formulary included most of our products, as well as some from Novopharm, along with most brandname products. The products of several generic manufacturers, not deemed to have adequate quality controls, were excluded. Some brandname products were also excluded by reason of inadequate quality control.”
(Bernard C. Sherman, Preface dated December 27, 1996)
A serious problem arose for Empire Labs in 1971 when a large number of complaints against it lodged to a federal government Department led to a government board decision to delist the company’s products from the Ontario Parcost Formulary, and Sherman’s attempt to try to resolve the problem with the official in charge, Dr. G. Showalter, did not help:
“Our most significant crisis in the “the Empire Years” arose on January 25, 1971. On that date, we received a letter from Dr. G. Showalter, an employee of the federal Department of Supplies and Services, who purported to act as Chairman of a board which selected drug suppliers acceptable to his Department. Dr. Showalter’s letter included a list of about fifteen complaints about Empire products that had been received by the Board, and stated that the Board had reviewed the complaints and found them to be valid, and that for this reason and “other reasons”, the Board had removed Empire Laboratories from the list of approved suppliers. The letter further stated that notice of our delisting had already been sent to all users of the list.
It appeared that Dr. Showalter and his Board had never heard of the principles of natural justice with which, according to common law, all judicial and quasi-judicial bodies must comply.
…
We immediately panicked. Listing by the Showalter’s Board was a prerequisite for becoming and remaining listed in the Ontario Parcost Formulary, and was also a prerequisite to being a supplier to most hospitals and other major customers.
Dr. Showalter had already left his office for the day. I obtained his home phone number from Ottawa Information and phoned him at home. … He told me that the decision would not be changed by threats from me and he hung up the phone.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Empire Labs again retained the prominent attorney Willard Estey, launched legal court proceedings, and was able to force the government board to back down from its decision against the company:
“The next day we met with Willard Estey and instructed him to initiate legal action against Dr. Showalter of the Board. Within a few days, Estey filed in the appropriate Court an application for a Writ of Certiorari quashing the Board’s decision and a Writ of Mandamus compelling relisting.
Estey also drafted for us a letter to Dr. Dyer at the Ontario Ministry of Health cautioning him not to delist our products on the basis of the Board’s decision as the validity of that decision was before the Courts. Dr. Dyer agreed to refrain from any steps pending the outcome of our attack on the Board’s decision.
Within two weeks, and before the matter could come to a hearing in the Court, Dr. Showalter and his Board backed down and relisted our company. Dr. Showalter and the Board did not bother us again thereafter.
This was the first time in my career that I found it necessary to initiate a legal action. It was to be the first of many.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As recalled by Sherman, the above case was the first that he found necessary to initiate a legal action, and would become “the fist of many”.
In this critical case, as in the previous case of defending against a criminal charge, the lawyer whom Sherman’s Empire Labs relied on to fight the legal battles was Willard (“Bud”) Estey, described in an earlier quote from Sherman’s memoir as “a prominent attorney who subsequently became a Justice of the Supreme Court of Canada”.
Sherman wasn’t quite accurate in that description, though.
Here is a chronology of Justice Willard Estey’s academic pedigree, law practices and judgeships quoted from his Supreme Court of Canada biography:
“… He studied at the University of Saskatchewan, obtaining a B.A. in 1940 and an LL.B. two years later. In 1942 he was called to the bar of Saskatchewan but served with the armed forces during the Second World War rather than practising law. He then went to Harvard Law School and completed an LL.M. in 1946. He taught law at the University of Saskatchewan for a year then was called to the bar of Ontario in 1947 and joined the Toronto firm of Robertson, Fleury & Lane, later named Robertson, Lane, Parrett & Estey. In 1973 he was appointed to the Ontario Court of Appeal and two years later was named Chief Justice of the High Court of Justice of Ontario. He became Chief Justice of Ontario in 1976 and was appointed to the Supreme Court of Canada on September 29, 1977. In 1985 he chaired the Commission of Inquiry into the Collapse of the CCB and Northland Bank. Justice Estey served on the Supreme Court for 10 years and retired on April 22, 1988. …”
(“The Honourable Willard Zebedee Estey”, September 4, 2008, Supreme Court of Canada)
More precisely, in 1970-1971 working on the Empire Labs cases Mr. Estey was a prominent attorney in law practice, and he “subsequently” became a Justice in Ontario in 1973, then became Chief Justice in two Ontario courts successively, before being appointed to the Supreme Court of Canada in September 1977 – a full six years after representing Empire Labs in its two cases against the government.
But I also notice that Justice Estey was actually the son of an earlier Supreme Court of Canada Justice, James Wilfred Estey:
“Willard Zebedee Estey was born in Saskatoon, Saskatchewan, on October 10, 1919. He is the son of James Wilfred Estey, a Supreme Court of Canada justice, and Muriel Baldwin. …”
(September 4, 2008, Supreme Court of Canada)
Thus, at the time when Barry Sherman utilized Willard Estey’s legal expertise in Empire Labs’ critical legal disputes with the government, Estey was not close to becoming a Justice of the Supreme Court of Canada.
On the other hand, Estey was prominent in the legal field no doubt not only as an attorney but also as a son of a former justice of Canada’s highest court.
Therefore, Morton Shulman who in the early 1990s had fierce disputes with Barry Sherman, as reviewed in Part 1 and refreshed at the start of Part 2 of this blog article, was quite unapt airing his anger by calling Sherman “son of a bitch”, not only because Sherman’s aggression did not come from bad behaviour per se but rather from his competitiveness when he believed he was right – as discussed earlier.
That invective by Shulman was unapt also because, as the above review of history reveals, shrouded behind Sherman’s intellectual brilliance was considerable attention to preference for family distinction, be it that of his generic drug company founder uncle, that of a former Justice of the Court of the land, or that of a former Prime Minister of the nation.
The other contemptuous expression Shulman used to describe Sherman, “the only person I have ever met with no redeeming features whatsoever”, that I deem more reasonable given Shulman’s experience with Sherman as reviewed in Part 1, is quoted there from Maclean’s investigative article in April 2018 on the Shermans’ deaths. Here is a fuller quote in the context of Sherman’s reputation in general:
“… A renowned risk-taker, disruptor and pitbull professionally, Sherman was a polarizing figure—regarded as a softie with a heart of gold by those in his proximity and loathed by those who claim they were outfoxed or betrayed by him. The man who learned weeks before his death of his nomination to the Order of Canada was also called out as unethical in business dealings. The late physician and pharmaceutical entrepreneur Morton Shulman, who did battle with Sherman, called him “the only person I have ever met with no redeeming features whatsoever.””
(“The other side of Barry Sherman”, by Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
As described, Sherman was “regarded as a softie with a heart of gold by those in his proximity and loathed by those who claim they were outfoxed or betrayed by him”.
As a general characterization, such could suggest a personality relying on nepotism and favouritism to operate like in a tight-knit cult, but using deception and manipulation to deal with others more generally, and that Shulman’s impression came as a result of having been met with intransigent deception and manipulation.
I have commented in Part 1 that the media coverage of Shulman’s pharmaceutical business disputes with Sherman in the 1990s was like a “beacon of light” – a well-documented example of Sherman’s behaviour in business dealings with others, which has been criticised like in the above quote but usually not reported in details.
Right after the Shermans’ deaths in December 2017, Toronto Life magazine’s republished article, previously appearing in July 2008, noted that in his autobiography, i.e., the 1996 memoir quoted extensively earlier, Sherman described his “logical” views on morality, asserting that it isn’t an intrinsic human value:
“In his autobiography, he described himself as recognizing no God and rejecting religion and free will in favour of “logical deduction.” He wrote about the instinct to co-operate with others, particularly relatives, when it was to “mutual advantage.” There can be no such thing as “altruism, kindness, generosity or morality,” he says, because humans act only in pursuit of their own happiness.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
As cited above, the view that there can be no “altruism, kindness, generosity or morality” could well be Sherman’s justification of his own personality and behaviour that incurred others’ criticisms and hostility.
So let’s look at what exactly Sherman wrote in his memoir:
“I cannot see that human behaviour differs in any fundamental way from that of numerous species on the savannahs of Serengeti. We are all driven by our instincts to eat, drink, copulate, protect ourselves and our young, and cooperate with others, particularly those most closely related to us, if and when it is to our mutual advantage. Happiness is, I believe, best defined as satisfaction of these drives, and it is that which we all pursue.
…
Although we all share the same drives, it is clear that individuals exhibited these drives in different proportions, be it as a result of genetic differences, differing environmental influences, and differing opportunities.
Individuals who help others to an unusual extent, are considered to be “kind”, “moral” or “generous”, although, if my thesis that everything is done in pursue of happiness is correct, then there can be no such thing as altruistic, kindness, generosity or morality.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Sherman’s thesis in the above was that personality attributes such as altruism, kindness, generosity and morality, namely unusual extents of willingness to help others, are actually driven by the person’s pursue of happiness.
In his memoir, following the above quoted passages Sherman immediately trained his unsparing criticism on organized religion, and on the notion of “salvation” through religious practice:
“I have always felt disdain for organized religion and for the foolishness or hypocrisy of clergymen who sell religion as a source of morality or everlasting life. Undoubtedly, there are many persons who are both committed to religion and generous, but I see no general correlation. Indeed, countless clergymen and others who espouse religion live in relative opulence while much of humanity languishes in squalor. If anything, from my experience in fundraising for charitable organizations, I have sensed a reverse correlation. Atheists often are enormously more generous than persons obsessively committed to seemingly absurd religious rituals. It may be that persons who believe that they get salvation from observance of rituals feel less need to derive happiness from helping others.
Voltaire said that: “Nobless Oblige”; with power and wealth comes obligation. I do not see any rational basis for that pronouncement. There is no objective basis to hold that anyone is obligated to do anything not required by law. Each person can be expected only to pursue personal happiness in whatever manner he sees best from his own perspective.”
(Bernard C. Sherman, Preface dated December 27, 1996)
In reading the above, I find that Sherman’s “logical deduction” did not quite explain why the atheists’ generosity was “enormously more” than the religiously committed, and hence did not quite rule out that their generosity came, if only partly, from “obligation” – even if he did not view that as necessary.
Nevertheless, in his philosophizing in the two quotes above was, I find, Sherman’s answer to Shulman’s proclamation that Sherman was “the only person I have ever met with no redeeming features whatsoever”.
Simply put, Sherman did not need to show “kindness” in the concrete toward Shulman’s predicament nor did he need redemption, but like everyone else only needed to be law-abiding – I should however point out that, as in Part 1, Sherman’s mail marketing of drugs into the U.S. market was viewed illegal by Shulman and confirmed so by an FBI criminal investigation in 1993-1995.
For Sherman, his greater pursue of personal happiness led him to become one of the “leading”, “most active” and “most generous” philanthropists in Canada – praises of Sherman, quoted in Part 1, by some top politicians and community leaders after his death – in contrast to the many clergymen and others who pursued salvation through religious observance.
These philosophical musings by Barry Sherman in his unfinished memoir, the preface of which was marked as written in Serengeti, Tanzania, on December 27, 1996, could indeed have begun as an intellectual response to the moral contempt and dismissive publicly aired by his nemesis Morton Shulman just a few years earlier around 1993 at the height of their business disputes.
As quoted earlier, the memoir also extensively recalled Sherman’s academic years and his early years in the pharmaceutical industry.
From what I have found in the press archives, it was about ten years later in 2006 that Barry Sherman began to tell the media about this unfinished and unpublished memoir of his, which he envisioned to be turned into a full account of his history but that had yet to be done.
At the time, Sherman was preoccupied with a major legal fight with the international Big Pharma companies Bristol-Myers Squibb and Sanofi-Aventis, over Apotex’s push in the U.S. market for its generic version of the heart drug Plavix as detailed in Part 1; and so Sherman mentioned his memoir in this context, stating that a chapter on the present could include “certain things” that would “end them up in prison”:
“The opening chapters of a draft autobiography sit amid the hundreds of pill bottles and mound of legal documents in Dr. Bernard Sherman’s office. It will be the story of a brainy kid born in Toronto who becomes Canada’s richest generic drug mogul.
Though a work in progress, it has the makings of a page turner. One chapter will recount how an employee from a brand-name drug company offered to sell him secret files. Another, he says, will describe how Dr. Sherman caught a rival stealing the recipe for a blockbuster generic developed by his company, Apotex.
But what promises to be the book’s most riveting chapter is still unfolding. It is the part where Dr. Sherman seemingly outsmarts two big drug companies, Bristol-Myers Squibb and Sanofi-Aventis, to market the first generic form of the big-selling heart drug Plavix five years before its patent expires. And it could conceivably end with someone in jail.
“They couldn’t see that maybe certain things were going to end them up in prison,” Dr. Sherman said during an interview in the Toronto building where his generic Plavix copy is being made.”
(“Generic drug, specific issue: Apotex fights Plavix”, by Stephanie Saul, August 16, 2006, National Post)
Such a vindicating victory envisioned above did not happen for Sherman, at least not to the extent of Part 1’s review on the Plavix dispute.
Neither did Sherman memoir’s chapters for his recent history actually happen: a total of 13 chapters were planned but only the first five have been fully or partially written.
The year after in 2007, Sherman submitted his unfinished memoir as a part of legal files for a civil lawsuit case in his family, and it received some media attention on its contents. The media wondered who Barry Sherman really was, “a cutthroat businessman?”, “a strings-attached benefactor?”, etc., as in a November 24, 2007 The Globe and Mail story:
“So who, exactly, is Barry Sherman? Is he a cutthroat businessman? A strings-attached benefactor? Or just a munificent, self-confessed workaholic?
In 1996, the drug baron asked himself some of those same questions. During a family trip to the Serengeti, he stepped back for a moment of reflection and
started writing a memoir called A Legacy of Thoughts. It has never been published – in fact, it sat in his desk until it surfaced in the family’s recent legal fight. But his biographical notes shed light on one of the country’s more reclusive business icons.”
(“The real Barry Sherman”, by Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
Citing from the memoir, the above news story reported Sherman’s childhood experience and academic excellence – some of it discussed earlier quoting from his memoir:
“Barry Sherman’s mother named him Bernard, thinking that it sounded distinguished. But he was so slow, his Grade 5 teachers called him “grandpa.”
The shy, awkward child, born in 1942, also had few friends growing up and difficulty keeping up with students in the classroom. Summer camp wasn’t much better – he hated it so much that one year he enrolled in a military program instead, only to find he loathed the mindless drills.
But, according to his memoir, there were early flashes of the future tycoon’s work ethic.
The only son of a zipper manufacturer, Barry would occasionally join his father at the factory. One Saturday, as his dad, Herbert, worked in his office, the 10-year-old packed so many more zippers into boxes than the paid employees that his father actually checked each box to make sure he had counted correctly.
While this impressed Barry’s father, there wasn’t much time to brag. He had a heart attack at work later that year and died instantly.
This forced his mother, Sara, back to work. A trained occupational therapist, she was now the sole support for Barry and his older sister, Sandra. It also fundamentally changed “grandpa.” Young Barry threw himself into his studies. And he discovered that his skill at mathematics and logic extended well beyond efficiently packing zippers into boxes.
By the end of high school, he had won a national physics contest and graduated with more A’s than any other student in Ontario. He enrolled in engineering physics at the University of Toronto and did a summer program at the U.S. National Aeronautics and Space Administration.
This led to a fascination with space. So, after working briefly on a satellite project in Toronto, he headed to the Massachusetts Institute of Technology to study aeronautics on scholarship.
His PhD thesis was a 200-page mathematical analysis of a system he invented that could control satellites in orbit. The invention so captivated him that he took out a patent on it.”
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
There were more interesting details, about Sherman’s special relationship with his uncle Louis Winter, reported not from his memoir but from an interview with Sherman:
“Louis Winter trained in biochemistry, but he was a born entrepreneur. By the 1960s, he had built a $1-million business called Empire Laboratories by churning out cheaper versions of Aspirin, saccharin and Valium.
Mr. Winter was not a big spender. But he did well enough to afford a house in a fashionable part of Toronto, a used Rolls-Royce and even a small fleet of
sailboats.After his brother-in-law died, Lou took his nephew under his wing, occasionally taking him out on the water.
Mr. Sherman says he “got seasick easily.” But he did better behind the wheel of a car. His uncle hired him to drive his company’s truck, picking up urine samples and delivering drugs to pharmacies. And he soon showed the same devotion to work and attention to detail on the job that Lou saw in himself.
“He was so impressed with Barry’s intelligence,” says Wayne Rockcliffe, Mr. Winter’s brother-in-law.
By the time Mr. Sherman was in university, he would take charge when his uncle was away. When one huge order came in, the 20-year-old not only filled it but negotiated a lower price from a supplier. This duly impressed Mr. Winter, and family members speculate that he saw his nephew as his successor.
“We had a small family and I was close to him. He was sort of a father figure to me,” Mr. Sherman said in an interview. “I think he considered me to be a son.”
Still, he returned to university that year. Which is where he was when his uncle, waiting for a colleague in his office, felt a sharp pain in his head. He collapsed and was rushed to the hospital.
He died the next morning – the same month Barry’s father had passed away 13 years earlier – of an apparent aneurysm. His wife, Beverley, who had been
fighting leukemia in the hospital, died 17 days later.”
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
As above, “I think he considered me to be a son”, was how Sherman described his relationship with his Uncle Lou in an interview cited in the November 24, 2007 The Globe and Mail story. In contrast to in his 1996 memoir, Sherman placed greater emphasis on the special family relationship between him and his Uncle Lou.
This was much like in a January 29 The Globe and Mail story in the same year 2007, where Sherman recalled what he had said to Royal Trust in 1967 in his effort to acquire Empire Labs from his late uncle’s estate, as quoted earlier:
“… “I said if you are going to sell it and there are other buyers, I suggest you give me first right of refusal because that’s something my uncle would have wanted,” Mr. Sherman recalled in an interview…”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
In the interview for the November 24 story, Sherman said something further, that he had told Royal Trust his uncle would have wanted him to own the company so that he could help his uncle’s young sons:
““You know, if all things are equal, you ought to give me first right because I am the boys’ natural cousin and my uncle would have wanted it,” he told the
trustee. “These are my cousins, and if some day these boys want an opportunity or need help, I will be there.””
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
Why did Sherman in 2007 suddenly emphasize his special family relationship with his Uncle Lou and what he had said to Uncle Lou’s estate trustee about taking over Empire Labs for that reason, and not just for it being this familiar “scientific business” as in his 1996 memoir?
That is because his uncle’s sons, now grown up, in early 2007 filed a lawsuit alleging that Sherman denied them 20% of business ownership they were entitled to. The media interviews Sherman did at this time was in response to their lawsuit, besides including his unpublished memoir with the legal documents.
The January 29, 2007 The Globe and Mail story was the first major media report that I have found on this family feud that came in the form of a $1.5 billion lawsuit filed by Sherman’s Winter cousins:
“Barry Sherman has spent a long career building a multibillion-dollar drug firm, becoming one of Canada’s wealthiest men and keeping his personal life private.
But a simmering family feud has erupted in court, and a group of relatives is suing Mr. Sherman, alleging he violated a 40-year-old agreement that entitled them to 20 per cent of his company, Apotex Inc. , Canada’s largest generic drug-maker.
The relatives, who are Mr. Sherman’s cousins, say they found out about the agreement only a few years ago and when they started asking Mr. Sherman questions about it, he stopped supporting them financially. They are seeking $1.5-billion in damages from Mr. Sherman and Royal Trust Co., which was involved in drafting the agreement.
In an interview, Mr. Sherman called the allegations “bizarre” and said the lawsuit “has no substantive basis whatsoever.”
“I’ve spent millions of dollars trying to help these kids but they’ve got a lawyer who smells money, it seems,” he said. “It’s just an unbelievable story. It’s actually very distressing to me.”
“I’m saddened that it has come to this,” said Kerry Winter, one of the cousins who is suing. “It’s a tragedy.””
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
Strictly speaking, the 40-year-old agreement cited above, between Royal Trust and Sherman when Sherman acquired Empire Labs, involved a possible 5% of Empire Labs’ ownership for each of the Winter sons:
“The terms of the sale included a provision to give Mr. Winter’s four children an opportunity to work for the company once they turned 21. And, after two years employment, they could buy 5 per cent of the business.”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
From the Winter sons’ point of view, Sherman owed them 20% of Apotex ownership because Sherman’s business success at Apotex had originated from their father’s Empire Labs, which they were owed when Sherman later sold the company and started Apotex:
“Kerry and Tim claim their father’s company made Barry’s success possible. But with the sale of Empire, they lost any interest they might have had in it. Or did they? They maintain that without Empire there could be no Apotex, therefore Barry has a legal obligation to hand over five per cent of his present assets to each of Lou’s sons or heirs. That’s what he promised when he bought Empire Labs. They claim that Barry sold it to weasel out of his commitment to them.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
To put it simply, family business would have family obligations: as discussed, a key argument Sherman used to sway his Uncle Lou’s estate trustee Royal Trust was, “These are my cousins, and if some day these boys want an opportunity or need help, I will be there”; and so the above agreement became a provision for his ownership of Empire Labs.
Two years earlier in 1965 right after the death of Uncle Lou, Sherman had pitched the same argument to Lou Winter’s wife Beverley, about taking over Empire Labs to “protect its value for the benefit of the children”; but she did not make a decision before her own death days later:
“… Barry attended Lou’s funeral, then visited Beverley in the hospital, where they talked about what might happen to Empire and the children’s future interests. He said that if she and the executors wished, he would take over the business and protect its value for the benefit of the children. In return, they would have to grant him the right to purchase the company if it came up for sale. Beverley discussed the idea but made no decision. Seventeen days later, she was dead.
Three days after her death, Barry made the same proposal to trustees of the Winter estate. They said no, that they would continue to run the business. And so the children’s legacy—Empire Labs and a trust fund—remained in the hands of two lawyers, an accountant and Royal Trust.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Instead, what could have become Sherman’s family obligation became a business ownership provision to protect the Winter children’s future interests when two years later he and Joel Ulster acquired Empire Labs on their own efforts – but using the same ‘special relationship’ argument to persuade Royal Trust:
“The pitch worked. Mr. Sherman and Mr. Ulster bought Empire for about $250,000 – thanks, in part, to a $100,000 bank loan secured by everything Mr. Sherman’s mother owned.
…
The purchase agreement also included specific provisions for the four Winter boys: They had the right to work at Empire as soon as they turned 21 and they could buy a 5-per-cent stake after two years of employment – as long as Mr. Sherman was still in charge.”
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
The provision was that each of the four Winter sons be given employment at Empire Labs starting at the age of 21, and after two years of employment be given the option to purchase 5% of the ownership. That would be a potential 20% total.
Here is a more accurate summary, from the Toronto Life story first published in July 2008:
“Two options were added to protect the Orphan Children—the phrase that the surviving sons, now in their late 40s, still use to describe themselves. The first states that all of Lou Winter’s sons would be given the opportunity to become “responsible full-time employees” once they turned 21 or completed their formal education. Second, any employed child who worked two years with the company would “have the right to purchase five per cent of the issued shares of the company or companies owning the purchased business.” However, the option could be exercised only if Sherman, Ulster or Ulster’s father kept control of the business.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Agreeing to such a provision would matter, because at the time there was at least one competitor bidding for Empire Labs, as also quoted earlier:
“… Royal Trust received two offers, according to court filings, and Mr. Sherman’s bid won.”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
However, the provision had conditions. It was enforceable only if the company was under family control and only if a Winter son was capable of “being a responsible employee”, as Royal Trust pointed out in 2007 in response to the Winter sons’ lawsuit:
“However, in court filings, Royal Trust alleges the agreement included several conditions. For example, it was only enforceable so long as the company remained under family control and provided each of the children was capable of “being a responsible employee.”
In 1972, Mr. Sherman sold the company to ICN Canada, a subsidiary of a U.S. company that was publicly traded. A year later, Mr. Sherman started Apotex.”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
As in the above, a few years later in 1972 Sherman sold the company before the Winter children reaching their adulthood, and a year later started Apotex.
In his court filing and disposition in response to the lawsuit, Sherman asserted that the provision became “unenforceable” when he sold Empire Labs in 1972, and that at that time he expressed the willingness to help his cousins:
“The Winters had four children; one son has died, his widow and two sons are suing Mr. Sherman, and one son has stayed out of the battle altogether. The children were raised by another family and Mr. Sherman bought their father’s drug business shortly after his death.
The cousins allege the purchase included a provision giving them an opportunity to work in the business when they were older as well as an ownership interest.
They allege Mr. Sherman never told them about the provision and they only discovered it a few years ago.
Mr. Sherman said in his filings that the arrangement concerning the children contained a number of conditions that became unenforceable when he sold the Winter business in 1972. Apotex was a completely separate entity, he added.
However, he vowed at the time to help the others. “I said also, ‘These are my cousins, and if some day if these boys want an opportunity or need help, I will be there,’” Mr. Sherman said in a deposition.”
(“Apotex founder hits hard in legal family feud”, by Paul Waldie, October 26, 2007, The Globe and Mail)
I note that Sherman’s 1996 memoir had emphasized his interest in Empire Labs because it was a familiar “scientific business”, and it did take a lot of work and skills on the part of Sherman and his partner Ulster to efficiently operate Empire Labs.
More of the efforts needed and risks involved in acquiring and owning Empire Labs were discussed in Sherman’s memoir, and are reviewed here next.
Sherman began by looking into Empire Labs’ operation and product sales, found that the company had declined since Lou Winter’s death, and argued that the decline was due to mismanagement under Royal Trust, before Royal Trust became willing to sell and to consider a low-price offer from Sherman and Ulster:
“I phone the Royal Trust Company, which was one of the executors and had been allowed by the other two executors, David Ward and Martin O’Brien, a free hand in managing the estate. They told me that they were not yet interested in selling.
Because the acquisition appeared ideal, I did not back off. I went to visit the offices of Empire Laboratories to talk to some of the staff. The operations were now located in a five storey building, at 301 Lansdowne Ave. in Toronto, to which the company had moved before Lou Winter’s death in 1965. I learned that the Royal Trust Company had appointed as president on a part-time basis Dr. George Wright, who was a Professor of Chemistry at the University of Toronto and had previously been a consultant to Lou Winter. I learned from the staff that they considered Dr. Wright to be incompetent to manage the business, that sales had declined from over a million dollars per year in 1965 to about eight hundred thousand dollars per year, and that the company would likely soon be insolvent.
I phoned David Ward and Martin O’Brien to tell them what I had learned, to suggest that the trust company might be more interested in continuing to manage Empire Laboratories to earn fees than in a prudent sale, and to point out that, if the company went insolvent, Lou’s children might some day hold them liable for negligence as executors and trustees.
Within days I received a phone call from the Royal Trust Company advising that they were ready to negotiate a sale. We were given full access to the books and records, as a result of which our suspicions of imminent insolvency were confirmed. We offered to purchase the assets at net book value, which would require payment of about two hundred and fifty thousand dollars after deduction of the liabilities to be assumed.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As Sherman recalled, since Lou Winter’s death in 1965 the annual drug sales of Empire Labs had declined from $1 million to about $800,000 in 1967, and the company might be near insolvency. As a result of his finding out about the decline, the trustees agreed to consider selling the company and Sherman and Ulster offered a price for the value of the assets, which came to about $250,000 plus assumption of the company’s liabilities.
The offer, which I note was more like in a liquidation sale, was too low for the trustees because when Lou Winter had just died in 1965 there were much higher offers; so Royal Trust decided to look around for other potential buyers:
“Royal Trust was reluctant to accept. There had been eager buyers at much higher prices upon Lou’s death in 1965, and Royal Trust thus now franticly sought out other potential buyers.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Around this time, two distinguished Toronto generic drug business owners sought out Sherman for discussions.
One of them, Jules Gilbert, advised Sherman of the potential risks in owning Empire Labs, and suggested that Sherman instead purchase a minority ownership in his company:
“While awaiting an answer from Royal Trust, I received a phone call from Jules Gilbert. Jules was the founder and owner of Jules R. Gilbert Limited, another generic manufacturer that he had founded in the mid 1950s. Jules is considered to be one of the fathers, if not the father, of the Canadian generic drug industry. Jules asked that I visit with him at his offices and factory on Dundas Street in West Toronto, and I obliged.
He gave me a tour of the premises and introduced me to his son-in-law, Fred Klapp, who was then endeavouring to expand sales through telemarketing.
Jules told me that he had heard that Joel and I were negotiating to buy Empire Laboratories, and he wanted to warn me that the purchase would be a great mistake. He said that he had just completed formulating a new plan that would make his company very successful and would put Empire Laboratories out of business within months. He told me that he required some further funding for his new plan and thought it would be best for both of us if I were to purchase a minority position in his company instead of buying Empire Laboratories. He said: “If you do so, I will be the king, but you will be the crown prince.”
…
It appeared to me that Jules Gilbert, although a very nice gentleman and very knowledgeable, could not distinguish between what was practical and what was not.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As told, was considered one of the fathers of the Canadian generic drug industry, and he called himself “the king” and wanted Barry Sherman to be “the crown prince” if Sherman would join him.
Jules Gilbert was foresightful, wasn’t he, in light of Barry Sherman’s eventual great success in his own right?
The other generic drug businessman, Lou Craig, advised Sherman not to get into the generic drug industry, at all, because of the risks:
“Within days after that meeting, Ben Ulster, Joel’s father, told us that his friend Lou Craig wanted to have lunch with Ben, Joe and me, to also try to talk us out of proceeding with the purchase.
Lou Craig was a brother-in-law of Jules Gilbert. They had originally been in business together but had parted company some years later. At lunch, Lou Craig explained that he had recently sold his generic drug company, which he had operated under the name Bell-Craig, to an American company, Denver Laboratories. He said that the generic drug business was a commodity business that was and always would be highly competitive. He said he was glad to be out and that if we proceeded to buy Empire Laboratories we would inevitably fail and lose our investment.
He also advised us against investing with Jules Gilbert, and stated that we should entirely refrain from investing in this industry.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Both Gilbert and Lou Craig, who each invited Sherman for a discussion, warned that this field was highly competitive and Sherman could lose.
Jules Gilbert was leading the Canadian generic drug industry’s lobbying for the Canadian government’s help to reduce American drug companies’ dominance, and his efforts led to the enactment of Bill C-102, with the introduction of “compulsory licensing”, by Prime Minister Trudeau’s government in 1969 – as in Sherman’s memoir it was a major boost for the nascent Canadian generic drug industry, including for Empire Labs under Sherman and Ulster. That history was recalled recently in a 2014 book by another pioneering Canadian generic drug businessman, Morris Goodman:
“A little-known fact about the generic industry in Canada – it had an American father. Jules R. Gilbert, then in Toronto, … on his own, set out to have the patent laws governing drug manufacture and distribution changed in Canada. At that time, American drug firms dominated the Canadian market and eventually Canada’s federal government, lobbied in large part by Gilbert, looked into drug distribution in this country. The government report … led to the passage, in 1969, of Bill C-102, which introduced “compulsory licensing.” New legislation made it possible for any company in Canada to produce a patented drug, paying a royalty of four percent to the company that had introduced the drug. In other words, it was compulsory for a company that introduced a new drug to license its distribution as a generic drug to a Canadian company that was prepared to pay the royalty. Suddenly, generic drugs were not only legal and protected by the Canadian government, companies like mine were being encouraged to delve into the generic market. This change dramatically altered the situation for Winley-Morris. …
The passing of Bill C-102 also had a dramatic impact on how much Canadians paid for many of their medications, which proved to be much less than their neighbours south of the border were paying. Bill C-102 gave Canadian a break on prescription costs and opened the door for considerable growth among companies producing generic drugs in this country. This legislation made it possible for Canadian-owned generic companies not only to exist but to thrive.”
(Morris Goodman, To Make a Difference: A Prescription for a Good Life, 2014, McGill-Queen’s University Press)
However, Gilbert’s own company later went bankrupt due to the large number of patent infringement lawsuits it faced from international brand-name drug companies:
“In June 1958, I contacted Jules Gilbert and Winley-Morris became his distributor in Quebec and Newfoundland. I eventually formed a company to handle Gilbert’s generic products, calling it Julius R. Gilbert (Quebec) Limited. … But while we did very well, Gilbert was kept busy and broke, pouring his income into fees for patent lawyers. The multinationals bled him dry with patent infringement lawsuits and eventually his company went bankrupt. Gilbert’s son-in-law, Fred Klapp, bought up the assets and ran a successful business developing creams and ointments under the label K-Line Pharmaceuticals. Later, he sold to Taro, …
Jules Gilbert lost his business, but, in the end, his cause was not lost. He was a bright, aggressive man, who changed the patent laws in Canada. He also paid the price for a number of us – Lesley Dan of Novapharm, Barry Sherman of Apotex, and me at Winley-Morris, ICN, and finally Pharmascience, not to mention all the other generic companies. Gilbert was a crusader and the Canadian public owes him a great debt because of his efforts to ensure that Canadians benefit from lower drug prices. The entire Canadian generic industry is also beholden to him for his unrivalled leadership. He opened the door for all of us. …
(Morris Goodman, 2014, McGill-Queen’s University Press)
Here, a larger and longer cautionary tale seems to emerge from my review of the history up to this point, including in Part 1.
Like the pioneering Jules Gilbert described above, Barry Sherman was also a “bright, aggressive man”, whom in 1967 Gilbert tried to recruit to become “the crown prince” for “the king”; Gilbert’s lobbying of the government soon led to major changes in the Canadian patent laws in 1969, but his company later went bankrupt because too much money was spent on patent lawyers to fight the international brand-name drug companies; in 1967 Sherman bought Empire Labs, went on to found and grow Apotex to be Canada’s leading pharmaceutical company and compete with Big Pharma internationally, but unlike Gilbert’s, Sherman’s company was big enough to sustain the huge legal expenses on patent lawyers.
Nonetheless, in the end, Sherman and his wife were brutally killed in a double homicide, and the scenario of brand-name drug companies having a role in it cannot be ruled out – as concluded in Part 1.
In any case, in 1967 Sherman and Ulster used the opportunity offered by Gilbert as a leverage in his negotiation to acquire Empire Labs, and won Royal Trust’s acceptance of their offer, as told in Sherman’s memoir:
“Despite the warnings of Jules Gilbert and Lou Craig, Joel Ulster and I decided to proceed to try to complete the purchase, although not without substantial trepidation.
…
I phoned David Ward and Martin O’Brien again. I told them that we were about to pursue another opportunity, and that if our offer to purchase Empire were not accepted within two days it would be withdrawn. Within the two days Royal Trust advised that they would accept our offer, and our solicitors began to draw up the formal agreements.”
(Bernard C. Sherman, Preface dated December 27, 1996)
While Sherman got a good deal for Empire Labs – paying only for the value of its assets – it was still a lot of money for someone who was fresh out of graduate school and whose family had been of modest means ever since his father’s death when he was in his early teens.
To raise the $250,000 to purchase the company, Sherman’s mother put up all her assets as collateral to obtain a $100, 000 bank loan, and his partner Joel Ulster’s father Ben provided a $150,000 loan and arranged a line of bank credit for the company’s operating use:
“It remained to arrange the financing. We required about two hundred and fifty thousand dollars to complete the purchase, plus an operating line of credit.
At that time, my mother had investments totalling about one hundred thousand dollars. She offered to put up all of her assets as security for a bank loan. The Bank of Montreal, at which my mother and I both banked, agreed to lend me one hundred thousand dollars against my mother’s assets, which was the full face value. It still seems surprising that both my mother and the Bank were prepared to take that risk, as we easily could have failed. Fortunately, we did not fail.
The remaining one hundred and fifty thousand dollars was advanced by Ben Ulster, Joel’s father. Ben also arranged for an operating line of credit at Toronto-Dominion Bank.
We completed the asset purchase in September 1967. For that purpose, we incorporated Sherman and Ulster Ltd., so that the business became Empire Laboratories, a division of Sherman and Ulster Limited.”
(Bernard C. Sherman, Preface dated December 27, 1996)
As told, by the time of writing his memoir in December 1996 Sherman still felt surprised that his mother and Bank of Montreal had taken the risk to do the $100,000 loan in 1967 – in fact, it was really his mother’s risk to lose all her investments to the bank while the bank would lose only the loan interests.
And the risk of losing was real, as Sherman recalled in 2007:
“… Mr. Sherman and Mr. Ulster bought Empire for about $250,000 – thanks, in part, to a $100,000 bank loan secured by everything Mr. Sherman’s mother owned.
“It was a crazy thing to do. We almost went broke in the first few months,” Mr. Sherman says. “I’m an entrepreneur and one has to take risks to get ahead. I was lucky.”
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
When one learns of the efforts and risks undertaken, as extensively told in his memoir and I have reviewed, for the acquisition and owning of a “family business” that had belonged to none other than a brother of Sherman’s own mother, one can see that it indeed was about business – except for the close-family factor as a favour in agreeing to consider Sherman’s takeover pitch and eventually accepting the offer of assets value he estimated from the company’s books and records.
More importantly, even at that favourable price the business venture risked the life savings of Sherman’s mother, who could have lost all had her son not turned out to be so bright, diligent and industrious, and a little lucky, too.
That business reality, despite his special relationship with his late Uncle Lou that he cited to sway the Winter estate trustees, in my analysis probably made Sherman less straightforward and less willing later when it came to materializing the ownership-share provision for his Uncle Lou’s sons.
As already reviewed, the enactment of Bill C-102 by the Pierre Trudeau government in 1969 gave a major boost to the Canadian generic drug industry, and in particular to Empire Labs, which under Sherman’s leadership worked hard to produce generic drug products sooner and better than many other companies.
But furthering the risks in this process of progress were the drug quality-related legal problems the company encountered; fortunately, they were expertly resolved in Empire Labs’ favour by the prominent attorney Willard Estey, son of a former Supreme Court of Canada Justice and later a justice himself in that high court.
According to some media reports, in 1969 two years after acquiring Empire Labs, Sherman swapped its shares with its largest customer, so that the customer rather than he and Ulster became the company’s controlling shareholder:
“The agreement protecting Winter’s sons didn’t survive. A 1969 share swap initiated by Sherman gave control of Empire to its largest customer…”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
However, Sherman’s memoir did not mention such a share swap.
Instead, it referred to Sherman and Ulster Limited as the owner of Empire Labs in 1973 at the time of its acquisition by a large U.S. pharmaceutical company; under Sherman and Ulster, by the end of 1972 Empire Labs had more than doubled its annual sales from the 1967 level, and attracted the interest of takeover from ICN Pharmaceuticals:
“In the years 1971 and 1972, the sales of Empire continued to grow, and by the end of 1972 sales had reached a level of a little under two million dollars a year.
In early 1973, we received a phone call from a young man named Gil LeVasseur. He was a Harvard MBA type who was working on acquisitions for ICN Pharmaceuticals Inc., a public U.S. company, of which the founder and chairman was Milan Panic.
ICN had recently purchased Winley-Morris, another small generic drug company located in Montreal, from Morris Goodman. Winley-Morris had been renamed ICN Canada Limited, and Morris Goodman had stayed on as president. LeVasseur told us that ICN wanted to buy Empire Laboratories (i.e., Sherman and Ulster Limited) and to merge it into ICN Canada Limited.
Joel Ulster and I were ambivalent about selling, but decided to let ICN evaluate out company and make an offer to us.
Although we had done reasonably well over the previous few years, we had concerns…
…
We were able to negotiate a selling price of a little under two million dollars, which we decided to accept.”
(Bernard C. Sherman, Preface dated December 27, 1996)
That was a big success, receiving an acquisition offer of “a little under two million dollars” after five years of ownership and more doubling Empire Labs’ annual sales to “a little under two million dollars” – from about $800,000 when Sherman and Ulster took over in 1967, as cited earlier.
The offer figure was at the same level as the company’s annual sales, compared to when Sherman and Ulster bought it for the assets value of $250,000 on annual sales of $800,000.
Also fortunate was the fact that, as told above, the purchaser was not only a U.S. drug company and thus had American financial strength, but also had patriotic Canadian leadership as ICN Pharmaceuticals had recently acquired Morris Goodman’s Winley-Morris and renamed it ICN Canada Limited with Goodman as president; as quoted earlier from his 2014 book, Goodman was a Canadian generic drug pioneer and had worked with Jules Gilbert, “father” of the Canadian generic drug industry who had tried to recruit Sherman in 1967 and whose lobbying had led to the passage of Bill C-102 in 1969.
However, American finance had its ‘proverbial’ risk, if it can be said that way, which Sherman could not help but tell a tale about.
The nearly $2 million offered to Sherman and Ulster by ICN was not in cash but in ICN stock shares, and it took much agonizing for Sherman and Ulster to decide to take the chance, and then, during a required waiting period of about six months watched the stock value went up and then down, and finally hurriedly cashed in just before the stock price crashed:
“There were only two flies in the ointment (pun intended).
…
The second was that ICN was prepared to pay only with ICN share and not cash. Moreover, we would have to agree to hold the shares until they were registered, which would take up to six months, before we could sell them. We considered the ICN shares to be a hot potato. They were priced at about twenty U.S. dollars per share, having risen from only a few dollars per share a year or two earlier on the strength of a string of acquisitions all using shares. The net book value per share and earnings per share clearly did not justify the price of ICN’s stock.
After much agonizing, we decided to take the risk and make the deal. The transaction closed in September 1973. In the following few months while we were holding the ICN shares, the share price continued to climb to about forty U.S. dollars per share, and we were, of course, ecstatic. However, the price then began to fall just as rapidly. By the time our shares were freed for sale, the price was down to U.S. twenty dollars per share again, and we quickly sold all our shares at about that price. The price then continued to tumble down to about U.S. two dollars per share. We were very fortunate, indeed, to have gotten out in time. After payment of relevant taxes and all of our debts, Joel and I each netted several hundred thousand dollars.”
(Bernard C. Sherman, Preface dated December 27, 1996)
The scenario of losing their worth from selling their company would have been unbearable. But Sherman and Ulster were lucky and netted several hundred thousand dollars each in profit.
In the second previous quote above, Sherman named the founder and chairman of ICN that bought Empire Labs by offering only its stocks was Milan Panic.
The risk taken by Sherman and Ulster was probably quite common for those doing business with Panic, a former Yugoslavian Olympic athlete and defector to the West, and a famous character who rode the wave of ICN acquisitions to become, by 1992, Serbia’s richest man and Prime Minister, with his wealth on roller-coaster rides with the ICN stock value:
“As with many such transient figures on the world scene, there are fresh-minted official biographies, and Mr Panic’s is largely supplied by himself. Born in 1930, of poor parents; peddled vegetables in the Thirties; joined Tito’s partisans in 1944 (when he would have been all of 14); trained as a chemist (at an unspecified university); became national cycling hero, depicted variously as Yugoslav champion and as an Olympic competitor (he was actually an reserve); defected to the West in 1956 on the way to a race in the Netherlands, finding his way, with his family, to the United States in 1960.
…
… His entire past is anything but free of difficulties with the law, not to speak of his stockholders. He is widely described as ‘Serbia’s richest man’; there cannot have been much competition, except for the likes of the noted New York publisher Bill Jovanovich, of Harcourt Brace Jovanovich. Mr Panic’s company’s current worth, on which his own personal fortune – dollars 101.6m ( pounds 53m) on 3 July – is based, is, depending on the value of its stock and assets, dollars 460m. …
His company, founded in 1966, was originally called International Chemical and Nuclear, and was recently described by Business Week in America as being ‘mostly a ragtag collection of acquisitions, selling everything from generics to laboratory supplies’. ICN Pharmaceuticals Inc, as it became, is basically a holding company with subsidiaries, some profitable, some not.
The difficulty for Mr Panic and for the company is that its most profitable part is Yugoslav – the result of a deal a year ago when ICN’s drug and marketing subsidiary, SPI Pharmaceuticals Inc, bought 75 per cent of the country’s biggest drug company, Galenika. In six months, Galenika was accounting for 61 per cent of all of SPI’s revenues of dollars 364m, and 96 per cent of its dollars 53m net profit. Cynics on Wall Street, with access to Mr Panic’s long record of optimistic forecasts and spirited marketing, believe he may well have accepted his Yugoslav post at least partly to bolster Galenika, for the company, which, for instance supplies Yugoslavia with its penicillin, is dependent on the United States for two-thirds of its raw materials – supplies that are currently blocked by the sanctions imposed on Yugoslavia.
Galenika is part of a long-term plan to acquire pharmaceutical plants in Russia, Poland, Hungary and Czechslovakia. But there, too, there are problems, because (a) many Eastern European drug companies are operating on pirated clones of international pharmaceuticals, and (b) all of them have, to date, operated in a controlled economic environment, meaning that there is no way to ascertain their profitability, nor to know whether they will be allowed, in a market economy, to continue with their pirated drugs.
Even then, all might be well were it not for other troubles facing Mr Panic, who has a long record of stockholder revolts and battles with the government, not to speak of his company’s long-range debt, which requires some dollars 19m a year just to service.
These troubles go back a long way, and suggest that Mr Panic is stronger on salesmanship, acquisition, wheeling-and-dealing and political contacts than on research and development. His first failure was in 1970 with L-dopa, the Parkinson’s disease ‘miracle drug’ – until its severe side-effects became known. ICN invested heavily, and its stock price (which has varied between dollars 72 a share and dollars 1.50, highly volatile even for pharmaceutical stocks) fell sharply.
…
This is not to say that he is considered dishonest. Rather, he is described as ‘visionary’, ‘creative’ and a ‘juggler’. In many ways, then, Mr Panic is as American (an American of the Eighties) as he says. He is one of the many who seem to have parlayed something out of nothing. And in the primitive form of capitalism now obtaining in Eastern Europe, he may do the same again. Not too many of his stockholders, and not too many Wall Street analysts, however, would bet on it.”
(“Who is this man Milan Panic?: How did an American millionaire become Prime Minister of Yugoslavia? And what’s in it for him? Keith Botsford reports”, by Keith Botsford, July 23, 1992, The Independent)
As reported in the above July 1992 story, ICN stock had varied between a high of $72 U.S. and a low of $1.5 U.S. over the years, and not many of Milan Panic’s shareholders or Wall Street analysts would easily bet on him winning in business in his native home of Eastern Europe.
But Barry Sherman bet on Milan Panic for six months in 1973-1974, and with some luck came away with several hundred thousand dollars – after paying Empire Labs loans and debts – that he could use to start Apotex, and the rest is history.
Just after Sherman had cashed in his ICN stocks, ICN Canada president Morris Goodman fired him. In his memoir Sherman said Goodman was the “only person ever to fire me from a job”, but after Sherman’s death in December 2917 Goodman recalled Sherman once saying that the firing was “the best thing that ever happened to him”:
““He was a force by himself. Is it possible to replace Barry Sherman? Not in 24 hours,” said Morris Goodman, 86, who founded Pharmascience Inc. in Montreal in 1983 and has competed with Sherman ever since.
“He was a fierce competitor in the marketplace. And he was more aggressive in fighting Canadian patents and disqualifying them than I was.”
…
Goodman remembers being Sherman’s boss after his employer at the time, California-based ICN Pharmaceuticals, bought Empire from Sherman in the early 1970s. After about six months, he was ordered to fire Sherman and reluctantly did so.
“I fired him. He would tell me later that was the best thing that ever happened to him,” said Goodman. “He says, ‘Don’t worry about it, Morris, I was planning to quit anyhow.’ And he started Apotex (in 1974).”
“So we stayed competitors and more or less friends. He was a very competitive guy.””
(“Competitors and critics agree Apotex founder Barry Sherman will be tough to replace”, by Dan Healing, December 21, 2017, Toronto Star)
Well, not that simple for Sherman just to start a new company.
Sherman would have had to wait for five years before starting another generic drug company, had he not cleverly evaded ICN’s attention to a detail of his Empire Labs – namely Sherman and Ulster Limited – ownership. Sherman later boasted about his foresight and shrewdness in his memoir:
“There were only two flies in the ointment (pun intended).
The first was that the contracts drafted by ICN required that the vending shareholders agree to not compete for five years. I wanted to be free to go back into the same business. Fortunately for me, I was not a shareholder directly, but only through my holding company, Berman C. Sherman Limited. I hoped that, if we withheld the schedule of shareholders until the last minute, ICN would not pick up this technicality and I would thus not be personally bound not to compete. This worked out exactly as I hoped.”
(Bernard C. Sherman, Preface dated December 27, 1996)
That was when Sherman sold Empire Labs, hiding a key piece of info about his ownership – he did not own directly but Bernard C. Sherman Limited did – “until the last minute”, so that ICN would not realize that the five-year ban on “the vending shareholders” could not prohibit Sherman personally from returning to generic drug business right away.
This is an important point, because it seemed that there was similar shrewdness on Sherman’s part in handling the Empire Labs ownership provision for protecting the Winter children’ future interests described earlier.
Not only did Sherman sell Empire Labs within a few years so that the company was no longer under family control, but for many decades he did not tell his Winter cousins about this historical provision between him and Royal Trust, “until the last minute” in the sense that by the time they found out it might be too late for them to resort to legal means.
Sherman’s cousins “waited far too long to sue”, was what Royal Trust asserted in 2007 when their lawsuit was filed:
“In court filings, Toronto-based Royal Trust denied the allegations and said the agreement expired long ago. The company added that the cousins have waited far too long to sue.
…
In their lawsuit, the cousins allege Mr. Sherman never told them about the agreement and “turned his back on the orphaned children.” They claim that the roots of Toronto-based Apotex can be traced back to Empire and that Mr. Sherman owed them royalties on products Mr. Winter developed.
In an interview, Mr. Sherman said the sale to ICN was straightforward and that he did not use Mr. Winter’s products at Apotex. Royal Trust said in court filings that since the sale involved a public company, ICN, the agreement relating to the children couldn’t be enforced. And none of the children were 21 at the time.
…
Around 2000, the cousins allege they first became aware of the sale agreement and began asking Mr. Sherman questions. In 2001, they went to court and won an order requiring Royal Trust to turn over documents relating to the deal.”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
As they alleged in their lawsuit, as above, Sherman’s Winter cousins were never told of the provision protecting their interests, until they became aware of it in around 2000 – by this time they were all around 40 years old, nearly doubling the age of 21 when they would have become eligible to work at Empire Labs.
And even at this later time, they still had to go to court to force the former Winter family estate trustee Royal Trust to give them the relevant documents.
But I should say that, other than the deceptive and everlasting avoidance of the Winter children protection provision – thus denying them the opportunity to build a better financial future through their late father’s former company, or another related to it – Barry Sherman did work hard and diligently in acquiring Empire Labs, developing generic drugs, increasing product sales, and later selling it to an American firm, along the way taking considerable risks as did his mother, i.e., the Winter boys’ aunt, in helping finance the venture – even though it was her late brother’s business and her son had once been a legal heir.
In other words, Sherman, and to some degree his mother, worked hard and risked much to make the success happen.
Sherman also began Apotex in a hard-working and well-planned manner, this time without Joel Ulster who would not take part further, and with only the several hundred thousand dollars he made from the Empire Labs sale; accordingly, he devised a ‘minimalist’ business plan:
“When I set out in late 1973 to found a new generic pharmaceutical company, I was acutely aware of the possibility of failure.
…
As the intended products were the very ones being sold by Empire Laboratories, Novopharm and others, there was no doubt that the market size was adequate to support a viable business.
As to efficiency, I was now, as a result of my experience at Empire, well qualified to design and manage an efficient pharmaceutical manufacturing enterprise. …
Joel Ulster had declined to join me in the new venture. Unless I was to take in other partners, which I did not wish to do, the only available funds would be the several hundred thousand dollars of profit that I had made on the sale of Empire to ICN.
I needed to design a business that would get to break-even with minimum equipment, minimum floor space, minimum personnel, and in minimum time. …
….
I estimated that it would be possible to have the initial product line developed, the required stability studies done, and sales initiated within a year of start up.
Phase 2, would be initiated when and only when significant sales were achieved. In Phase 2, all revenues derived from sales as well as borrowed funds would be invested in expansion of capacity and development of the new generic products requiring New Drug Submissions to FDD. The development of these new products would be done as aggressively as possible in order to build the company rapidly.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Following his “minimum” start-up plan, Sherman began Apotex with only two employees and 5,000 square feet of space, making only compressed tablets for a dozen or so generic versions of established drugs that could be sold cheaply by mail order and telemarketing:
“Business boomed, thanks to a combination of lucky timing and entrepreneurial savvy. Barry started with 5,000 square feet, employed two people and made only compressed tablets. He selected about a dozen established products with an eye to getting them to market quickly, then sold them cheaply by mail order and telemarketing. …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
By the 1990s, Apotex had grown to become Canada’s biggest generic drug company:
“… Further changes in the law during the Trudeau years allowed greater scope and removed some advantages of brand name companies. By the ’90s, there were a dozen generic drug companies in Canada. Apotex was the biggest.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
But the first two years of Apotex were actually quite difficult, as Sherman recalled in 1992 about “seeing bankruptcy on the horizon” after a couple of years; he credited Apotex’s eventual success to – just like the media and others have described him as, reviewed in Part 1 – being “very aggressive”:
“In 1974, Sherman founded Apotex with two employees in a 5,000-square-foot building on Ormont Dr. in Weston, right around the corner from today’s corporate headquarters on Signet Rd.
As Sherman recalled, the company that now employs more than 1,000 people in several locations had a rocky start.
“I remember after a couple of years in business we still weren’t selling anything,” Sherman said.
“Losses were getting up to $10,000 a month and I was seeing bankruptcy on the horizon. But just before we got to the end of our resources, we got some acceptances.”
The real breakthrough came with Propranolol, a generic version of the blood pressure treatment Indaral. Propranolol was approved in 1980.
More than a decade later, Apotex revenues are upwards of $250 million and with Sherman’s other companies, top $500 million, he said.
Sherman credits a corporate aggressiveness that mirrors his business personality.
“One of my primary strategies was to be very aggressive . . . We had to find some major products that we could do the research on quickly and be the first generic (producer), so we could convince pharmacies to stock our products.””
(Allan Thompson, February 11, 1992, Toronto Star)
The picture for the other side in Sherman’s family legal dispute had been much bleaker, and rather sad.
While Sherman was working hard to grow Empire Labs and then found and grow Apotex to national success, his late Uncle Louis Winter’s much younger sons fell into troubled lives at young ages.
After the deaths of their parents in 1965, following their late mother Beverley’s wish the Winter boys were adopted by a Jewish family:
“Before she died, Beverley Winter left instructions that her children not be adopted by any relatives. Her brother, Wayne Rockcliffe, still wonders why she didn’t choose him and his wife. At that time they had no children. They were willing to move into the Winter home and send the boys to Upper Canada College. But Beverley, a convert to Judaism, wanted her sons to be raised as Jews. Rockcliffe thinks that his sister “just didn’t want us to have what was hers. What a shame that was!” Beverley’s rabbi found a home for the boys with Martin Barkin, a highly regarded urologist, and his wife, Carol, a schoolteacher.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Beverley Winter’s brother Wayne Rockcliffe, as cited above, felt the Jewish adoption of the Winter sons was a sign of social snobbery toward him, was “a shame”.
Kerry and Dana became unhappy with their adoptive parents beginning in their early teens; they later turned to living life with illegal narcotic use and narcotic drug dealing; and Jeffrey suffered from bipolar mental problems:
“By 1973, the year Sherman sold Empire, Kerry, then 12 years old, and his closest brother, 11-year-old Dana, were extremely unhappy. They found Barkin difficult and their adoptive mother cold. By age 15, Kerry had left home and moved into a rooming house. He continued to attend school, where he was arrested for selling hash and marijuana and sentenced to six months in the Mimico Correctional Centre. In what would become a recurring theme, a relative came to his rescue. Uncle Wayne used his connections to get Kerry accepted into Ottawa’s tony Ashbury College. He graduated and took honours English at Richmond College in London, England, with fees paid by the family trust. He enrolled in San Diego State University for a masters but never finished. Instead, he travelled around the world; while in Peru, he began to experiment with crack cocaine and heroin.
Two of Lou’s other sons had their own problems. Jeffrey was diagnosed as bipolar and was in and out of treatment. And Dana, like Kerry, got into drugs. …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Recall that the provision for the sale of Empire Labs to Sherman and Ulster, reached with Royal Trust in 1967 to protect the Winter children’s interests, had two conditions that each of them had to meet in order to get the options of working at the company and acquiring 5% ownership: if the company was still under family control, and if each was capable of “being a responsible employee”.
In 2007 when the Winter sons launched the $1.5 billion lawsuit against Barry Sherman and Royal Trust, Royal Trust responded that the Winter children’s “significant personal issues”, including “criminal activity”, made them unsuitable to be involved in Apotex:
“Court filings and interviews with relatives reveal a bitterly divided family that has been beset by a series of troubles. One cousin, Dana, died of a heroin overdose in 1995 shortly after being charged with conspiracy to commit murder. Royal Trust alleges in court filings that one reason the cousins could never become involved in Apotex was because of “significant personal issues, which included criminal activity, incarceration, serious drug addictions and mental health issues.””
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
Uh, Dana died of a heroin overdose in 1995 after being charged with “conspiracy to commit murder”. That was clearly totally contrary to good behaviours expected of a “responsible employee”.
In his legal deposition on the lawsuit, Sherman also stated a similar point, namely that their troubled lives meant that none of the Winter sons could have become “a suitable employee at Apotex Inc.”:
“Mr. Sherman said in his filings that the arrangement concerning the children contained a number of conditions that became unenforceable when he sold the Winter business in 1972. Apotex was a completely separate entity, he added.
However, he vowed at the time to help the others. “I said also, ‘These are my cousins, and if some day if these boys want an opportunity or need help, I will be there,’” Mr. Sherman said in a deposition.
Mr. Sherman said in the deposition the children led troubled lives. “There is no way that any of these boys would have ended up being a suitable employee at Apotex Inc., but I have tried to just help them do what they wanted to do.””
(Paul Waldie, October 26, 2007, The Globe and Mail)
After the Shermans’ deaths, in an media interview in early 2018 Kerry Winter also admitted that the brothers all led troubled lives at one point or another, Tim being an alcoholic and others similar to earlier mentioned:
“Winter’s childhood would prove abusive and damaging and though he has reconciled with his adoptive family, neither he nor his siblings emerged unscathed.
Eldest brother Tim is an alcoholic, Jeffery has been diagnosed bi-polar, Winter is open about his struggles with addiction to heroin and crack and Dana, died of a heroin overdose at 33.”
(“EXCLUSIVE: ‘My gut tells me he killed her. He asked me twice to whack her. He hated his wife.’ Billionaire and wife found hanged beside their pool was murder-suicide NOT a targeted hit their cousin tells DailyMailTV”, by Laura Collins, January 31, 2018, Daily Mail)
What a sad and disappointing, but perhaps not unfamiliar tale: an academically brilliant, business goal-driven and socially high-achieving Barry Sherman had these younger cousins, sons of his business-founder uncle and mentor, Louis Winter; after their parents’ early deaths, the cousins were made to live unhappily with a “difficult” and “cold” adoptive family, and their future went downhill ever since and even became unsalvageable, all the while when their cousin Sherman went from one success to another.
The Winter sons’ misery happened despite their late mother’s best intention, wanting her children raised as Jews; as quoted earlier from the Toronto Life article, the appropriate adoptive parents, “Martin Barkin, a highly regarded urologist, and his wife, Carol, a schoolteacher”, were found by her rabbi – despite her brother Wayne Rockcliffe’s feeling of it being ‘social snobbery’ toward him.
But wait. The name of the “highly regarded urologist” adoptive father, Martin Barkin, sounds a little familiar in my review thus far.
Sherman’s memoir had a mention the couple, quoted earlier:
“Lou and Beverley Winter left behind four sons, all of whom were subsequently adopted by Dr. Martin Barkin and his wife, Carole.”
(Bernard C. Sherman, Preface dated December 27, 1996)
There have been earlier instances of this name. In Part 1, a Dr. Martin Barkin, had been brought into the management of his company Deprenyl Research in 1992 by Morton Shulman, and ran the company in 1993 while Shulman was in bitter legal disputes with Barry Sherman and Apotex, here partially quoted again:
“Dr. Morton Shulman, officially retired but still proud father of Deprenyl Research Ltd., and Barry Sherman, president and owner of Apotex Ltd., are doing battle, armed with legal briefs, affidavits and reports from private investigators.
…
“This is a true crusade,” Shulman said in an interview in his Roncesvalles Ave. office. “I’ve got nothing to do (but fight with Sherman.) I’m delighted. It was a godsend that this came along.”
The battle started this spring, about the same time Shulman, 68, was being eased into retirement from Deprenyl Research, the company he founded to import a drug to combat Parkinson’s disease.
…
Shulman became his company’s best advertisement as the drug alleviated his symptoms for years. Now, his condition is deteriorating and his speech is slurred and movements are jerky.
Shulman’s son Geoffrey and Dr. Martin Barkin, who was brought in last year to run Deprenyl, now manage the company as it tries to expand its range of products and defend its Eldepryl turf.”
(“Shulman vs. Sherman; The drug entrepreneurs face off”, by Art Chamberlain, July 11, 1993, Toronto Star)
That couldn’t be the same person, could it, that the adoptive father of Barry Sherman’s Winter family cousins was also a top manager for the company of Morton Shulman, Sherman’s bitter public nemesis?
This Dr. Barkin was then the president of Shulman’s company, in 1994 changing its name to Draxis Health as well as its focus – away from the Parkinson’s disease drug Eldepryl as its Canadian market was threatened by Sherman’s aggressive push for a generic version, here partially as quoted in Part 1:
“Deprenyl Research Ltd. has taken some final steps to put the Morton Shulman era behind it.
The company emerged from its annual meeting yesterday with a new name – Draxis Health Inc. – a new corporate structure and a new share option program for senior management.
President Martin Barkin said the name change reflects the company’s new focus on products other than Eldepryl, a treatment for Parkinson’s disease.
Draxis recently lost a court battle and expects generic drug maker Apotex Ltd. to have a cheaper version of Draxis’s main product on the market later this year.”
(“Deprenyl change ends Shulman era; Company to be called Draxis and get new focus”, by Art Chamberlain, May 27, 1994, Toronto Star)
Then, in a 1997 news story about Draxis’s new drug for treating dogs for Cushing’s disease, this Dr. Martin Barkin was cited as its president and CEO, and as a “former Ontario deputy minister of health”, here again partially as in Part 1:
““We are very excited to have received the FDA approval,” said Martin Barkin, company president and chief executive officer.
…
“The United States is one-third of the worldwide pharmaceuticals market,” said Dr. Barkin, a former Ontario deputy minister of health. He sees Anipryl as Draxis’s first big step into the U.S. market.”
(“Stock in the news: Analysis Draxis looks to U.S. market for sales; Canine drug Anipryl launched south of border following FDA approval”, by Andrew Poon, June 11, 1997, The Globe and Mail)
Perhaps there were two Dr. Martin Barkins, namesakes, in the healthcare field in Toronto, Ontario. I should either confirm or disprove it.
Let’s see who Shulman company’s Dr. Martin Barkin was, per Shulman’s autobiography, Can’t Somebody Shut Him Up? – a book previously extensively cited in Part 1:
“Barkin is a Toronto urologist and medical academic whose CV rolls richly off the page: President and CEO of Sunnybrook Health Sciences Centre, vice-chairman of the Ontario Hospital Association, president of the Ontario Council of Teaching Hospitals. Deputy minister of health for the Province of Ontario from 1987 to 1991, where he established, and was secretary of, the premier’s council on Health Strategy, and chaired the deputy cabinet committee on social policy.”
(Dr. Morton Shulman and Susan Kastner, Can’t Somebody Shut Him Up?, 1993, Warwick Publishing Group)
That Martin Barkin was also a Toronto urologist, like the Winter sons’ adoptive father. Well, the likelihood that they were the same person is high.
A prominent University of Toronto urologist Dr. Martin Barkin died on January 21, 2018 – a little over a month after the unexpected double murder of Barry and Honey Sherman. This is the one associated with Morton Shulman, because the long and distinguished record cited includes “President and Chief Executive Officer of DRAXIS Health Inc.”, and reads just like above from Shulman’s book – it also includes endowing the “Martin Barkin Chair in the Division of Urology at the University of Toronto”:
“Faculty of Medicine is remembering Dr. Martin Barkin, who passed away January 21, 2018 after a brief illness.
Dr. Barkin was a leader in academia, medical administration and business. He held the rank of Professor in the Faculty of Medicine at the University of Toronto in both the Departments of Surgery and Health Administration. He also endowed the Martin Barkin Chair in the Division of Urology at the University of Toronto.
He was President and Chief Executive Officer of DRAXIS Health Inc., and served on the Boards of Viventia Biotech Inc. and Bone Care International, Inc. Dr. Barkin went to DRAXIS in 1992 from KPMG where he served as Partner and National Practice Leader for Health Care. Before that, he was Deputy Minister of Health for the Province of Ontario, Secretary of the Premier’s Council on Health and Chair of the Deputies’ Cabinet Committee on Social Policy for the Province of Ontario.
Dr. Barkin was President and Chief Executive Officer of Sunnybrook Health Sciences Centre and Vice Chair of the Ontario Hospital Association and President of the Ontario Council of Teaching Hospitals.
He served as Chief of the Division of Urology, Sunnybrook Health Sciences Centre, Professor of Surgery (Urology) at U of T and Project Director at the Research Institute of the Hospital for Sick Children as well as a member of the Grants Review Committee of the Medical Research Council of Canada.”
(“Remembering Dr. Martin Barkin”, March 2, 2018, Faculty of Medicine, University of Toronto)
There was an obituary in the National Post newspaper for a Martin Barkin, who died on that same day January 21, 2018. This Martin Barkin’s family profile fits that of the Winter sons’ adoptive father, namely he was a Jewish man, with his wife named Carol, and two of his sons named Tim and Jeffrey – as discussed, the other two Winter sons Kerry and Dana were unhappy with their adoptive family, Kerry left home at 15 and Dana died in 1995. At the same time, this Martin Barkin’s medical profile has a match with the other Martin Barkin in “the Martin Barkin Chair in Urological Research at U of T”:
“BARKIN, Martin
On Sunday, January 21, 2018 at Toronto General Hospital. Beloved husband of Carol. Loving father and father-in-law of Tim and Nancy Barkin, Jeffrey and Karen Barkin, Risa Barkin Worth, and Robert and Lisa Barkin. Dear brother and brother-in-law of Miriam Marks, and Sharon and Mel Shiffman. Dear brother-in-law of Joel and Catherine Kohm. Devoted grandfather of Jack, Ethan, Daniel, Slater, Jake, Halle, and the late Eden Worth. At Benjamin’s Park Memorial Chapel, 2401 Steeles Avenue West (3 lights west of Dufferin) for service on Tuesday, January 23, 2018 at 1:00 p.m. Interment in the Temple Sinai section of Pardes Shalom Cemetery. Shiva 54 Old Forest Hill Road, Toronto. Memorial donations may be made to the Martin Barkin Chair in Urological Research at U of T, 416-978-4296, Sunnybrook Hospital Foundation, 416-480-4483 or to a charity of your choice.”
(“Martin BARKIN Obituary”, January 23, 2018, National Post)
Without a doubt, the two Dr. Martin Barkin were the same man.
Wow, 15 years before a “family feud” between Barry Sherman and his late Uncle Louis Winter’s sons went public with their $1.5 billion lawsuit against him and former Winter family estate trustee Royal Trust – over his denying them an alleged 20% business ownership by reneging on an agreement reached 40 years earlier with Royal Trust – the Winter sons’ adoptive father had already become a top executive in the company of Morton Shulman, Sherman’s public nemesis in bitter legal disputes with him.
Dr. Barkin was much more than just a “highly regarded urologist” as the Toronto Life story said in the context of the Winter sons’ adoption. He was a pillar of the medical professional community and a leader in the field of healthcare in the city of Toronto, the province of Ontario, and even nationally in Canada.
But Dr. Barkin’s record of adoptive parenting was rather disappointing, to say the least, and even terrible. Several of his adoptive Winter sons were very unhappy with him and his wife, one leaving home while in the mid-teen, and all descended into troubled lives.
Morton Shulman’s 1993 autobiography coauthored with writer Susan Kastner, while boasting much about his own achievements, mentioned Martin Barkin quite extensively and thus can be a source of information for understanding Barkin’s personality that could be relevant to the adopted sons’ experiences.
Shulman noted that Martin Barkin was known for his ego and temper:
“… Martin Barkin is a tall, portly and dignified 54-year-old with a distinguished background in medicine and health administration, and a tendency to flush dark red in temper. His interest in the business of medicine is as broad, and his ego as wide, as that of his diminutive new boss.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
Barkin’s ego and temper could be one reason that some of his adopted sons found him “difficult” – as described in the Toronto Life story quoted earlier.
There is also an issue of possible parental negligence, on the part of someone with such an exceptionally high professional standard – negligence with serious and long-lasting ramifications for those adversely affected.
The provision reached between the Winter estate trustee Royal Trust and Barry Sherman in 1967, for the protection of the Winter children’s interests once each of them reached adulthood, would have been, and definitely should have been, made known to the adoptive parents, though it did not seem to have been conveyed to the adopted sons at any time – until they learned of it approaching their middle age in around 2000.
As quoted earlier from the Toronto Life story, some of the Winter sons’ unhappiness with the adoptive Barkin family began in their early-mid teens, as early as 1973. That was the time when Barry Sherman and his partner Joel Ulster were selling their company to the American firm ICN Pharmaceuticals following their successful run of Empire Labs taken over from the Winter estate, and Sherman was then about to start Apotex.
At that time, if those Winter boys were not well behaved from an adult’s standpoint, their prospect with Empire Labs, and subsequently Apotex, would not have looked good.
In any case, not long afterwards Sherman no longer kept in touch with them. What led to their losing touch, besides his late Uncle Lou’s old company no longer in the picture, was the passing of his mother, i.e., the Winter boys’ aunt who while alive, along with her son, had regularly visited them at the Barkins’ home:
“In her will, Mrs. Winter specified that she did not want the boys raised by relatives. She had converted to Judaism after marrying Lou and insisted that her four sons – Tim, Kerry, Jeffrey and Dana – be taken in by a Jewish family.
Within a year, Martin Barkin and his wife, Carol, became the boys’ guardians. Mr. Barkin was still studying to be a doctor, but the couple had already adopted two children, had a house in Toronto and the support of family, so they added the boys to their household.
…
… During his time at Empire, Mr. Sherman had dropped in on the Barkins with his mother – who used to give each boy crisp dollar bills for his birthday. But in the early 1970s, after the ICN deal closed and Mrs. Sherman died, the families lost touch.
“I wanted to help with the transition, so I visited them frequently when they were first adopted,” Mr. Sherman recalls. “We drifted apart. I had no reason to contact them. They were young and with their new family.”
And Mr. Sherman was about to have a family of his own. Just before selling Empire, he had met Honey Reich on a blind date. The attraction was almost
immediate – “call it love at second sight,” Mr. Sherman says – and the two were soon married by a judge.”
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
Sherman and the Winter sons lost touch for over a decade until 1988 – I note that by this time they were all in their late 20s:
“The cousins and Mr. Sherman lost touch for more than 10 years after he started Apotex. It wasn’t until 1988 that contact was re-established. …”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
Regardless of the fallacy of their adoptive father Martin Barkin, let’s see how Sherman related to his cousins after re-establishing contact at a time of, after all, their prime age for starting a working career.
Here is an account from the July 2008 Toronto Life story republished in December 2017:
“… One night in 1988, while eating at Bemelmans on Bloor, Dana bumped into a man named Stan Garden, who struck up a conversation. It happened that Garden had greatly admired Dana’s mother, Beverley (“beautiful, like Lana Turner”). At her deathbed, she asked Garden to keep an eye on the boys, but he’d lost touch. Now he could make amends. He got Barry’s number from someone he knew and phoned him. He told him about Dana’s situation and was invited to bring him to the Apotex office the following Saturday.
Until then, Barry knew nothing of the cousins’ struggles. Now he became involved in the lives of Dana, Jeff and Kerry, providing money and moral support. (Tim Winter, now a chef, never asked for help.) His motives? If you believe Barry, he was just trying to help Lou’s children. If you believe Kerry and Tim, he intended to make them dependent. That way, if they ever discovered the option agreement that could make them rich, they’d be too incapacitated or beholden to Barry to sue.
For whatever reasons, Barry bankrolled three of the Winter children in their ventures. Dana started a jewellery business; Jeff moved from a travel company into custom CDs; Kerry launched a construction company. Barry bought them homes and cottages, paid Visa bills and gave out allowances, lending millions on dubious security. Behind his back, Dana called him “Bank Sherman.””
(Geraldine Sherman, December 18, 2017, Toronto Life)
A told above, a former family friend Stan Garden happened to meet Dana at a Toronto restaurant, Bemelmans, and reconnected him to Sherman. As told above, at that point Sherman “knew nothing of the cousins’ struggles”, i.e., troubles, and now he began to provide “money and moral support” to all of them – except the Winter adopted Tim who did not ask for help.
There was no mention of getting any of them a job at Apotex, which could be a start to potential ownership shares if Sherman had wanted to honour the old provision in some way.
Here is another account about their reconnecting, from the January 29, 2007 The Globe and Mail story:
“The cousins and Mr. Sherman lost touch for more than 10 years after he started Apotex. It wasn’t until 1988 that contact was re-established. Dana was facing trouble and turned to Mr. Sherman for financial help. Mr. Sherman gave him money, bailed him out of jail and helped him land various jobs. But Dana’s drug problem worsened and he died seven years later.
Soon Mr. Sherman was providing substantial support to the other children. Apotex had become a major generic drug company with roughly $1-billion in annual sales and Mr. Sherman, married with four children, was a billionaire.
He bought his cousins homes, cottages, financed various business ventures and gave them millions of dollars, according to court filings. Kerry received up to $15,000 a month for years, according to court filings. After Dana died, Mr. Sherman bought his widow a home and sent monthly cheques to her two children.”
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
Whatever mention of the help Sherman provided, for getting out of trouble or for making a substantially better living, none was about any of them being offered a job at Apotex – even though they reconnected through Dana being brought to Sherman’s Apotex office by mutual family friend Stan Garden.
But I note that the state of life Dana was in when reconnected with Sherman was problematic, that his facing criminal trouble and wanting help in that context may have easily made Sherman determine the prospect to be dismal for someone like that to work in his company.
What Sherman did beginning in 1988 was consistent with his later statement in in a 2007 court deposition over the Winter cousins’ lawsuit, previously quoted:
“There is no way that any of these boys would have ended up being a suitable employee at Apotex Inc., but I have tried to just help them do what they wanted to do.”
(Paul Waldie, October 26, 2007, The Globe and Mail)
In any case, at this time in the late 1980s and early 1990s, the now grown-up Winter sons were unaware of the old Empire Labs provision that Sherman had agreed with Royal Trust in 1967 for their future benefits. As quoted earlier, years later after they found out, they alleged that the financial help from Sherman was intended to make them less likely to pursue the Empire Labs ownership matter, as earlier quoted:
“… His motives? If you believe Barry, he was just trying to help Lou’s children. If you believe Kerry and Tim, he intended to make them dependent. That way, if they ever discovered the option agreement that could make them rich, they’d be too incapacitated or beholden to Barry to sue.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
But there may have been another motive, one not yet probed by the media, in Sherman’s being so helpful and generous toward his Winter cousins – short of putting them on a path toward possible Apotex ownership interests.
They were the adopted sons of Dr. Martin Barkin who, according to Morton Shulman’s 1993 autobiography quoted earlier, was Ontario Deputy Minister of Health from 1987 to 1991 – during the time when Dana and Sherman reconnected in 1988.
My quite extensive review of his 1996 memoir has shown that Sherman had a sharp mind when it came to how persons in positions influential in or with the government could help and hurt businesses: he marvelled about the crucial legislative role of the government of Prime Minister Pierre Trudeau, about the expert legal help he repeatedly sought from the prominent attorney Willard Estey, a future Justice of the Supreme Court of Canada – at that point the son of a former Justice of that Court – and about Dr. Alan E. Dyer, Ontario Assistant Deputy Minister of Health who established the PARCOST (Prescriptions at Reasonable Cost) program in 1968.
There is no reason that in 1988 Sherman would have overlooked that point when his Winter cousins’ adoptive father, Dr. Martin Barkin whom he had known back in the years when at whose home he and his mother regularly visited the boys, was now Ontario’s Deputy Minister of Health, the second-highest official in the government health ministry – just below the Minister who must be a member of the legislature in the Canadian government systems.
That could be a valuable connection far outweighing any hassle from Dana’s criminal trouble, one that Sherman only needed to revive. As a comparison, during the early 1990s Morton Shulman was also trying to connect to Deputy Health Minister Dr. Martin Barkin to obtain government approval for his “Hungarian wonder drug” – a term quoted in Part 1 referring to deprenyl which he named Eldepryl – for treating Canadian Parkinson’s disease patients. Shulman made eight phone calls to Barkin, and Barkin “didn’t even return a single call”:
“Through the whole Deprenyl approval thing with Ontario I never met him. I kept phoning him and he wouldn’t return my phone calls. I phoned him eight times. He didn’t even return a single call. Finally I got pissed off and I wrote him and said, “Come on down, let’s fix this damned thing up.” He wouldn’t. Even at that point I didn’t meet him.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
As recalled by Shulman, during the years when Barkin was the deputy health minister, Shulman contacted him many times and Barkin never bothered to respond.
During this period, Barry Sherman was ‘luckier’ in the sense that he had the opportunity to, and did, shower Barkin’s adopted sons with all kinds of help, worth “millions of dollars” as quoted earlier.
But unlike Shulman eventually, Sherman did not recruit Barkin to work for his company, or if he did it did not happen and that I can understand: Barkin’s gong to Apotex could revive the decades-old, conveniently forgotten issue of the Empire Labs ownership provision and potentially cost Sherman up to 20% of his now billion-dollar company Apotex.
Barry Sherman’s holding back was Morton Shulman’s gain.
But one may say that Shulman’s small brand-name drug company Deprenyl Research was no Canada-leading generic drug maker Apotex, which could be too challenging a pharmaceutical giant for Martin Barkin.
The answer, besides in the different types of management positions there exist in a large corporation, is that Barkin’s academic and professional reputation was no inferior to Sherman’s – even if as a billionaire Sherman was much wealthier.
Be it in his academic study years or in his professional career, Barkin was excellent like Sherman, here as quoted from a 1990 article by Dr. Brian Goldman:
“… Now in his 30th year as a physician, his career accomplishments are impressive. After graduating from the University of Toronto in 1960 – he shared the Gold Medal that goes to the top student with a classmate – Barkin specialized in urology, completing his postgraduate training at Harvard University and in England. He returned to Canada to practise urology at Sunnybrook, where he quickly rose to the top of his field.
As a researcher, he developed innovative techniques for correcting anatomical abnormalities of the genitourinary system. An expert in this relatively narrow and highly specialized field, he was courted internationally as a consultant, author and lecturer.
His career as an administrator moved on a parallel path.
While serving as CEO at Sunnybrook he turned the hospital’s annual operating deficit into a surplus within 1 year. Earlier, he was a well-connected member of Ontario’s medical elite, serving as chairman of the Ontario Council of Teaching Hospitals and on several committees of the OMA and the District Health Council of Metropolitan Toronto. Somewhere in the middle of these career twists and turns, Barkin found time to own and operate a company that developed computer software for physicians’ offices.”
(“What makes Martin Barkin run?”, by Brian Goldman, MD, 1990, 142 (6), Canadian Medical Association Journal)
As cited above and earlier, whereas Sherman won a Wilson Medal and a Gold Medal from the University of Toronto, Barkin, a few years more senior, won a Gold Medal as well; and whereas Sherman excelled at his graduate studies at MIT, Barkin did so not only at Harvard – also a world-leading academic institution in Boston in the United States – but also in England; and whereas Sherman led his Apotex to become the leading generic drug company in Canada, Barkin rose to the top of his medical field of Urology internationally, in addition to holding various leadership positions in the healthcare field in Toronto and Ontario, and even owned and operated a computer software company for medical applications.
Besides working at the helm of the healthcare field in Ontario, Barkin also had an influential reputation in the healthcare field in North America, here – like the previous quote – as reported in 1990 by Dr. Goldman in the Canadian Medical Association Journal:
“It was yet another juicy rumour. Once again, Dr. Martin Barkin was supposed to be quitting his job as Ontario’s deputy minister of health to head for greener pastures south of the border. There have long been rumours that Barkin, perhaps the province’s most controversial physician, would be tapped to head Humana, the giant American health care conglomerate.
In typical fashion, he outdid the rumour. CMAJ has learned that George Bush, the president of the United States, has spoken to Barkin. The topic? Would Barkin help him create a national health insurance plan for Americans.
Doctors at the Ontario Medical Association (OMA) and hospital administrators across the province listen to the Barkin rumours with interest. They wonder if the man who brought the saying “Just say no!” to hospital budgets is finally going to go away and leave them alone.
At least for now he won’t be, but some say it took a last-minute plea from Premier David Peterson to keep Barkin in Ontario. In any case, the game of rumour and denial continues. Love him or hate him – they all respect him – Barkin watchers across the country agree that he is the most fascinating character to enter the Canadian health care scene in years.”
(Brian Goldman, MD, 1990, Canadian Medical Association Journal)
See, according to rumours circulating among medical professionals, the American healthcare giant Humana wanted to recruit Barkin to be its top leader, and according to information obtained by the Canadian Medical Association Journal, then U.S. President George Bush had spoken with Barkin about helping him “create a national health insurance plan for Americans”.
Wow, anything was possible for Dr. Martin Barkin, “the most fascinating character to enter the Canadian health care scene in years”!
But what were rumoured or even spoken were not necessarily what happened. Soon President Bush was out of a job and there has been no ‘Bush Healthcare’ for Americans; and in the end, Dr. Barkin did not go to the American giant Humana but the small Canadian Deprenyl Research.
In any case, Barkin’s joining Deprenyl Research was a major coup, a steal, for Morton Shulman.
But what made it happen, besides Barkin having left his government post, was Shulman’s offering Barkin stock options worth potentially multi-million dollars:
“I pursued Martin Barkin for three years, then persuaded him to come to work for me in half an hour. I told him in a year I would make him very, very rich.
…
He got stock to come into the company, and an option on a million shares at $7. He’ll get very rich from this. I think in five years he’ll be a multi-millionaire.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
In addition to the large stock option offer Barkin was given the job of executive vice president, and he came only after reaching agreement that he would be promoted to president and Chief Operating Officer in three months; that was at a great time in March 1992, when the stock price of Shulman’s Deprenyl Research had recently had a record high, and old and new media glories came upon Shulman:
“Well then. Can 1992 possibly be anything but even purer gold than the year before?
Surely not.
In the beginning, all augurs well. Canguard backs off – drops plans for its undercutting generic. The stock cruises at the $21 mark; before the month is out, it will hit a psychedelic high of $23.50 Canadian. And the company has expanded. There’s a series of brand new horses racing for profit carrying the colors of Deprenyl Research. There is DAHI: Deprenyl Animal Health; and there is Bone Health, with a new be-all and end-all osteoporosis medication in trials – both US subsidiaries of Deprenyl Research. There is another subsidiary, Memorial, conducting trials for Alzene, for treatment of Alzheimer’s. And soon there will be Deprenyl USA – DUSA – with its 5-ALA PDT; a new photodynamic treatment being tested for skin cancer, quietly rumoured to have spectacular possibilities for other cancer treatment as well.
And a lengthy negotiation is on the point of paying off – with a gold-plated Dr. Respectable to head up the burgeoning company and counterbalance Dr. MortyMouth.
Morty woos and wins as executive vice president of Deprenyl Research Dr. Martin Barkin, the eminent ex-deputy minister of health for Ontario.
…
In March, 1992, Barkin agrees to join the jolly ship Deprenyl as second officer if he is moved up to president and chief operating officer in June. it is a fascinating – not to say demonically inspired – joining of forces. …
…
When Morty first began his recruiting campaign, Barkin had moved from government to the very bosom of the private sector as partner at the heavyweight brokerage firm of Peat Marwick Stevenson and Kellogg, as National Practice Leader for Health Care.
While at Deprenyl he will continue to chair Peat Marwick’s Health Care Advisory Committee. He is frequently called upon by the editorial boards of both the Star and The Globe & Mail to expound on questions of health management, policy and marketing.
…
Remembers Barkin: “He called my partner at Peat Marwick and told him, ‘I want to hire him as president of my company.’” …
…
On March 14 the stock closes up 25 cents, at $17.50. On March 15 the Canadian Broadcasting Corporation announces Wojeck is back on TV, in a new two-hour special.
That day brings a major newspaper profile of Shulman, with a glowing account of Deprenyl’s profit picture: shares that have “gone up 18 times and split twice, despite the naysaying of skeptics,” a company which with its subsidiaries has a market value of “almost half a billion dollars.” A pipeline of exciting products, including Alzene, and the exciting new Canadian discovery ALA PDT, the new photodynamic therapy for skin cancer uncovered by Geoff at that dermatology conference in Kingston.
…
So mesmerized is the reporter that she hurries back to her office to persuade all her friends to snap up the DUSA, quicker than quick. …”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
As told, Deprenyl Research’s stock price reached a record high of $23.50 Canadian dollars in late January 1992, and was at $17.50 on March 14, in the month when Martin Barkin joined the company, with the option to buy one million shares of the stock at $7 – it meant Barkin could make $10.50 per share or a total of $10.50 million if he could purchase and sell those stocks right away.
Also as told, on March 15 the CBC announced a TV re-airing of the show Wojeck – as mentioned in Part 1 it was a TV drama inspired by Shulman’s past work as the chief coroner of Ontario and Toronto – and a major newspaper profile of Shulman also appeared, in which he boasted that his company and its subsidiaries now had a market value of “almost half a billion dollars.”
“Almost half a billion dollars” was not quite Apotex and Barry Sherman’s billionaire status, but Morton Shulman’s company was very promising in its market showing, even though it had only one proven drug deprenyl, named Eldepryl, for treating Parkinson’s disease – discussed in details in Part 1 – and other drugs only at various planning and research stages within the company’s subsidiaries – the person Geoff mentioned in the above story was Shulman’s son Geoffrey Shulman.
Very exciting, and even the reporter doing the newspaper profile of Shulman went to “persuade all her friends” to buy the stock shares of Deprenyl Research’s U.S. subsidiary DUSA.
But as it has been shown in the story of Sherman’s getting ICN Pharmaceuticals stocks for selling Empire Labs and holding them for six months in 1973-1974, and in the story of the volatile ventures of ICN’s owner, Serbian-American tycoon Milan Panic, these stocks were not cash and anything could happen to their value over a period of time.
Like those businesses, Deprenyl Research’s business was also volatile.
Shulman’s propensity for publicly bragging about his business soon led to serious media criticisms of Eldepryl’s high brand-name price; the company’s stock value went into rapid decline soon after Barkin’s joining:
“… But underneath it all, the ground is crumbling away, and the January cloudlet builds to a thunderhead.
…
Indeed, in the third week of March, seemingly out of the blue, James Reynolds, key West Coast analyst with Wedbush Morgan Securities, had flown in the face of his New York vice president David Saks’ unabated devotion to all things Morty. Reynolds issued a sell advisory on Deprenyl stock.
Morty announces he is furious, hints Deprenyl may take the West Coast guy before the regulatory authorities.
It doesn’t happen. Deprenyl stock sinks $2.62 to $15.25, flutters back up to $16.50. The ever-faithful David Saks continues to recommend Deprenyl.
But by the beginning of April, there has been a $10 slide from the January heights, and things start to get nasty.
A huge front-page Toronto Star piece in mid-April luridly paints Morty as Dr. Venal: rich, greedy and scamming the poor with unconscionable pill profits.
“Angry Parkinson’s patients pay $2.31 for 6c pill” the headline shouts. Morty is said to be shamelessly blocking production of cheaper generic versions while sitting on “a whopping $10-million before-tax profit” and displaying hypocritical hypersensitivity to criticism, “repeating over and over again he isn’t in the drug business to make money but to help people, followed with several phone calls and faxes of documents showing evidence of his good works.”
A Newfoundland Parkinson’s sufferer is found to have complained about Eldepryl’s price to the Patent Medicine Prices Review Board. “Why,” the lady rages, “should we have to beg some rich man in Toronto for something that shouldn’t be that expensive anyway?”
…
Here, the reporter briefly explains that Deprenyl is only doing exactly the same as every other pharmaceutical company. The difference is that the big private companies can keep it secret.
…
“The only thing different about Deprenyl is that the true costs – and true profits – have slipped into the public eye. It’s only because Deprenyl Research was a new company with a single product that the factors behind the price of Eldepryl could be deduced by patients – and reporters.”
The message in all this: you might say that Morty was once again paying the price he has paid all his life, for the same reason he has always paid it. He’s getting zapped for letting it all hang out.
…
The newspaper is obliged to print first a correction, then a retraction and an apology for two major factual errors which alter the thrust of the whole story: “… Those figures were incorrect. The company says the 36c it pays for a deprenyl pill does not include its overhead and administration costs. According to the company’s annual report, the after-tax profit on pharmaceuticals is only 15%. The Star regrets the errors and apologizes to Dr. Shulman.”
Yes, the bloom is off.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
As cited above, in March 1992 just one week after a major newspaper profile citing Shulman’s company as having a market value of “almost half a billion dollars”, a key West Coast stock market analyst recommended that investors sell – instead of buy – the stock, and by the beginning of April his company’s stock price had a “$10 slide” from its January heights – its record high in late January being $23.50 as cited earlier, and so the stock price by early April was only around $13.50.
Then, as told above, in mid-April in a Toronto Star story both a Parkinson’s disease patient and the reporter accused Shulman of making excessive profit on a cheap drug: “patients pay $2.31 for 6c pill”. It turned out to be inaccurate, because the cost was 36 cents/pill buying from the foreign manufacturer but that still did not include the company’s operating costs.
Still, at $2.31/pill a drug was being sold at a high price over 6.416 times of its purchase cost of 36 cents/pill; the real costs for the company depended on how much the operating costs were, as the profit was as reported, “a whopping $10-million before-tax profit”.
On the other hand, the above story also shows that there was something too ‘lofty’, if one can put it that way, that a company cheaply importing a foreign drug to sell and getting a “$10-million before-tax profit” – as surprising as the number was – while its other drug projects were not yet productive, could be worth “almost half a billion dollars”.
Also significant in the Toronto Star story was the accusation of Shulman “shamelessly blocking production of cheaper generic versions”. As reviewed in detail in Part 1, Shulman and his company would soon be in fierce legal battles in 1993 against Barry Sherman and Apotex, who wanted to introduce a much cheaper generic version of Shulman’s brand-name drug.
As told in Shulman’s autobiography, in 1992 after joining Deprenyl Research, Martin Barkin immediately played a sobering role to provide clarity over business publicity, trying to calm down the volatility:
“There is news of another major breakthrough. On April 22 Eldepryl is approved by HPB for treatment of early Parkinson’s; it is no longer officially restricted, as in the past, to be prescribed in conjunction with other anti-Parkinson’s drugs for advanced stages of the disease.
This marks several large steps forward. …
Martin Barkin projects a doubling of revenue over next 24 months. He announces revenues of $13.9 million for the year ended December 31, 1991, and a profit of $6.5 million.
In May, the company announces the launch of its new star project. Bone Health, its new Massachusetts-based drug subsidiary, has begun a major clinical trial of its osteoporis drug One-Alpha D(2).
Results will be published in September. But the prognosis is so promising that, on May 22, Deprenyl Research issues to its investors a dividend in the form of one Bone Health warrant for each Deprenyl share. The warrant is good for the purchase of one Bone Health share for 30 cents, from March 1, 1993 to May 7, 1993; or may be traded at that time for 20 cents cash.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
As in the above, there was good news in late April 1992, that the company’s main drug Eldepryl was approved for broader use, the new U.S.-based subsidiary Bone Health showed early promise in its drug trial, and Deprenyl shareholders were issued options to buy the new Bone Health shares or get cash dividends.
The company’s 1991 revenue and profit figures announced by Barkin, in my understanding, clarified over the newspaper reported “a whopping $10-million before-tax profit” and the company’s correction that “the after-tax profit on pharmaceuticals is only 15%” – as in the second last quote above.
I note that $6.5m profit on $13.9m revenue was much higher profit than the 15% after-tax profit “on pharmaceuticals” on a revenue that was not large.
The seemingly conflicting figures would imply that part of the revenue, and more importantly most of the profit, did not come from pharmaceuticals.
As quoted earlier, as planned Barkin would soon become president and COO in June 1992.
Shulman’s 1993 autobiography continued to describe more media criticisms in August 1992.
One critical story, in the Wall Street Journal, reported that Shulman’s company were selling a new Alzheimer’s drug Alzene that had not been officially approved, by mail to the U.S.:
“And now, the storm begins to break.
The Wall Street Journal returns to the scene with a vengeance, turning both barrels on Alzene, and Morty, in the last week of August, 1992.
PROBLEMATIC PILLS
An unapproved drug for Alzheimer’s gets a big marketing push. Proof Alzene helps is scant but that doesn’t deter Deprenyl Research Ltd. Promoters defend methods.
Many Alzheimer’s researchers doubt that Alzene, which hasn’t been approved for sale in the U.S., helps the dozens of U.S. families who buy it by mail through a crack in U.S. import laws. But nobody doubts the promotional prowess of two young drug companies, a flamboyant Canadian entrepreneur and an obscure Israeli inventor that are touting the drug and investments in its prospects.
. . . Most users buy the pills on faith from Deprenyl Research Ltd., a small Toronto drug company. . . .
…
It seems Morty has been cutting through layers in his favorite time-tested ways to get Alzene into U.S. circulation ahead of the official approval process. There have been letters to American neurologists from Deprenyl Research, that warn “overwhelming demand” for the drug has caused a shortage.” The FDA is no happier about this Mortyescapade than was Canada’s Health Protection Branch before them. It issues a reprimand ordering Deprenyl Research to stop promoting Alzene. Morty again denies exaggerating or law breaking. He faxes the FDA to assure them of the potential efficacy of Alzene.
…
He stops sending letters to U.S. doctors; asserts, “I have done nothing more than inform my shareholders of events that might affect the stock.”
The formula for having it both ways was working fine, for the second drug in a row. The publicity will speed the approvals process while letting Deprenyl Research do business by dealing the drug during the pre-approvals gap. For about a year before Eldepryl was approved for sale in the U.S. Deprenyl Research has sold it to American patients through the mail.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
Uh-uh, Shulman seemed to be doing what he accused Sherman of doing illegally.
As in Part 1, Barry Sherman and his brother-in-law Allen Barry Shechtman had been selling Apotex drugs by mail since 1989, with magazine advertising by a Bahamas-based company, to U.S. consumers without the necessary prescriptions or approvals; it led to an FBI criminal investigation in 1993 and a $500,000 fine on one of Sherman’s companies in 1995.
Also as in Part 1, responding to Sherman’s pressure in 1990 to let Apotex develop and sell a generic version of his Parkinson’s disease drug Eldepryl, Shulman hired private detectives to investigate Sherman’s businesses, and discovered Sherman’s mail selling of drugs, which Shulman viewed as illegal.
Now it turned out that Shulman also sold drugs by mail to the U.S. without proper approvals. That was hypocritical, was it not?
Selling a medication before receiving official approval was obvious problematic as reviewed in Part 1 in Sherman’s case. But here Shulman seemed to suggest that promoting a drug by sending a letter to U.S. doctors, but without public advertising that Sherman’s companies had been doing, would not be illegal.
Another critical media story in August 1992, in The Globe and Mail, revealed that Sherman’s company was actually doing currency trading on a unusually large scale, much larger in monetary amount than its pharmaceutical operations:
“The Journal story runs Tuesday, August 25, 1992; the next day, Wednesday the 26th, the Globe reprints the whole thing on the front of its Business section.
It is not a happy time in Deprenylville.
Dan Westell of the Globe follows with a close look at Morty’s dollar-hedging activities.
He reports that Deprenyl’s currency transactions top $514 million in a six-month period; that Danny Gordon, Deprenyl’s broker at currency traders Friedberg Mercantile Group affirms: “He’s on top of things. He’s on the phone with me almost before I’m in the office.”
Deprenyl, which reported revenue of $7.3 million in the six months ended June 30, did more than $514 million worth of securities transactions in the same period.
Martin Barkin says Dr. Shulman deals with Deprenyl’s investments and then reports back on what he has done.
“We’re not gambling on foreign exchange,” Dr. Shulman says. “We hedge our net assets [of somewhere between $5 million and $20 million] because Deprenyl expects the Canadian dollar to fall.”
This open avowal sits uneasily. Canada is stumbling towards a national referendum that is being bannered as the harbinger of its almost certain disintegration.
…
But for Morty, as for hedgers and floggers the world over, the shaky economic and political situation comes to a focuspoint in the gleaming golden four-figure number that shows the downticking state of the Canadian dollar. As far as he’s concerned politics is bunk, politicians are bonkers, and he couldn’t be happier. Each tick is worth $1,000, every time the buck falls a point.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
A truer picture was revealed in the above story. Back in March when Barkin joined, Deprenyl Research with its subsidiaries was touted by Shulman as worth “almost half a billion dollars” on the stock market as earlier quoted, but now in this August story its real net assets was revealed to be “somewhere between $5 million and $20 million” – much, much smaller.
Moreover, Shulman was using this modest amount of assets to play the currency market, buying and selling by hedging on the Canadian dollar, raking up a huge amount of transactions – $514 million within 6 months – because of the frequency of his trading.
So how much did Shulman’s company make from pharmaceuticals, really, versus from other trading activities such as currency hedging?
Barkin again provided some clarity by announcing more financial figures, also pointing out that Shulman talked too much at the detriment of the company, while the company’s stock price continued to drop to $7.63:
“DEPRENYL PRICE SLIDES AFTER CRITICAL STORY IN U.S. PAPER
The stock dropped 38 cents to $7.63, bringing to 9 per cent the decline so far this week. The tumble began Tuesday after publication of a front-page article in The Wall Street Journal that was critical of Deprenyl and its marketing of Alzene. . . .
Martin Barkin has used all his political savvy to smooth the waters. “The only thing that’s happened in the last two weeks is that Morty has been the subject of news articles,” he tells reporters. Barkin also issued a press release which took the unusual step of predicting Deprenyl’s pre-tax net income from pharmaceutical operations would be $1 million in the 3rd quarter compared with $728,000 in the same quarter a year earlier.
But notwithstanding, analyst Michael James, Health Care analyst with Montreal-based Dlouhy Investments, expects the stock price to keep falling . . .”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
As Barkin reported, Deprenyl’s pre-tax net income from pharmaceutical operations was $728,000 in the 3rd quarter of 1991, and would be $1 million in the same quarter of 1992 so there was steady progress.
On the other hand, recall that Barkin had in April announced the total revenue in 1991 as $13.9 million and profit $6.5 million, and a Toronto Star story reported “a whopping $10-million before-tax profit”; and if one multiplies $728,000 by 4 as an estimate of the full year pre-tax profit, it would come to $2.912 million, suggesting that only about 29% of the company’s pre-tax profit came from pharmaceutical operations – while the vast majority, around 70%, came from other trading activities unrelated to medicine.
Recall as quoted in Part 1, Shulman was sometimes accused of “stock manipulation”:
“… Then he turns the drug, Deprenyl, into a pharmaceutical company that at one time was worth $100 million. Along the way he is accused of stock manipulation, quackery and worse. …”
(“Another look at what makes Morty run”, by Edward Trapunski, January 15, 1994, Toronto Star)
As reviewed, Shulman was boasting a market value of far more than “$100 million” cited above, but “almost half a billion dollars” for his company and its subsidiaries. While the facts reviewed did not constitute “stock manipulation”, they did show an unhealthy degree of preoccupation with, even addiction to, the stock and currency markets – for someone who claimed his company to be at the forefront of developing and marketing new medical drugs.
September 1992 marked the sixth month of Martin Barkin joining Morton Shulman’s company since March 1992.
In September, two major international pharmaceutical companies ended their cooperation with Deprenyl Research. One came as a huge disappointment when the U.S. subsidiary Bone Health’s promising new drug trial, mentioned earlier, was abandoned by the leading brand-name drug company SmithKline Beecham:
“On the 5th comes the announcement that Purdue Frederick, the Canadian division of a U.S. drug company, is ending an 18-month-old agreement to market Eldepryl in Canada.
The official announcement says this is a mutual decision [with Deprenyl Research] because Deprenyl Research is acquiring the expanded sales staff it needs to market all of its own growing product pipeline.
On September 18th Bone Health gets a huge kick in the shin.
SmithKline Beecham announces it is dumping One-alpha D(2) because it feels preliminary data from the clinical trials did not demonstrate a significant difference between patients treated with the drug and those taking placebo. SmithKline transfers its marketing rights back to Bone Care International.
Deprenyl has a 14 per cent interest in Bone Care and holds 381,500 shares of Lunar Corp., the U.S. pharmaceutical company associated with Bone Health. The announcement knocks Deprenyl shares from just above $7 to $6.63. The future of Bone Health is pronounced “uncertain.”
If Deprenyl investors bail out of their Bone Health warrants, it could cost Deprenyl $3.4 million, instead of the $5 million it was counting on reaping. On September 19th, Deprenyl shares hit a 52-week low of $5.38.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
Recall that Shulman had offered Barkin 1 million shares of stock options at $7 per share to get the latter to join the company in March. By now in September, those stock options were essentially worthless because one could just buy the shares on the stock market at the cheaper price of $5.38.
Barkin again blamed it on Shulman for getting too much publicity. As the stock value continued to slide, a special company board meeting was convened and a decision was made for Barkin to replace Shulman as the CEO, with Shulman remaining as company board chairman. Barkin immediately reined in the other trading activities and kept the company’s focus on medical drugs:
“Barkin tells the press the company is “paying the price for Morty’s seeking – and getting – so much publicity. Deprenyl sure gets a lot of press attention,” Barkin says ruefully.
The company has decided to “tone down its image notably by keeping its chairman and founder, the flamboyant Morton Shulman, out of the limelight. “There is no question that Morty Shulman has tried to keep the media eye on this company and that has not always been the best policy for this or any other company.”
Barkin added that the evidence on which SmithKline based its pullout from Bone Health is “pretty flimsy.”
“Two days later Deprenyl shares clunk down to $4.70, totter back to $5.38. DUSA lurks around $6.75. Chief Financial Officer Ed Foster emphasizes the company is still in great shape financially, well able to come up with cash to redeem the Bone Health warrants if need be.
On September 23rd a special Deprenyl Research Limited board meeting is called.
…
The official press release comes the next day: “Martin Barkin Named CEO of Deprenyl Research. Morton Shulman to Remain Chairman.”
…
Barkin tells reporters there will be a brake on Morty’s currency activities, which will be supervised by two outside advisors. … And, “While Shulman’s health is good, the company is definitely looking at succession planning. We accept the fact that Morty is 67 years old . . . and we are taking a look at succession planning as it deals with his son Geoff.”
The king is dead; long live the kings.
The shares close up 13 cents that night: $5.50. The industry analysts express their approval. Confidence reigns, sort of.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
It had been a nightmarish six months for Martin Barkin; and now he was finally the man in charge.
But just when he thought there was a big CEO salary for him now, he found out that Shulman had literally lived on the stock market and had no CEO salary – a discovery that would turn Barkin’s face “dark red in temper” like described earlier about his ego and temper:
“The day after Dr. Barkin is elevated to CEO, he sends a letter to Shulman asking to have Shulman’s salary as CEO diverted over to himself. Shulman gleefully replies that he is happy to turn it over in full, “But, as I have never drawn a salary as CEO, it will not be of much help to you”. Morty personally takes the letter over to Barkin. Barkin reads it, turns red in the face and rips it into little pieces.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
With the dust settled, Martin Barkin had an unlucky 6 months of the stock market compared to Barry Sherman and Joel Ulster in 1973-1974, who held for 6 months the shares they had gotten from selling Empire Labs to the famous Milan Panic’s ICN Pharmaceuticals and watched the ICN stock go up and down, but in the end did cash in at about the same price as when they first received them – before the stock value really sank like Deprenyl Research’s that rendered Barkin’s stock options worthless.
As reviewed in Part 1, less than two years later under Barkin, the company lost its legal battle with Apotex over Sherman’s plan for a generic version of Deprenyl Research’s drug Eldepryl.
Then in May 1994, the company changed its name to Draxis Health – taking one of the “final steps to put the Morton Shulman era behind it” – and most likely by this later time enhanced share options were made available for Barkin, as reported in a Toronto Star story quoted earlier and in Part 1:
“The company emerged from its annual meeting yesterday with a new name – Draxis Health Inc. – a new corporate structure and a new share option program for senior management.”
(“Deprenyl change ends Shulman era; Company to be called Draxis and get new focus”, by Art Chamberlain, May 27, 1994, Toronto Star)
Despite the burst of the big stock bubble in his first six months, Barkin continued as the company’s president and CEO until the end of 2007 when he retired; by that time the company was into completely different pharmaceutical products and was a global supplier for those specialized ones:
“DRAXIS Health Inc. (TSX: DAX) (Nasdaq: DRAX) announces that Dr. Martin Barkin today informed the board of directors that he will retire as the President and Chief Executive Officer of the Company effective December 31, 2007.
Dr. Barkin joined the senior management of DRAXIS in 1992. Over the last fifteen years, he has been instrumental in guiding the Company through a period of significant growth from a small Canadian pharmaceutical marketing company to its current position as a provider of specialized pharmaceutical and radiopharmaceutical products in markets globally.
…
DRAXIS Health, through its wholly owned operating subsidiary, DRAXIS Specialty Pharmaceuticals Inc., provides products in three categories: sterile products, non-sterile products and radiopharmaceuticals. …”
(“DRAXIS Health Inc. Announces Retirement of Dr. Martin Barkin as President and Chief Executive Officer”, October 31, 2007, Cision)
While my review above of the history gives a good glimpse into Martin Markin’s joining and succeeding Morton Shulman at the small pharmaceutical company the former Ontario Chief Coroner founded, an intriguing question remains.
Did Shulman recruit Barkin to his company just because Barkin was a distinguished medical professional, healthcare leader and former provincial deputy health minister, or that it had something to do with Barkin being the adoptive father of the Winter family cousins of Barry Sherman?
Sherman was one of Shulman’s most hated enemies, as he told the media to that effect in 1993, quoted earlier and in Part 1:
“This is a true crusade,” Shulman said in an interview in his Roncesvalles Ave. office. “I’ve got nothing to do (but fight with Sherman.) I’m delighted. It was a godsend that this came along.”
…
Shulman’s son Geoffrey and Dr. Martin Barkin, who was brought in last year to run Deprenyl, now manage the company as it tries to expand its range of products and defend its Eldepryl turf.”
(“Shulman vs. Sherman; The drug entrepreneurs face off”, by Art Chamberlain, July 11, 1993, Toronto Star)
Most likely, at some point in time Martin Barkin and his wife Carol had learned of the 1967 provision between Royal Trust and Sherman for protecting their adopted Winter boys’ future financial interests, which Sherman conveniently dodged in 1973 when he sold Empire Labs. By this time in 1992-1994, Sherman had reacquainted with the Winter cousins, and no doubt with Barkin, and showered the cousins with help worth millions of dollars but apparently did not raise the issue of that old provision.
Morton Shulman, a former chief coroner and politician, could also have learned about that provision through the private investigation he had done on Sherman’s various businesses, previously discussed in Part 1.
If Shulman’s invitation for Barkin to join his company had the motive in mind of politically countering Sherman, then Barkin could well have a compatible motive, namely using Shulman as a leverage to get more from Sherman – given Barkin’s own masterful experience playing politics as a leadership figure in the healthcare field and in government.
As discussed earlier, Barkin was as bright and as competitive as Barry Sherman. The 1990 Canadian Medical Association Journal’s profile of Barkin, cited earlier, also portrayed him as a shrewd and money-interested man with his own agenda:
“Before joining the government his career was built on enlightened self-interest. As a urologist he was a staunch defender of extra-billing, charging up to 10 times more to reverse a vasectomy than the slightly more than $200 now paid by the provincial health insurance plan.
…
Doctors don’t hesitate to complain either. “The biggest knock against Martin that I am aware of is that he really doesn’t want to listen to anybody else”, says one high-ranking OMA officer. “He has his prearranged agenda, which he’s going to blow through, come hell or high water. . . . He is undoubtedly the Machiavellian mind behind the attempts to force physicians into alternate payment schemes.””
(Brian Goldman, MD, 1990, Canadian Medical Association Journal)
As told, Barkin liked to make a lot more money whenever he could. Thus, if he viewed Sherman’s friendly gestures to his adopted sons as not enough because of the existence of the old Empire Labs provision, he would likely explore other ways to pursue it.
As also referred to above, Barkin was known as a “Machiavellian mind”, and so such an ‘other’ motive in joining and taking over Shulman’s company would have been compatible with his interests and his personality nature.
The last chapter of Shulman’s 1993 autobiography described Shulman’s being notified, in May 1993, of his appointment as an Officer of the Order of Canada; it was supposed to be confidential before the official announcement, but Shulman couldn’t wait to tell his friends, and a celebratory brunch with the “Morty circle” was held at the home of their friends Roma and Denny Dzerowicz in the Halton Hills on May 16, 1993.
At the end of that Chapter 10, The Bestowal, on the way home Shulman said something and became emotionally teary-eyed, and the interactions with his friends at that time revealed a subtle relationship between Shulman and Barkin regarding Barry Sherman:
“May 16, 1993
From the four corners of Metropolitan Toronto, the Morty circle is gathering.
The impossible has happened.
Morty is to be inducted into the Order of Canada.
He has just gotten the news and of course it is all strictly confidential, but . . .
…
The circle, three-quarters of whom are directors of Morty companies past, present and future, have grown to, for none of them was born to, savor the subtle delights of opera and the silken joys of extremely expensive wines, many of whose names they happily admit they cannot pronounce.
…
The brunch is to mark two milestones.
The first is the news of Morty’s impending induction, at last, into the Order of Canada.
The second is his final break with the company that he and Parkinson’s built, the rift of which, finally and inescapably leaves him on one side of the canyon and, on the other, Martin Barkin and Geoff Shulman.
…
After lunch there is an ad-hoc partial board meeting downstairs in the gym. Arnie, Kingham, Morty: Arnie wants to know if Safety Corp. is going to be in competition with Deprenyl. He also wants to know just where Safety Corp. is at.
Sam Sarick stays at the table, where the golden sauternes shimmers in the glasses, nodding and seeming to doze, and missing nothing.
There are dragons to be slain, wicked witches and wizards to be overcome. On the drive home Morty is hyped, up and down.
Viola McMillan, whom he once dubbed the Boadicea of mining promotions, one of his targets in the Windfall mining scandal of the ’60s, has breathtakingly transcended a 1967 conviction for stock skulduggery and received an Order of Canada, too, at the spring ceremonies just past. They moved the date of the presentation to April 21, to coincide with her 90th birthday, April 21.
…
Thus do laurels wreath the brows of those who make markets.
“She was supposed to spend nine months in prison; I swear she never spent a day! I railed against her in the Legislature, I went to see her in prison and I couldn’t find her; they took her in the front door and out the back. It was an unbelievable scandal.”
Will anyone, anyone at all listen?
Sam focuses serenely on the highway, seems not to be paying attention, until Esther pricks up at something Morty has just said: medication smuggled from Canada and abroad, for illegal resale in the States; imminent rack, ruin for the generic king …
“Does Martin Barkin know about this? Esther asks.
“Martin won’t talk to me,” Morty says.
“Martin won’t talk to you? Oh, nonsense. Whatever gives you that idea? Everything has been taken into account.” Sam has been listening, after all. Morty twitches his shoulders, turns to the window his wide and watering eye.
“Nothing will be done. Won’t make any difference,” he mutters.”
(Dr. Morton Shulman and Susan Kastner, 1993, Warwick Publishing Group)
As in the above anecdote, at the end of celebrating with friends his Order of Canada appointment just notified him by the government of Canada, Shulman’s thoughts were, interestingly, in his old modes as chief coroner and provincial legislator, “dragons to be slain, wicked witches and wizards to be overcome”.
Coincidentally, the previous chapter of his book being discussed here, Chapter 9, is titled, “Slaying the Generics Dragon”. It has been a primary source of my quotes in Part 1 from the book.
Shulman was unhappy that a businesswoman who was a convicted criminal, Viola MacMillan, had already received the Order of Canada before him.
Then he mentioned medication smuggling for “illegal resale in the States”, and “imminent rack, ruin for the generic king” – none other than Barry Sherman who, in the next month June 1993, as in Part 1, would be reported by the media to be under FBI criminal investigation.
One of a couple of friends with Shulman in the ride home, Esther, immediately asked, “Does Martin Barkin know about this?”, and Shulman replied that “Martin won’t talk to me”.
Esther’s husband Sam immediately interjected, “Martin won’t talk to you? Oh, nonsense. Whatever gives you that idea? Everything has been taken into account.”
But Shulman was in tears, muttering, “Nothing will be done. Won’t make any difference”.
See, even before the FBI criminal investigation of Sherman and Apotex became news in June 1993, Shulman already knew it was about to happen, but also knew that it would not lead to any real result – as reviewed in Part 1, after the initial major media publicity about the FBI criminal investigation, by late January 1994 it did not seem to exist anymore, and eventually the end result was a fine in 1995 for one of Sherman’s companies.
When Shulman said, “Martin won’t talk to me”, it could have meant that Martin Barkin was no longer listening to, or even on speaking terms with Shulman. But when Sam replied that, “Whatever gives you that idea? Everything has been taken into account”, it showed that Sam did not think of Barkin as not speaking with Shulman, and that even if Barkin did not he had already taken into account what Shulman wanted to say.
Sam and Esther in the above conversation were Toronto businessman Sam Sarick and his wife. Sarick was not only a Shulman friend but also a board director of Deprenyl Research, as alluded to in the above passages as well. (“About Us”, Samuel Sarick Limited, Eastwood Developments Inc.; and, “Samuel Sarick Independent Director, DRAXIS Health Inc.”, S&P Global Market Intelligence, Bloomberg)
Coincidentally, Sarick died recently in late March 2018, i.e., about two months after Martin Barkin who had died over a month after the Shermans, and his funeral service and burial site were in the same venues as Barkin’s. (“Sam SARICK Obituary”, March 28, 2018, Toronto Star)
Whatever Barkin would not speak with Shulman on was most likely some specific topic, given that Sarick, a director of the company, did not view the two as not on speaking terms.
And if it was only a specific topic, Shulman already said it was about “imminent rack, ruin for the generic king”
This meant that when it came to a matter like prosecuting Barry Sherman, Martin Barkin refused to discuss with Shulman. It caused Shulman to become teary-eyed because it was very personal to him.
The legal patent dispute between Deprenyl Research and Apotex over Shulman’s Parkinson’s disease drug was business that Barkin must handle as the company CEO. But he refused to listen to Shulman’s further ideas regarding Sherman, i.e., criminal prosecution.
There was one obvious reason Barkin would not take a harder stance: Sherman was his adopted sons’ billionaire cousin and since 1988 had been giving them help that has been reported to be worth “millions of dollars”.
I note that, as in Part 1, this was an especially emotional time for Shulman since in May 1993 he was making a personal gesture of excluding Apotex drugs from his prescriptions as a doctor for his patients.
Shulman’s becoming teary eyed when saying that Barkin would not talk to him, also could mean that he felt sad that he failed to win over Barkin at this personal level.
It is therefore a probable scenario that this personal level of thinking had been in Shulman’s mind when first recruiting Barkin to his company, i.e., he could win more to his side including the situation with Barkin’s adopted sons – or “everything” as Sarick might be alluding to.
But Barkin was a mastermind of his own as earlier reviewed and he most likely only used, in my analysis, the animosity between Shulman and Sherman as a leverage for his own interests, rather than pursuing Sherman’s criminal problem as Shulman wanted to see happen.
Barkin’s cousin Jack, also a medical doctor, described Martin Barkin as “extremely aggressive” and doing everything “with a purpose” – not unlike Barry Sherman in a sense:
“He says that his cousin has always used strategy – everything is done with a purpose. “Martin was always a gentleman who knew where he wanted to go. He was extremely aggressive in whatever he was doing, whether it be business, family relationships, or medicine. He always wanted to excel.”
According to past associates, Barkin has few close friends except for his wife Carol, a former fashion model who now sells real estate. The Barkins adopted six children, the last four coming from a single family when the parents died suddenly.”
(Brian Goldman, MD, 1990, Canadian Medical Association Journal)
The first paragraph above, in my analysis, gives additional credence to the scenario that, besides succeeding a high-profile Morton Shulman at the helm of the latter’s company, Barkin had an aggressive strategy of using Shulman as a leverage in his and his adopted sons’ attempts to get more from Sherman – but not siding with Shulman to the point of losing potential gains from Sherman.
Reading also the second paragraph quoted above, I would pose a broader question: what could, or would, Martin Barkin’s “purpose” have been, to begin with, in adopting the Winter sons “when the parents died suddenly?”
From what Beverly Winter’s brother Wayne Rockcliffe recalled, quoted earlier from the Toronto Life story, the late Winters’ home could be available to the adoptive parents. But could there be more that was in Barkin’s “Machiavellian mind”?
One direction to look into, in the context of my review, is that Sherman, an MIT Ph.D. student whose University of Toronto accomplishments had been even more stellar than Barkin’s, in the days between the death of Louis Winter and that of Beverley Winter in November 1965 had expressed a keen interest in taking over Empire Labs.
Then the Winter children were adopted by the Barkins.
Thus, more specifically in my questioning, when Sherman and Ulster acquired Empire Labs in 1967, could the terms of it, in particular the provision between Royal Trust and Sherman for the future interests of the children, be influenced by the adoptive parents?
If Martin Barkin did have a role in the addition of that provision in the Empire Labs purchase agreement between Royal Trust and Barry Sherman, that would befit his cousin Jack’s description of him as a man of “strategy” and “purpose”.
On the other hand, the paradox, or contradiction to it, is that Barkin soon failed to provide good parental care or guidance to at least half of the four Winter sons, and then for decades up to this time in 1993 failed to let them know about that historical provision.
From this perspective, the following year 1994 when Barkin cemented his leadership at Shulman’s former company, changing its name and guiding it to new focuses, was when Barkin and Sherman reached a sort of power balance, albeit an uneasy one: Barkin assumed full control of Shulman’s mantle, or as Sarick said about Shulman’s animosity toward Sherman, “everything has been taken into account”, whereas Sherman poured “millions of dollars” worth into helping Barkin’s adopted sons but doing so without yielding ground that could revive the old Empire Labs provision.
The year after, 1995, then saw the reality of human frailty, or possibly human cost, highlighted in the death of Dana, Louis and Beverley Winter’s youngest son – in a context related to Sherman’s help:
“But no amount of money could set things right. In 1995, Barry sent Dana to a remote fishing village in B.C. to get clean. Dana decided to settle in B.C., married a woman named Julia Zwicker, fathered two children and slipped back into drugs. He would later be charged with conspiracy in the murder of a fellow drug dealer. From a holding tank in Vancouver, he called Barry to arrange bail. While he was out, Dana, then 33 years old, died of a heroin overdose. At the time of Dana’s death, Kerry was in the final chapter of his marriage to Elee Scarlett, a lawyer. The living allowance that Barry gave Kerry would eventually reach $20,000 a month.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
On can reason that had Sherman not sent Dana to British Columbia to “get clean”, Dana would not have instead become a drug dealer there, been charged with conspiracy to murder a “fellow dealer” and died of a heroin overdose in Vancouver.
As above, at the time Sherman was providing a living allowance to Kerry, and so Dana probably received one also. Sherman could not have easily sent one of them to another place had he not provided financial assistance.
One may wonder if Dana’s unexpected death, or otherwise the serious criminal trouble ahead, shocked Sherman or hardened him more. The next year, 1996, was when Sherman had a family Christmas vacation in Africa where he penned his unfinished memoir.
Now, I can re-read some of Sherman’s words in the context of the recent history just prior to it, namely that he had re-connected with his Winter cousins, given them help that was generous but at the same time held them at bay, while their adoptive father Barkin had joined and now led the company of his nemesis Morton Shulman.
Sherman wrote:
“I cannot see that human behaviour differs in any fundamental way from that of numerous species on the savannahs of Serengeti.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Yep, Dana’s behaviour and life existence that Sherman knew well, including frequent illegal narcotic involvement and repeated incarceration, exemplified what was “on the savannahs of Serengeti”.
Sherman then asserted, as a philosophical truth:
“We are all driven by our instincts to eat, drink, copulate, protect ourselves and our young, and cooperate with others, particularly those most closely related to us, if and when it is to our mutual advantage.”
(Bernard C. Sherman, Preface dated December 27, 1996)
Dana was, incidentally or not, the example of “instincts to eat, drink, copulate”, having in 1988 met at a restaurant the old family friend Stan Garden who reconnected him to Sherman, was sent by Sherman to B.C. in 1995 where he decided to marry Julia Zwicker and father children.
But when it came to “instincts to … protect ourselves and our young, and cooperate with others, particularly those most closely related to us”, Sherman himself was a master of the art. From the start, his agreeing to the provision protecting the future interests of his Winter cousins was important for his acquiring Empire Labs on good financial terms, and since 1988 to this time in 1996 he had provided generous help to the cousins he had re-connected with.
However, all the protection that Sherman agreed to and help that Sherman provided were not without conditions as Sherman made it very clear in his philosophizing, “if and when it is to our mutual advantage”.
The old Empire Labs provision had two crucial conditions that Sherman invoked so as not to owe financial interests to these cousins whose late father had been his uncle and mentor: if and when selling Empire Labs was to his advantage, or if these cousins could not be responsible employees at his Apotex, then it would not matter to him whether ownership shares might be good for them.
Earlier, I’ve concluded that answering Morton Shulman’s accusation of his having no “redeeming features” may have been a motivation for Sherman to pen this memoir in 1996; and I’ve noted that Sherman made this memoir available to the media in 2007 as a part of his legal defence against the $1.5 billion lawsuit filed by his Winter cousins.
Now my above review of the relevant history leading up to Sherman’s writing this memoir would suggest that in 1996 Sherman also anticipated that, sooner or later, his Winter cousins would find out and ask about the old Empire Labs provision and what it could mean to the Apotex ownership – because two influential men, namely their adoptive father Martin Barkin and his nemesis Morton Shulman were now together and had the interest in pursing it.
Further development of events beginning in 1999 was consistent with the above conclusion of my review and analysis, namely that Barkin and Shulman were important factors behind the Winter sons’ pursuing this matter:
“The relationship between Barry and the cousins started to sour in 1999 when Jeffrey began seriously investigating aspects of the Empire Labs sale. He was convinced that he and his siblings had been cheated out of years of royalties, and out of their promised share of the successor companies, including Apotex. When Royal Trust failed to hand over key documents, saying they were mislaid, Jeffrey took them to court, and a judge ordered the company to hand them over. …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Jeffrey was the first to begin “seriously investigating aspects of the Empire Labs sale” in 1999 and sued Royal Trust to get the key documents.
The fact that Jeffrey started the “family feud” saga is symbolically and logically important. From the various facts discussed, in particular Barkin’s January 2018 obituary, we know that Tim and Jeffrey have been the Winter sons with a close family relationship with the adoptive Barkin family; of the two, Tim had originally been adopted by the Winter family and that may have had to do with the fact that he never asked for Sherman’s help; Jeffrey, therefore, was the only Winter biological son who also called himself a Barkin.
That the first salvo in the old Empire Labs provision dispute came from Jeffrey meant that Barkin likely provided some clues; also, that it happened a year before Shulman’s death, which was in August 2000 as quoted in Part 1, suggests that the Parkinson’s disease-stricken Shulman’s long-time wish to go hard against Sherman helped to make it happen – in a way that would be positive for Barkin’s interests.
As further evidence that preparing for his Winter cousins’ eventual legal feud with him had been a motivation in Sherman’s writing the memoir, I note that the timeline of Sherman’s telling the media about the unfinished memoir closely matched the timeline of the Winter sons’ taking legal recourses to claim major financial interests owed them.
Here is a timeline of the Winter sons’ lawsuits for financial claims against Royal Trust and Barry Sherman:
“… Then, in March 2006, Tim, Jeffrey, Kerry and Dana’s widow, Julia, filed a claim against Royal Trust for $500 million, accusing them of failing to protect their interests. Royal Trust argues that it had acted properly and the claim should be dismissed.
That summer, Apotex was embroiled in the Bristol-Myers Squibb debacle. A U.S. judge ordered Apotex to stop sales of a generic version of Plavix while the case proceeded through the courts—but not before Sherman had flooded the market, made a fortune, and paid out $6 million in bonuses to his entire staff. While Sherman battled over Plavix, he also sought and received assurance from the cousins that they wouldn’t launch a suit against Apotex.
In January 2007, Kerry, Tim and Julia nevertheless filed a claim against Sherman and his former partners for $1 billion. …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
As told, the first lawsuit, with financial claims of $500 million against Royal Trust, was filed in March 2006; and in the summer while battling Bristol-Myers Squibb over the Plavix drug Sherman privately persuaded his Winter cousins not to sue Apotex; then in January 2007, they nevertheless filed a $1 billion lawsuit against him – the two suits’ claims totalled $1.5 billion.
As reviewed earlier, the first major media story referring to his unpublished memoir was a National Post article in August 2006 – in the summer of 2006 – on the Plavix dispute, entitled “Generic drug, specific issue: Apotex fights Plavix”, here partially quoted again:
“The opening chapters of a draft autobiography sit amid the hundreds of pill bottles and mound of legal documents in Dr. Bernard Sherman’s office. It will be the story of a brainy kid born in Toronto who becomes Canada’s richest generic drug mogul.
Though a work in progress, it has the makings of a page turner. One chapter will recount how an employee from a brand-name drug company offered to sell him secret files. Another, he says, will describe how Dr. Sherman caught a rival stealing …
But what promises to be the book’s most riveting chapter is still unfolding. It is the part where Dr. Sherman seemingly outsmarts two big drug companies, Bristol-Myers Squibb and Sanofi-Aventis…”
(Stephanie Saul, August 16, 2006, National Post)
The above quote reveals that when Sherman began telling the media about his memoir, the chapters he talked about – on disputes with brand-name drug companies – had not really been written.
Why did Sherman talk about these business disputes, especially the ongoing one against Bristol-Myers Squibb and Sanofi-Aventis, by telling through empty chapters of an unfinished memoir? A logical explanation is Sherman wanted to show off what was already in the memoir, but not quite yet because his cousins had launched a lawsuit against Royal Trust but not yet one against him.
Then, after his cousins’ lawsuit against him was filed in 2007, Sherman’s memoir was prominently featured in a The Globe and Mail article on him and his history, entitled, “The real Barry Sherman”, quoted earlier and here again partially:
“So who, exactly, is Barry Sherman? Is he a cutthroat businessman? A strings-attached benefactor? Or just a munificent, self-confessed workaholic?
In 1996, the drug baron asked himself some of those same questions. During a family trip to the Serengeti, he stepped back for a moment of reflection and
started writing a memoir called A Legacy of Thoughts. It has never been published – in fact, it sat in his desk until it surfaced in the family’s recent legal fight.”
(Paul Waldie and Andy Hoffman, November 24, 2007, The Globe and Mail)
As told, the memoir was Sherman’s medium to answer the question of who Barry Sherman really was, and “it sat in his desk until it surfaced in the family’s recent legal fight”.
In other words, the family legal feud was the first occasion when Sherman really made use of his memoir. My conclusion from reviewing the relevant history points to the likelihood that when he wrote it in 1996 Sherman had thoughtfully planned for exactly this use – also with the consideration that his moral accuser Morton Shulman was now bonded with his Winter cousins’ adoptive father.
But Sherman did not want to concede anything before it was publicly raised by his cousins, and so instead of talking about his special relationship with his uncle, the memoir boasted about how excellently he did work for his uncle at Empire Labs in the summers of 1960, 1961 and 1962.
Now in 2007 as the family feud began, his cousins struck hard with a billion-dollar financial claim, and Sherman responded hard by also disclosing in his legal deposition what verbal exchanges had occurred between them:
“In the deposition, he said the family dispute arose around 2002. Mr. [Kerry] Winter accused him of being “involved in some conspiracy to murder their father and deprive them of their inheritance in the 1960s.”
Mr. Sherman said he was “totally flabbergasted at this untrue allegation.”
In an affidavit, Mr. Winter denied making the murder allegation. …”
(Paul Waldie, October 26, 2007, The Globe and Mail)
Aha, the Winter sons had learned or taken cue from the criminal charge of “conspiracy to commit murder” levied against their late brother Dana, or were so angry that Sherman’s sending Dana to British Columbia had led to their brother’s fatal heroin overdose, that when they started arguing in 2002 the allegation Kerry levelled against Sherman was about past involvement “in some conspiracy to murder their father and deprive them of their inheritance”!
It was unlikely that Sherman fabricated this anecdote, since being accused of such a criminal terror was not a pride and would not help himself. Winter’s denial was also understandable because one needed to be extra cautious in a legal setting about making such a serious allegation.
But how likely was it true, i.e., Sherman having been involved in a conspiracy to murder his uncle and mentor Lou Winter and deprive his cousins the inheritance, or alternatively to get access to it for himself?
The elementary facts and basic logic would suggest that it was not likely unless a very broad social conspiracy existed. The reason is that at the time of Louis Winter’s death, Sherman was a Ph.D. student studying in MIT at Boston, and the intensity of academic studies expected of an aspiring young scholar, not to mention Sherman’s own hard drive for academic excellence, meant that during that time he was likely somewhat detached from the social and family happenings in Toronto – even if there had existed a conspiracy of the alleged type.
But when it came to attaching conditions, i.e., attaching strings onto benefits for the Winter children, Sherman was every bit as smart in the generous help that he provided since 1988 as he had been with the old Empire Labs provision.
In their lawsuit, the Winter sons alleged that Sherman’s monetary help “made them dependent” on him, he “used it to keep them under control”, and he often required “security for financial gifts”:
“He bought his cousins homes, cottages, financed various business ventures and gave them millions of dollars, according to court filings. Kerry received up to $15,000 a month for years, according to court filings. After Dana died, Mr. Sherman bought his widow a home and sent monthly cheques to her two children.
The cousins allege the money made them dependent on Mr. Sherman and he used it to keep them under control, often requiring security for financial gifts.
Around 2000, the cousins allege they first became aware of the sale agreement and began asking Mr. Sherman questions. In 2001, they went to court and won an order requiring Royal Trust to turn over documents relating to the deal.
The cousins allege Mr. Sherman demanded that they drop the legal action or he would cut off financial support. When they filed a suit against Royal Trust last year, Mr. Sherman allegedly told Kerry to sell his cottage and slashed his monthly stipend to $2,000. He also allegedly cut off monthly support to Jeffery and Dana’s widow. The cousins aren’t backing down and in the court filing they claim Mr. Sherman has illegally interfered with their rights by not telling them about the agreement and withholding royalties.
Not all the cousins agree. Jeffrey has backed out of the lawsuit and, according to Mr. Sherman, he is furious at the others. They claim he is fearful of Mr. Sherman.
Mr. Sherman, 64, can’t understand how it has all come to this. “To suggest that I was trying to keep control and cover up information is ridiculous,” he said exasperated. “When I found out these kids had problems I did everything I could to help them. So you’ve got an extraordinary and bizarre situation here.””
(Paul Waldie and Andy Hoffman, January 29, 2007, The Globe and Mail)
The facts in the above early story in January 2007 on the Sherman-Winter family legal feud did show that the Winter children were dependent on the monthly stipends he provided: when they filed the lawsuit against Royal Trust their allowance amounts were cut off or slashed to a minimum; such countermeasures created difficulties for them and as a result Jeffrey – the first Winter son to begin seriously investigating the old Empire Labs provision in 1999 as reviewed earlier – withdrew from the $1 billion lawsuit due to fear.
Ironically, Kerry Winter and Dana’s widow Julia Zwicker, with their lifestyles more ‘street-hardened’, so to speak, were more able to withstand Sherman’s pressure of slashing monetary help than Jeffrey who had lived his life closer to his “loving father” – as from the January 2018 obituary quoted – the adoptive Martin Barkin.
But the Winter children’s dependence on Sherman’s money does not mean that Sherman had purposely used it as a means of controlling them as they alleged; also, in the above story no facts were presented regarding Sherman’s “requiring security for financial gifts”, which would have rendered the “financial gifts”, well, not really gifts.
Subsequently in February 2007, the media reported on a $7.9 million countering lawsuit that Sherman filed against Kerry Winter, showing that outside of the monthly allowance much of the financial help by Sherman had been in the form of loans – namely security and repayment required:
“The cousins have acknowledged in court filings that Mr. Sherman, 64, gave them money. Mr. Winter received as much as $15,000 a month and Dana’s widow has been given money to support her two children, according to court filings. However, they have alleged that Mr. Sherman used the money to control them. In court filings, Mr. Winter said his monthly payments dropped to $2,000 a month after the relatives filed a suit against Royal Trust Co. last year.
In his lawsuit, Mr. Sherman alleges that Mr. Winter, 45, signed a promissory note last November agreeing to repay $7.9-million on demand. Mr. Winter had borrowed the money over the years to finance a home renovation business and purchase several properties, according to family members. Mr. Sherman is seeking repayment of the promissory note, plus interest, as well as possession of a house in Fenelon Falls, Ont.
Court filings show that Mr. Sherman sent Mr. Winter a letter demanding repayment about a week before the cousins filed their lawsuit.
“It’s simply to protect my interests,” Mr. Sherman said yesterday. “I’ve got to realize on the security. But the value of it is far less than I’ve lent him.””
(“With ‘disgust,’ Apotex head strikes back”, by Paul Waldie and Andy Hoffman, February 10, 2007, The Globe and Mail)
As anyone can read what Sherman said in the above, that when it came to the money for doing business and purchasing properties, Sherman had “lent” it to Kerry, over the years totalling $7.9 million; when Kerry had the intent to pursue a lawsuit, he needed to sign a “promissory note” agreeing to repayment “on demand”; and when the lawsuit was about to be filed, Sherman demanded immediate full repayment.
Kerry lost a legal battle to keep the properties, including his family home; a house Sherman had helped Dana’s widow Julia buy had a mortgage provided by Sherman, and Sherman now revoked it, according to an October 2007 media story:
“Mr. Sherman has also appointed a receiver to seize four houses he helped Mr. Winter buy, including his family home in Toronto.
Mr. Winter is fighting to hang on to the houses. He recently lost a legal battle and is now appealing.
A fifth house in Vancouver belongs to Julia Winter, the wife of a cousin who died in 1995. According to allegations filed in court, Mr. Sherman has moved to revoke a $321,000 mortgage he holds on that house because Ms. Winter joined the others in the lawsuit.”
(Paul Waldie, October 26, 2007, The Globe and Mail)
Losing a legal battle in the $7.9 million counter-lawsuit by Sherman meant Kerry had to surrender his properties, including his family home:
“In January 2007, Kerry, Tim and Julia nevertheless filed a claim against Sherman and his former partners for $1 billion. Sherman, acting with the same lethal cool he brings to his fights over patents, turned down an offer to settle. He then sued Kerry for $8 million in outstanding loans. In Vancouver, Sherman took Julia to court to have the terms of his mortgage on her house clarified so he could collect his money immediately rather than when the house was sold.
In August 2007, the court heard the suit against Kerry. His lawyer, Malcolm Kronby, argued that Sherman was acting vindictively. The judge still ruled in Sherman’s favour and Kerry had to surrender two business properties, a cottage and his home on Bellwoods Avenue. Kerry agreed to stay on as a tenant, paying $2,500 a month. Even this sum could be hard to come by. His construction company was shrinking while he continued to obsess over justice and riches.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
The facts as reviewed were indeed that much, probably most, of the financial help provided by Sherman had not been “financial gifts” as much as “loans”, was not free, and was dependent on the Winter children being on good terms with Sherman.
But of course, the cash Sherman provided for the Winter cousins’ allowances and paying their Visa bills, over the eighteen years or so from 1988 to 2007, probably did come to millions of dollars.
The way Sherman conditioned these loans and the manner in which he later revoked them or demanded repayment, show that he had in mind his “control” of the Winter cousins’ financial predicaments, methodically considered years in advance in preparation for the likelihood of their discovering the old Empire Labs provision and demanding substantial financial interests.
Kerry Winter called Sherman’s controlling tactics “bullying” that could cause him and his family “irreparable harm”:
“Kerry Winter has alleged that Mr. Sherman is bullying the family and that he has gone back on a promise not to retaliate financially while the lawsuit over Toronto-based Apotex proceeded. “If he is permitted to continue, Mr. Sherman will cause me and my family irreparable harm,” Mr. Winter said in an affidavit filed in court.
Mr. Sherman denied that his actions were tied to the lawsuit. “I’m doing it to enforce the security [of the properties], it’s as simple as that,” he said in an
interview. In court filings, he said that a couple of the houses have been vacant and property taxes on three have not been paid for years.Mr. Sherman began backing Mr. Winter in 1994 by arranging a $1.2-million line of credit to help him start a home renovation business. More money followed to Mr. Winter and others.
Mr. Sherman, who is much older than his cousins, said in court filings that he felt obliged to help the Winter children after their parents died in 1965.”
(Paul Waldie, October 26, 2007, The Globe and Mail)
As in the above, the more substantial finance by Sherman for Kerry and the others, i.e., business loans, began in 1994. That was the year when Martin Barkin cemented his leadership at the brand-name drug company Morton Shulman had founded, changing its name as well as its focus.
The timing coincidence could be an instance of Barkin’s leveraging Shulman’s animosity toward Sherman to get benefits for his adopted sons, in this case some major career-oriented help from Sherman. Sherman claimed to the court that he felt obliged to help them, but despite such feeling his help at this business level started only 6 years after their reconnecting.
In the above, in 2007 Sherman said he was simply “enforcing the security [of the properties]”. But the fact that in the several media stories quoted above there was no mention of Sherman demanding money repayment from Jeffrey, who coincidentally at some point withdrew from the $1 billion lawsuit, indicates that the security was enforced selectively – as a condition “to keep them under control” as alleged in the Winter cousins’ lawsuit.
So, those aware of this high-profile family legal feud have witnessed the costly price of attempting to claim a share of the family business ownership from the prominent Canadian billionaire and leading philanthropist Barry Sherman: it was awfully steep for the Winter family cousins feuding with Sherman, whose late father had been his mentor, that within months their comfortable lifestyles were gone when he withdrew his favours and demanded payback through “enforcing the security” in the conditioned help he had provided.
This onerous outcome for the Winter sons was probably important for Sherman. His unfinished memoir which he publicized in 2007 as a part of this family legal fight, showed how central the notion of “mutual advantage” was in his philosophy – without exception even for those close to him.
According to Geraldine Sherman, writer of the July 2008 Toronto Life article later republished in December 2017, when she interviewed Barry Sherman for that article, the latter reiterated that he had no intent to compromise with his Winter cousins – he might have been too good to them already:
“Even at his stage of life, he’s committed to expanding his business and shoring up his legacy, more concerned with the judgment of the courts than with public opinion. As for the Orphan Children, he remains steadfast in his belief that he did all he could for them, perhaps too much. He argues that at the time of the Empire sale, the boys, ages 11 to 15, were too young to benefit. And after so many years, it’s too late to file a claim.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
It wasn’t easy even just to stay in the family legal dispute against Sherman. Kerry Winter’s lawyer Malcolm Kronby did not want to publicize the case, and for a while Kerry communicated with the media sneakily. Finally, he decided to fire his lawyers, blaming their being Jews as the reason that they did not fight hard publicly for his “revenge” but instead tried to shut him up, as he told the Toronto Life writer:
“Kerry winter admits that for many years Sherman was “like a surrogate dad and I was like an adopted son.” Now, perhaps because he feels most betrayed, he leads his family litigation and, going against his legal advice, feeds stories to the press. His lawyers told him not to talk to me, and for more than a year we communicated like spies. He would secretly transmit documents if I promised not to tell Kronby. He’d call me with various rants: “For me it isn’t about shekels, it’s about revenge!” Dozens of emails passed between us. He accused me of falling for “Sherman’s spin” if I hesitated before contacting people he recommended. Once, when I didn’t reply fast enough, he accused me of being out for dinner with Honey and Barry. Twice, after I sent questions in advance to both Kerry and Kronby, Kerry backed out of our scheduled interview. Finally, last March, we met.
…
Sipping his coffee, Kerry explained that he was firing his lawyers. “They always tried to shut me up. Well, they’re finished.” He drew his finger across his throat. He thinks that because his lawyers are Jewish they hesitated to go after Barry in the press, afraid of being shunned by their community. He claims there was a breakdown of trust.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
The Winter sons’ uncle Wayne Rockcliffe, who as reviewed earlier had a grudge about Beverley Winter’s decision for the children’s Jewish adoption, expressed his support for Kerry Winter:
“He arrived at the Starbucks near his Trinity Bellwoods home, a tall, ruddy-faced, boyish-looking 46-year-old. He had just come from seeing his uncle, Wayne Rockcliffe, who had once again come to his aid, promising to cover Kerry’s $2,500 rent that month if needed. I was surprised. A recent Globe and Mail article had reported Rockcliffe’s advice that the cousins move on with their lives. Later, when I spoke with Rockcliffe, he complained that the reporter had omitted a crucial qualifier: “Perhaps if I’d had their terrible start in life, I’d think differently.” Rockcliffe has his own reason to dislike what he calls “Barry’s cold heart.” Forty-three years ago, when they shared a limo at Beverley’s funeral, Rockcliffe said it would be a shame if the Orphan Children were adopted separately. Sherman’s reply, he claims, was, “So what? Worse things could happen.” Rockcliffe says he can’t forgive him. Sherman denies ever having said anything to that effect.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
As recalled by Rockcliffe, back in 1965 the young MIT Ph.D. student Barry Sherman’s attitude toward his Winter cousins’ facing adoption was rather “cold” hearted. That attitude apparently had not changed over the decades, and if anything was further rationalized by Sherman’s articulation of his moral philosophy in his 1996 memoir.
In his interview with Toronto Life’s Geraldine Sherman, Kerry Winter also spoke of support for him from Barry Sherman’s “business enemies”:
“According to Kerry, Stan Garden and Rockcliffe aren’t the only people on his side. He says several of Sherman’s business enemies want him to win. As he spoke to me, his face reddened and his voice rose. “If Barry had his way, I’d be eating cold french fries out of a Dumpster at KFC. Well, Barry, that’s just not going to happen.” …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
As my review of facts, many of which not yet given attention by the media in investigating the Shermans’ deaths, has shown that their adoptive father Martin Barkin and his business partner Morton Shulman for many years had considerable clouts in the pharmaceutical business field, and so the Winter sons at least had the option of utilizing some of those professional and business links.
In this logical context, the first guess of who those “Sherman’s business enemies” were as Kerry called them would be the ones in the brand-name drug business field – versus Apotex’s generic drug business field – as reviewed in Part 1.
What Kerry said in the above can be interpreted as that he had to up the ante and involve some of Sherman’s business enemies on his side – even if he and his siblings were legally claiming shares of Apotex ownership – because otherwise he could end up “eating cold french fries out of a Dumpster at KFC” as Sherman intended.
In other words, Sherman’s harshness toward persons who legally disputed him could make them feel necessary to act harder in response.
Even with such broader backing from the presumably influential in business, Kerry had no illusion that it would be a easy fight, and vowed of being Sherman’s “nemesis”, as “a lifelong mission”:
“… He rapped his knuckles on the table and leaned in close. He vowed he’d be Sherman’s “nemesis,” saying that for him this was “a lifelong mission.” …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
In his interview with Toronto Life for the same 2008 article, Barry Sherman clearly indicated that he would not compromise on the Winter cousins’ lawsuit:
“No one can say when the $1-billion suit will be heard in court. It will probably take years. Will Barry settle? Not likely. He’s a lion, a stranger to the notion of compromise.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
The lion is the king of the Serengeti. Isn’t that the metaphor?
Kerry Winter also expressed fear for his own safety, as well as for that of the Toronto Life writer interviewing him:
“… He expressed fear for his personal safety and, pointing a finger in my face, warned: “By the way, sweetie, you’re next.” By this time, he was shouting. He imagines Sherman at the courtroom door, begging to settle. “I’ll go to trial, sweetie,” he growled. “I’m not going away.” Then he put on his coat and walked out without another word.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Real or imagined, the street-hardened Kerry Winter would naturally think that such a high-profile and high-stake legal feud against a powerful business leader could mean personal danger, and he himself was also quick to talk in that term about others – not merely about the reporter – as well, like with his gesture about firing his lawyers, as earlier quoted, ““… Well, they’re finished.” He drew his finger across his throat.”
Recall as in Part 1, a “Mr. Jones”, who headed a private investigative agency working for the German pharmaceutical giant Bayer, once said about Barry Sherman, as recalled by another private investigator Paul Whybrow:
“… Jones is thinking about how he can get Sherman. This is no longer just business, this is personal. He doesn’t just want to compromise him in a corporate way. He’s talking about playing hardball with Barry Sherman. It was very direct. He said to us, ‘We have to get this bastard Sherman.’ He said to us, ‘What are we going to do about him? Let’s take him out of the game. Take him out.’ …”
(Jeffrey Robinson, Prescription Games: Money, Ego and Power inside the Global Pharmaceutical Industry, 2001, McClelland & Stewart Ltd.)
And so, in his connecting to Barry Sherman’s business enemies, if Mr. Kerry Winter ever became in touch with Mr. Jones, no doubt there would be a lot of fireworks, verbally and possibly more.
Kerry Winter’s “lifelong mission” turned out to be indeed so – as in Sherman’s life, so far.
Over a decade after the initial lawsuit filing in 2007, in September 2017 an Ontario judge made a ruling on the Winter sons’ $1 billion lawsuit. Siding with Barry Sherman, Justice Kenneth Hood dismissed the lawsuit’s claim as “wishful thinking and beyond fanciful”. Then in early December 2017 – a week before Barry and Honey Sherman were last seen alive – the judge also ordered the Winter sons to pay $300,000 of Sherman’s legal costs:
“On Sept. 15, 2017—three months to the day before Sherman and Honey were discovered dead—an Ontario judge sided with Sherman, dismissing the suit as an abuse of process and calling the cousins’ claim “wishful thinking and beyond fanciful.” On Dec. 6, one week before the Shermans were last seen alive, Justice Kenneth Hood issued another ruling, ordering the cousins to pay $300,000 of Sherman’s legal costs.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
The judge again ordered Kerry Winter to pay back the $7.9 million loans he owed Sherman – as reviewed earlier it had been ordered by a judge in 2007, resulting in Winter losing all his properties:
“As part of the court’s decision, Winter not only lost his claim on his cousin’s fortune, but he was also ordered to pay Sherman back $8 million. …”
(“Barry Sherman’s cousin fails lie detector test over allegation of plot to kill Honey Sherman”, by Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
At this point, a curious reader may wonder: could Barry Sherman’s Winter cousins, particularly Kerry, have something to do with the Shermans’ murder, having lost the legal battle for their $1 billion lawsuit and slapped with more financial burdens?
The media was equally curious, for example, asking a similar question in the Maclean’s April 2018 investigative article:
“The timing of those two judgments triggered inevitable suspicions. Could they have been a motive for murder?”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
It is a good question, namely about the Winter cousins’ possible roles in the double homicide, for at least three reasons.
Firstly, the Maclean’s article quoted above and more extensively in Part 1, also asked a related question , “why now?”, about Sherman’s murder. Here that question is quoted along with facts previously quoted in Part 1:
“The question to be answered is not only why was Sherman murdered alongside his wife, but why now, at 75? It’s no secret the drug executive had amassed a long list of enemies in his 50-year career. A renowned risk-taker, disruptor and pitbull professionally, Sherman was a polarizing figure—regarded as a softie with a heart of gold by those in his proximity and loathed by those who claim they were outfoxed or betrayed by him. The man who learned weeks before his death of his nomination to the Order of Canada was also called out as unethical in business dealings. The late physician and pharmaceutical entrepreneur Morton Shulman, who did battle with Sherman, called him “the only person I have ever met with no redeeming features whatsoever.””
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
By this logic, if one ponder the question of why the murder happened at this time when Sherman was at a senior age of 75, then Mr. Winter would look more suspect than Mr. Jones and the brand-name drug companies competing with Sherman as reviewed in Part 1. The hypothetical answer, or scenario, is that the Ontario judge’s dismissal of the Winter son’s lawsuit triggered the Shermans’ murder, and so the timing of the murder was determined by the court ruling’s timing.
Secondly, suspecting the Winters is reasonable because Kerry has publicly admitted that, because of the timing coincidence, people may view him as a suspect even if there has not been physical evidence for it:
“Speaking to Maclean’s, Winter says he understands why some may consider him a suspect, given the timing of the lawsuit’s dismissal and the subsequent costs award. “People can think: ‘Oh, Kerry lost his summary judgment motion and he went out and—some way, somehow—got into Barry’s house on Old Colony and did the dirty deed, and now he’s acting like a loon on The Fifth Estate. He is the main suspect,’ ” he says. “Come on. Would I be walking around, six, seven weeks after the murder? If I’m a suspect, where is my DNA? Where is my hair? Where are my fingerprints?””
(“Barry Sherman’s legal battle with his cousins goes on weeks after his murder”, by Michael Friscolanti and Anne Kingston, February 8, 2018, Maclean’s)
Winter even admitted that he had no alibi for his own whereabouts on the day when the Shermans were believed killed:
“Winter says no one can verify where he was at all times on Dec. 13, the day Barry and Honey Sherman were last seen alive.
“No, no alibi,” he told The Fifth Estate. He said after a Cocaine Anonymous meeting, he went home and fell asleep.
“Very easy for me to have left work at any time because I’m not on the clock. … I could easily have driven over to [the Sherman home] and did the deed.
“I admit to that, but I didn’t, I didn’t, and that’s why I’m not nervous.””
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
But he said that police told him he was not a suspect:
“Winter said he planned to meet police for an interview and that he was told he was not a suspect.”
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
The lack of evidence tying Kerry Winter to the actual crime could mean that he was not a killer in this case. That could be what the Toronto Police meant telling him that he was not a suspect.
But as in the case of his late brother Dana in 1995 and the example of what he once accused Barry Sherman of as Sherman stated to the court in 2007, involvement in a “conspiracy to commit murder”, or the perception of such, would be harder to absolve for Kerry.
Finally, suspicion of Kerry Winter is natural because he even told the media about fantasizing killing Barry Sherman in the past, in “very graphic” terms:
“In a wide-ranging interview with The Fifth Estate, Winter said he told his psychiatrist that in the past, he had fantasized about murdering Barry Sherman.
“I would talk about killing Barry, and it was very graphic,” Winter said. “He would come out of the parking lot of Apotex, and I’d be hiding behind a car, and I’d just decapitate him. I wanted to roll his head down the parking lot, and I’d sit there and wait for the police.””
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
Nonetheless, besides emphasizing the lack of evidence against him, Kerry also firmly stated, in an interview with Maclean’s, that he “had nothing to do with their demise”:
“Speaking to Maclean’s, Kerry insists he had nothing to do with the slayings. “I admit that I have utter disdain and hatred for Barry Sherman,” he says. “He wronged me. He didn’t honour my father. He didn’t honour the option. He pulled a sleaze move. He stopped visiting me. He lied to me. He betrayed me. I have every reason to hate this man, but I had nothing to do with their demise.””
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
In another interview, with the CBC’s The Fifth Estate program, Kerry also asserted that he did not know “who did it”:
“Winter admits he could be seen as a suspect in the Sherman killings.
“I probably had reasons to lash out to do the dirty deed,” he told The Fifth Estate’s Bob McKeown. “I had nothing to do with it. I don’t know who did it.””
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
Kerry Winter’s statements above amounted to a flat denial of any role in, or even knowledge of, a “conspiracy to commit murder”.
Nevertheless, other things Kerry said and did in the same circumstances show that the above denial should not be easily taken as truthful.
Here I review two serious concerning facets of what Kerry Winter said and did in the same circumstances: one, Kerry’s street-hardened background gave him ready access to the hard-core criminal sector, and in the above interview with The Fifth Estate as well as other media venues, he made a relevant claim of once arranging for a would-be murder wanted by Barry Sherman; and two, Kerry was prone to lying, and while making his denial in the above-quoted interview he also failed a polygraph test about this other claim of murder planning, and even admitted to lying about it.
Relating to the first facet, namely his criminal connection and intent, Winter dropped a bombshell in the media by claiming that about two decades ago in the mid-1990s, Sherman asked him to arrange for the killing of Sherman’s own wife Honey:
“Though he cannot remember the date, Winter said that in the 1990s, on two separate occasions during a visit to Barry Sherman’s office at Apotex, he recalls Sherman asking him to make arrangements to kill Honey. At the time, by his own admission, Winter said he was heavily into drugs and the street culture.
“Back in the mid ’90s, we had a discussion in his office at Apotex,” Winter said. Asked what led to the discussion, Winter said: “His disdain for his wife, Honey. His unhappiness in his marriage and that he couldn’t stomach to be in the same room as her.”
Asked by the Star if he believes the comments he alleges were made in the 1990s held true in 2017. “They could have kissed and made up,” he said.
Winter said he never told police, but told two close friends.
“I was quite surprised. I wasn’t surprised that he had this idea, I was quite surprised that he was asking me if I knew someone who would do that,” Winter said, though he later conceded he was likely asked because “I was on the street, I was on drugs at the time and I knew a lot of bad people.””
(“‘I had absolutely nothing to do with it,’ Barry Sherman’s cousin says”, by Kevin Donovan, January 31, 2018, Toronto Star)
According to his interview with The Fifth Estate, Kerry did find a “hit man” but at the last minute persuaded Sherman not to do it:
“Winter’s bizarre allegation of the plot to kill Honey Sherman includes the claim that he lined up a hit man to do the job two decades ago.
“He said, ‘I want you to whack my wife,’” Winter claimed. Winter then claimed the plan was aborted at the last minute.
“I called him and said: ‘You know, there’s no turning back, Barry, if I push the button,’” Winter said.”
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
In these media interviews Kerry essentially provided witnesses, saying that at the time, i.e., in the mid-1990s, he told two close friends about it. The Fifth Estate managed to contact those two people and verified the authenticity to some degree, namely that two decades ago Kerry had indeed told them about the murder plot:
“The Fifth Estate interviewed two of Winter’s friends who said they were told of the plot two decades ago, but neither had any direct knowledge of such a plot ever happening.”
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
The Fifth Estate arranged a polygraph test for Kerry Winter, to see if it can affirm the truthfulness of his claim through the lie detector, a claim of past involvement in a “conspiracy to commit murder” by both him and Sherman:
“Some of Winter’s claims were reported this week by Canadian and U.K. media outlets, but The Fifth Estate could find no direct evidence to support Winter’s claim that he and Barry Sherman were involved in a conspiracy to commit murder.
Winter and his lawyer agreed to a lie detector test on the question of whether or not Barry Sherman had asked him to arrange the killing of his wife.
The test, filmed by The Fifth Estate, was conducted by former Quebec police officer and veteran polygraph expert John Galianos.
Galianos determined that Winter was not being truthful about the alleged plot and that he “failed” the test.
While not admissible in court because of possible inaccuracies, polygraphs are commonly used by police officers to determine truthfulness.
Winter told Galianos on camera that he “embellished” part of the scheme. He also said he fabricated other parts of the story.”
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
As above, the polygraph test showed that Kerry was not being “truthful”, and on the spot he explained it as due to embellishing part of the plot and fabricating other parts.
Kerry then arranged for another polygraph test without involving The Fifth Estate, and those results were “inconclusive”; but he refused to take a polygraph test directly on whether he killed the Shermans:
“Late Thursday, Winter sent The Fifth Estate results of another polygraph test he says he arranged himself that showed the results were “inconclusive.”
On the advice of his lawyer, Winter also declined to take a lie detector test on the question of whether he killed the Shermans.”
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
Thus, Kerry Winter who had a criminal past including illegal narcotics dealing and time in jail, had quite likely told some friends two decades ago about arranging to murder Honey Sherman for Barry Sherman, but what he has told the media now was not reliable and he has admitted to lying about the it.
Can the denial of someone like that, with a criminal past and prone to lying, about any involvement in or knowledge of the murder of the Shermans be easily trusted? After all, the shocking double homicide occurred two decades after his talking to others about one wanting to kill the other with his help.
Criminologist Michael Arntfield, who observed The Fifth Estate’s polygraph test, posed the question why Kerry Winter went through the test, “this whole song and dance”, when he clearly was lying:
““He was lying, and the test results — the polygraphist — confirms that,” said Michael Arntfield, a criminologist at Western University in London, Ont., who observed the polygraph test.
“I mean, why go through this whole song and dance? That’s really the underlying question here.””
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
The criminologist’s question is a very meaningful one because it regards Kerry Winter’s objectives.
In his interview with The Fifth Estate, Kerry asserted that his objective was to “hurt” Sherman’s legacy:
“Winter told The Fifth Estate he was going public now with the allegations because he wanted to “hurt” Barry Sherman’s legacy.
Winter and his siblings had been locked in a protracted, decade-long lawsuit launched in 2007 seeking a piece of the Apotex fortune. Last September, an Ontario Superior Court judge dismissed the case as “fanciful.” The cousins have since appealed.
“I was betrayed. My cousin hurt me, and now I want to hurt him,” Winter told The Fifth Estate.”
(Harvey Cashore, Scott Anderson, Ronna Syed and Joseph Loiero, February 1/2, 2018, Fifth Estate, CBC News)
In order to hurt Sherman’s “legacy”, or reputation, the alleged murder plot Sherman had wanted needs to be credible, i.e., seen as credible by others. That has been partially achieved when Kerry Winter’s two close friends confirmed to The Fifth Estate that they had heard about it from him two decades ago – at least it isn’t a newly fabricated story.
But in a legal sense, this was about planning for a would-be murder, and any solid confirmation would carry potential criminal-law implications for Kerry Winter, alone among he and Barry Sherman now that Sherman is dead. As some of the above quotes from The Fifth Estate story indicate, police pay attention to polygraph results and lawyers would advise not taking such tests.
For this reason, my explanation is that Kerry lied so that the polygraph results could not fully confirm the murder plot; but when the results were concluded as false, he did another test on his own to show that it might not be all false. In other words, Kerry wanted some degree of credibility for the old murder plot so as to hurt Sherman’s reputation, but not full confirmation that could cause himself trouble.
In my view also, Kerry Winter’s objective was not just hurting Sherman’s “legacy”, but had practical motivations.
For one motivation, such negatives in Sherman’s legacy, namely the bad deeds he had done, have ramifications to his business ownership reputation.
Sherman had been adamant, on several occasions as reviewed earlier, that his Winter cousins were simply not suitable to work at Apotex and thus would not qualify for ownership interests.
But now, if both the prominent businessman and leading philanthropist Barry Sherman and the sometimes criminal Kerry Winter were at one time would-be murderers, or co-conspirators in a would-be murder, the notion of business ownership suitability could change in favour of Winter.
However, a main weakness of this murder plot claim by Winter, in my opinion given that The Fifth Estate had partial verification from his two close friends, is the alleged murder motive – that Sherman was unhappy in the marriage.
In my quite lengthy review of the various media profiles of Barry Sherman and his memoir, I have not noticed such a deadly facet in his personality traits.
When the media first reported that the Toronto Police suspected the deaths as murder-suicide, there were stories about the “clashing personalities” of Barry and Honey Sherman:
“‘Yin and yang’ is how family described Honey and Barry Sherman. They complemented each other, yet had clashing personalities.
Reserved, socially awkward and a workaholic, Barry was a pugnacious man who never backed away from a courthouse or corporate fight.
As an entrepreneur, he hired private detectives to rummage through his competitor’s garbage, then got a court order so he could barge into their head offices and seize their papers. He didn’t hesitate to foreclose on the homes of people who owed him money, even relatives.
“Free will is an illusion . . . Life has no meaning or purpose,” he said in his unpublished memoirs.
Honey was outgoing, with a cutting wit and salty tongue. Feted for her philanthropic work, she had the mettle of someone who survived throat cancer and took part in a charity dance contest after undergoing surgeries for her crippling arthritis.
…
Friends close to the couple describe signs of discord in the Sherman’s marriage, such as public ribbing about Barry’s devotion to work, but they viewed it as shtick. Everyone the Globe and Mail spoke with over the past week has been incredulous at the police’s initial theory that it could be murder-suicide. There have been no further details from police about the case.
Interviews with friends, court records, Barry’s memoirs and public tributes at the couple’s memorial Thursday paint a portrait of two people with outsized personalities who were polar opposites.
Back in 1970, Honey Reich was volunteering at Mount Sinai Hospital when she told a nurse that she was looking for a nice Jewish doctor. That nurse was married to Joel Ulster, a friend and business partner of Barry, a budding pharmaceutical magnate. He was not a medical doctor, but he did have a PhD. The two were introduced.
…
Honey was a socialite philanthropist, and loved nothing more than an excuse to celebrate. Holiday get-togethers were one area of their lives where the otherwise frugal couple loved to go all out. What began years ago as a modest family dinner evolved over the years into an 80-person feast, with a banquet table cutting across the entire length of their mansion. In the kitchen, Honey – in her sweatpants and flip flops – would be cooking for everyone.
…
Despite their busy household, Barry spent most of his time at the Apotex offices – six days a week, in the company’s early years, often working longer than 12-hour shifts. At night, he slept with a pad and pen by his bedside in case he woke with an idea.”
(“Who were Barry and Honey Sherman?”, by Tu Thanh Ha, Molly Hayes and Rachelle Younglai with reports from Andrew Willis, December 22/23, 2017, The Globe and Mail)
As told, the couple were opposite personalities with contrasting life focuses, the husband being aggressively driven in business while the wife immersed in social events and philanthropy, and Barry was not the medical-doctor husband Honey Reich had looked for.
But there were no outward signs of anything really “clashing” between them in their marriage, and so as in the above story their friends scratched their heads trying to substantiate Toronto Police’s “initial theory” of murder-suicide.
Thus, media reported facts about the couple do not support Kerry Winter’s claim about Barry Sherman’s animosity toward his wife.
For another motivation on Kerry’s part, a hidden history on the part of Barry Sherman involving a plan to murder his wife Honey could bolster the “murder-suicide” scenario of their shocking deaths, in a way befitting Kerry’s interests.
Using his sensational tale of hiring a hit man for Sherman two decades ago as evidence, Kerry firmly stated, in an interview with Toronto Sun’s Joe Warmington, his “belief” that the deaths were the result of Barry killing Honey and himself, exactly as the Toronto Police initially suspected:
“… He believes the Shermans, who were found dead of ligature neck compression hanging from an indoor pool railing, was a murder-suicide as police originally suspected.
“If you believe (family lawyer) Brian Greenspan, if you believe it was a targeted hit and it was up close and personal, let’s find out when they charge the person responsible for Honey and Barry’s death,” Winter said.
“Well that day is never going to come sir because I said it, and I will say it again, Barry killed her and committed suicide,” he said. “That’s my belief and it will never change. The only way it will change if someone admits to doing it.”
…
“I am a recovering addict, six years sober, buddy,” said Winter. “I believe in the Lord. I am not an evil person. I had nothing to do with Honey and Barry’s death.”
But he does allege participating in a conversation with his cousin Barry Sherman in which he claims the Apotex founder asked him to arrange for his wife to be “whacked.”
Winter said “this business about Barry asking me to kill someone …“could be misconstrued as a conspiracy to commit a murder.”
He’s trying to balance that fine line between it not being a conspiracy he was involved in but one that Barry Sherman was allegedly spearheading.
“This idea that Barry never asked me is laughable,” he said. “Barry didn’t love Honey.”
He said the truth will eventually come out — which includes him looking to hire an underworld friend.
…
“You will see I am not a kook, I am not a nut,” he said. “All I said was there was a murder-suicide and I kept my mouth shut. But when Brian Greenspan starts spinning this (double murder) yarn, I am not going to keep my mouth shut anymore.
“The idea that Barry could not harm a hair on her head, Joe, is not true,” Winter said. “Barry hated her. That’s what I am trying to tell you.””
(“WARMINGTON: Cousin claiming Sherman deaths murder-suicide fails lie detector”, by Joe Warmington, February 2, 2018, Toronto Sun)
Basically, Kerry Winter wanted others to accept that he is a decent person but Barry Sherman was once a would-be murderer of wife Honey and now has really killed Honey and himself.
In another interview with the British newspaper Daily Mail, Winter talked in very graphic language about his “gut” feeling that Barry Sherman killed his wife:
“Winter, 56, told DailyMailTV: ‘My gut tells me he killed her.
‘That’s my feeling [and] I don’t believe somebody out there is going to be found because… Barry did the deed.
Winter’s own immediate reaction on learning of their deaths, he said was: ‘F***ing hell he finally did it. Barry finally killed the b****.’
…
Winter says that Sherman had ‘many enemies’ and that over the years people may have wanted him dead – but says the simplest explanation and the one he believes is that he did it himself.
‘Is it plausible that somebody out there had an ax to grind and arranged for them to be targeted?’ he told DailyMailTV. ‘Absolutely, because of the manner in which he did business and the many enemies he had.’
But he said: ‘There is no doubt, sitting in front of you here, that Barry killed her. I’m not surprised. Actually I’m surprised it didn’t happen sooner.’
…
Winter insisted this is legal feud with Sherman has no bearing on his conviction that his cousin killed first his wife and then himself or his decision to speak out now.
‘It’s not so much I’m saying negative things,’ he said. ‘I’m saying truthful things.’
And in reality, Winter said, the man mourned by Trudeau was a ‘pathological liar’ who was obsessed with accumulating wealth and held his wife in ‘disdain’.
Winter said: ‘He couldn’t stomach to be around her. He used to say to me, ‘There’s love and hate in every marriage. But there’s just so much hate in mine.’
‘And all these people who sit back and say, “Barry would NEVER have harmed her…he adored her,”’ Winter shook his head, ‘Barry wasn’t capable of love.’”
(Laura Collins, January 31, 2018, Daily Mail)
To show how bad Sherman could be, Kerry told Daily Mail other anecdotes, including that the generous help Sherman gave the Winter sons not only were mostly loans – as my earlier review has shown – but also deceptively stripped off their remaining family inheritance, and that the Royal Trust documents on the Winter estate had information about their mother’s worry shortly before her death that Sherman would steal Empire Labs from her children:
“He bankrolled three of the brothers in business ventures. He paid visa cards, allowances, bought them homes, cottages, cars and speedboats. Only, in a detail they would later come to rue, Sherman didn’t actually ‘give’ them any of these things.
He signed lines of credit contingent on them handing over the remainder of the inheritance left to them by their parents.
At the time, twice-married Winter, was developing houses and losing himself to the drug addiction which very nearly killed him.
Sherman co-signed to millions of dollars of credit, mortgages and loans supposedly to help Winter expand his business and he provided him with $20, 000 – $30,000 a month.
Then, older brother Jeffery started asking questions about the sale of their father’s business and everything changed.
The siblings sued Royal Trust in 2001 for access to documents relating to the sale. In 2002 they discovered the option that Sherman had buried.
On one document, Winter said, a handwritten note from a trustee who visited Beverly shortly before her death noted she was ‘visibly upset’ and, ‘worried that Barry is trying to steal the company from the children.’
…
The last time Winter spoke to Sherman other than in a lawyer’s office was a telephone call he made on learning about the existence of the option some 15 years ago.
Winter said: ‘It was a short phone call and I was emotional. I remember crying and I remember saying, “Barry you lied to me.”
‘He said, “I know.” I said, “Why did you lie so much to me?” And it broke my heart.’”
(Laura Collins, January 31, 2018, Daily Mail)
Winter stated to Daily Mail his conclusion that Sherman had never wanted to let the cousins share the ownership of the company he had taken over from their family estate:
“Today, Winter said, his older cousin ‘never had any intention of honoring that option.’
Certainly he never told Martin and Carole Barkin, the couple who adopted the Winter orphans, that it existed.”
(Laura Collins, January 31, 2018, Daily Mail)
As Kerry Winter confirmed in the above media interview published at the end of January 2018, shortly after his adoptive father’s death, that Barry Sherman never mentioned the Empire Labs ownership provision to the Barkins.
But as I have pointed out before, Royal Trust would have and certainly should have informed the adoptive parents.
In concluding his Daily Mail interview, Kerry said something showing that he wasn’t that absolutely convinced of the deaths being a murder-suicide:
“But for all the unknowns he has no doubt about one thing: Sherman was capable of murder and wasn’t bound to his own life by anything that brought him joy.
Winter said: ‘If Barry Sherman hadn’t been an entrepreneur and a CEO he would have been a serial killer.’
He reflected: ‘Either way he had a terrible end. He either killed his wife and hung himself or he was targeted and Honey was punched out in front of him and his last moments must have been horrific.
…
‘But my feeling is he killed her. Barry did this. And all the tea in China doesn’t change that fact.’”
(Laura Collins, January 31, 2018, Daily Mail)
As above, the mindset shown was consistent with my analysis earlier. Kerry Winter was not really so absolutely convinced that Sherman killed his wife, but that he was very capable of it and had wanted it at one time and so nothing is more certain than if he “finally did it” – a degree of wishful thinking has been embedded in this definitive belief even though Kerry knew Sherman might have been “targeted” after all.
While painting a picture of Barry Sherman as a murderer the best he could, Kerry also portrayed himself as now clean, well-behaved, and no longer involved in illegal drugs or with the criminal world like in the past:
““I’m six years sober, I’m a wonderful father, I work full time, I haven’t done a drink or drug in six years. I view myself as rehabilitated and recovered. I no longer associate with street people, drug dealers, criminals.””
(Kevin Donovan, January 31, 2018, Toronto Star)
That would be a perfect outcome in Kerry Winter’s imagination, that in the end Barry Sherman is a dead murderer whereas he himself is a born-again good citizen ready for some serious business ownership.
Kerry’s attempts to rehabilitate his own image had begun at least as early as 2008 in his interview with Toronto Life’s Geraldine Sherman, stating at the time that he no longer did illegal drugs except marijuana, and that had he known the prospect of becoming rich he would have changed earlier:
“We met a second time, same place. I asked Kerry about the effects of drugs on his life. He said he’s been clean for the past four years, “except for weed.” He said he once told Barry that he might have given up the drugs earlier if he’d known it might have made him a multimillionaire.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
But as reviewed in Part 1 and acknowledged by Kerry Winter in some of the quotes above, by the time of these media interviews he did in late January-early February 2018, the private investigators hired by the Sherman family had found evidence of “multiple killers’” in the killings, and the Toronto Police had also announced as “double homicide”. These conclusions were reported by the Daily Mail alongside Winter’s sensational opposite assertions:
“Toronto police initially treated the Shermans’ ‘suspicious’ deaths as murder-suicide after autopsies returned the cause of death as ‘ligature neck compression’ – strangulation caused by a cord or rope.
Then private investigators hired by the Shermans’ children concluded that the couple were murdered by multiple killers two days before the 75-year-old and his wife were found hanging from their poolside railings in a ‘semi-seated’ position. They had been strung up by belts.
Sherman was honored in death by Justin Trudeau, who publicly mourned him at a memorial service and tweeted a tribute to the couple’s ‘vision and spirit’.
Last Friday, after six weeks of investigation during which 127 witnesses had been interviewed, thousands of hours of surveillance camera footage recovered, 150 items removed from the couple’s 12,000 square foot home and even sewers searched in a bid to recover evidence, cops announced that they too were viewing the deaths as double-homicide.”
(Laura Collins, January 31, 2018, Daily Mail)
Nonetheless, there could be some credit in Kerry Winter’s insistence that Honey Sherman had been a murder target two decades ago and the real murder target this time. Author Jeffrey Robinson, who had interviewed Barry Sherman for his 2001 book, Prescription Games: Money, Ego and Power inside the Global Pharmaceutical Industry, following the Shermans’ deaths also voiced the opinion that Honey Sherman could have been the real target:
“Another possibility that the writer entertains is that it was Honey Sherman who was the real target.
“She was well-known as a pain in the ass, maybe somebody had something against Honey,” Robinson said.”
(“SHERMAN MURDERS: Did organized crime kill billionaire?”, by Brad Hunter, February 1, 2018, Toronto Sun)
In that case, I suppose if and when the killers also came upon Barry Sherman in the Sherman home they might find it necessary to neutralize him.
In response to Kerry Winter’s talking to the media about his strong belief in a murder-suicide, the Sherman family issued a statement denouncing him and his “outrageous and baseless claims about our father”:
“We are deeply hurt, shocked, and angered that Kerry Winter is using the tragedy of our parents’ homicides to make outrageous and baseless claims about our father. The family accepts the conclusion of the Toronto Police Service, and finds it regrettable that the media would give a platform to these completely absurd allegations.”
(“Statement from the Sherman Family: Allegations by Kerry Winter”, Apotex Inc., February 1, 2018, Cision)
After Kerry Winter’s high-profile media interviews with sensational claims about Barry Sherman intending to kill Honey two decades ago, and stating his strong belief in their deaths being a murder-suicide, it was reported that Julia Winter, widow of Kerry’s brother Dana, asked the court to conduct a mental-health assessment of Kerry while the Winter family appealed the 2017 court ruling against their $1 billion lawsuit:
“In a newly-unsealed court document obtained by the Sun, a relative contends the controversial cousin who’s made outlandish allegations surrounding the murder of Barry and Honey Sherman suffered “some sort of nervous breakdown” after the billionaire couple was discovered dead in their home last December.
Kerry Winter’s “perplexing media campaign” has also cast him as a murder suspect, worries his sister-in-law in the filed affidavit.
“Although I have no formal training regarding mental or emotional disorders, I have known Kerry for approximately 25 years and based on his recent conduct, it is my opinion that he has suffered some form of nervous breakdown,” says Julia Winter, widow of Kerry’s brother Dana.
…
“I did not approve of Kerry’s recent statements to the press. I attribute it to his illness,” his Vancouver sister-in-law wrote in her affidavit.
…
Winter outraged many by blaming Sherman, telling the Sun’s Joe Warmington, “Barry killed her and committed suicide.”
Instead, people believe Winter is involved, his sister-in-law said in her affidavit, due in part to his “recent perplexing media campaign concerning his relationship with Barry. Kerry even recently appeared (involuntarily) on the cover of the National Enquirer with the caption “The Cousin Did It.”
His children are now being harassed at school. “In particular, they are being told that their father (Kerry) is a murderer.”
While he’s spearheaded the lawsuit on her behalf, as representative of her late husband, as well as his brother Tim Barkin, Julia Winter said her brother-in-law is now “unable to provide instructions” to their lawyer Brad Teplitsky or “participate in joint decision-making regarding the litigation with me and Tim.”
Teplitsky asked the court to require Winter to undergo a mental health examination to see whether the Office of the Public Guardian should be appointed as his litigation guardian. He’s now agreed to the assessment.”
(“MANDEL: Barry Sherman’s cousin Kerry Winter suffered nervous breakdown, sister-in-law tells court”, by Michele Mandel, May 4 , 2018, Toronto Sun)
The real world is much more complicated than in his self-interested idealization of what happened, Kerry Winter being familiar with the criminal world and well aware of his own life exploits and adventures.
In any practical scenario it is unlikely that Barry Sherman actually killed Honey, and although Kerry said he did not know “who did it” he also admitted to lying in The Fifth Estate’s polygraph test; even if he really did not know who, with the hard-core criminals and street characters he knew the killers may well have known Kerry Winter; and even if they did not know him, with the way he liked to talk about Sherman’s enemies and about his fantasy of killing Sherman, they may well have been aware of him and felt inspired by his anger and hate.
In my view, perhaps one of the strongest arguments against the murder-suicide scenario is the timing, namely the wrong timing of the deaths. Not only that the timing coincided with an Ontario court ruling shortly beforehand against the Winter sons on the $1 billion lawsuit they had filed in 2007, ordering them to pay $300,000 legal costs to Sherman, thus making a bold man like Kerry Winter extremely angry, but it also coincided with the Senate of Canada having just awarded a 150 Anniversary Medal to the Shermans and the government of Canada having just made a decision to appoint Barry Sherman to the Order of Canada – both in November 2017 as discussed in Part 1.
For Barry Sherman, as it had been for his old nemesis Morton Shulman in May 1993 as reviewed earlier, such was a time to celebrate, to rejoice, to be ecstatic and to be jubilant, rather than to kill his wife Honey and end his own life.
But Barry Sherman’s enemies were not limited to the brand-name drug companies as reviewed in Part 1, and his Winter family cousins and their adoptive family as reviewed up to this point in Part 2.
When the April 2008 Maclean’s investigative article asked the question why the murder happened now when Sherman was 75, it stated, here quoted again, that Sherman “had amassed a long list of enemies in his 50-year career”:
“The question to be answered is not only why was Sherman murdered alongside his wife, but why now, at 75? It’s no secret the drug executive had amassed a long list of enemies in his 50-year career. …”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
My review next will look at some well-publicised cases of Sherman’s disputes with others more generally in business, and in the community that he was a part of.
Note that in his 2008 interview with Toronto Life, as quoted earlier, Kerry Winter claimed that “several of Sherman’s business enemies” wanted him to win in the $1 billion lawsuit.
Those “Sherman’s business enemies” might not be limited, at all, to only those in the pharmaceutical business field which the Winter sons’ adoptive father Martin Barkin was a member of, given Winter’s past lifestyle dabbling in illegal narcotic dealing activities as well as various small business ventures, some of which supported by loans from Sherman.
In his business career, Barry Sherman has also made a broad mix of investments outside of the pharmaceutical industry, as Maclean’s reported:
“… Sherman’s wealth saw him cross paths with high society and low—from business and political elites to shady characters out of a Coen brothers movie. His investments outside of Apotex were both extensive and, at times, perplexing—a list that includes a failed casino bid, a money-losing gold mine, an outfit that produced therapeutic pads for horseshoes, a stake in the hottest commercial real estate venture in the country, a now-bankrupt jewellery company that dealt in “loose diamonds,” an investment in a yacht named The Great Gatsby that never existed and his backing of B movies Real Gangsters! and Sicilian Vampire.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
It looks like, from the above, that Sherman had some fascination in stories of gangsters and mobsters. Perhaps it had to do with the business ventures he had interests in.
As previously noted in Part 1, Author Jeffrey Robinson, who had interviewed Sherman for his 2001 book on the pharmaceutical industry, did not think the brand-name drug companies were behind the killing of the Shermans; Robinson also mentioned “Russian and Chinese organized crime syndicates” as examples of who could do such a murder job:
“But Robinson doubts one of Sherman’s Big Pharma enemies took out a contract on him.
“Big Pharma doesn’t take out hits on people, at least not in North America,” Robinson said. “They’ll plant a kilo of cocaine in the trunk of your car or embed kiddie porn on your computer but they won’t murder you.”
Russian and Chinese organized crime syndicates, on the other hand, play by different rules. Robinson said some Russian hitmen “fly in on Monday, do the job, then they get on a plane and disappear on Tuesday morning.””
(Brad Hunter, February 1, 2018, Toronto Sun)
Something like what Robinson said in the above, an international professional criminal hit, would be harder to solve. But presumably only the powerful would have the capability to easily arrange such an international assassination. The Big Pharma is certainly among the powerful.
Robinson thinks Sherman’s problem was “winning” at all cost:
“Now, investigators are working on the why and who.
“Barry was a prick, if he needed you to pay $150,000 he wouldn’t hesitate to spend $3 million in court. It was all about winning for him,” Robinson said.
“People really hated him in the business.””
(Brad Hunter, February 1, 2018, Toronto Sun)
As said, “People really hated him” because in a dispute Sherman must win through legal means.
On the other hand, it may not be winning that was what Sherman went after but that putting his opponent down was his need or satisfaction, as Kerry Winter said in 2008, quoted earlier:
“… “If Barry had his way, I’d be eating cold french fries out of a Dumpster at KFC. Well, Barry, that’s just not going to happen.” …”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Rather interestingly, the April 2018 Maclean’s investigative article referred to such a vindictive trait of Sherman’s as “righteous certitude”:
“… A hard-nosed strategic genius who built Canada’s largest pharmaceutical company, Sherman also conducted business with known criminals. He’d generously bail out someone in need—but often with a longer, self-interested view. He was a billionaire driven to litigation less by money than something more primal: a sense of righteous certitude that propelled him to prevail at any cost.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
Whether that kind of “self-interested” stiffness should be described as “righteous”, conducting business with “known criminals” while having such a “righteous certitude” could be a deadly mix.
So let’s look at the case the Maclean’s article referred to when referring to Sherman’s “righteous certitude”, to see if it could offer any clue:
“In the summer of 1988, Barry Sherman received an urgent phone call—from a prison in Oregon. On the other end was a familiar voice: that of Harvey Rubenstein, a notorious Toronto stockbroker convicted of fraud on both sides of the border. Though Rubenstein’s financial scams garnered plenty of headlines, few people had any idea his victims included the founder of Canadian generic drug giant Apotex Inc. Mere weeks before taking that call, Sherman had launched a lawsuit against Rubenstein, his former investment adviser, claiming he’d been duped out of millions.
Now the disgraced broker, recently extradited to the United States to face another slew of fraud charges, was asking for even more of Sherman’s money: US$100,000 so he could post bail. He told Sherman if he weren’t behind bars, he could focus his efforts on recovering his lost money. Sherman agreed. “I couldn’t see any benefit, from my viewpoint, of having him languish in jail,” Sherman later testified in a sworn deposition.
The story didn’t end there. After Rubenstein pleaded guilty, Sherman agreed to loan him half of the $100,000 bail money so he could pay restitution to his victims. …”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
Wow, Sherman seemed uncharacteristically generous in this case. Harvey Rubenstein, a notorious stockbroker who had been convicted of fraud in both Canada and the U.S. and who had as investment adviser defrauded Sherman “out of millions” and was being sued by Sherman, phoned Sherman from a U.S. prison asking for the help of $100,000 U.S. dollars to get out of jail; Sherman decided to post the $100,000 bail to secure Rubenstein’s release, and then loaned him half of the $100,000 bail money – in cash – so that Rubenstein could pay restitution to his victims.
That did not look like winning at any cost. Rubenstein had “duped” Sherman “out of millions”, and yet Sherman did not want to let him linger in prison but would lend him an additional $100,000 as bail, and after Rubenstein was released let him use $50,000 of the $100,000 to compensate the fraud victims.
In this case, Sherman was not only kind toward the fraudster Rubenstein but also considerate toward the other victims of Rubenstein’s fraud. Sherman being generous like this, a criminal likely would not want to kill him.
But then a related dispute arose:
“… But when another creditor stepped forward to claim rights to the remaining $50,000, Sherman spent the next four years fighting in U.S. court to eventually recoup what, for him, was essentially pocket change.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
As told, when another creditor, i.e., someone to whom Rubenstein owed money, laid claim to the remaining $50,000 of bail money, Sherman switched to the ‘winning at any cost’ mode, spending 4 years fighting in the U.S. court to recover that money – for a person of his wealth $50,000 was very small, and the legal costs of fighting in the U.S. court over the four years probably cost him more.
The story did not say that the other creditor was a “criminal”. U.S. court records show that it was City National Bank. (“UNITED STATES of America, Plaintiff, v. Harvey RUBENSTEIN, Defendant. Bernard C. SHERMAN, Claimant-Appellant, v. CITY NATIONAL BANK, Cross-Claimant-Appellee.”, July 24, 1992, United States Court of Appeals, Ninth Circuit. Court Listener)
It seems to me to be a mindset where when it was a small amount of money Sherman would be willing to make a kind gesture, but he could not stand his sense of authority being challenged – especially when the other creditor was a large financial institution.
Thus, in this case Sherman was rather generous to the difficult plight of a known criminal who had defrauded him, but unrelenting in fighting a financial institution just like fighting Big Pharma in his pharmaceutical business world.
Such a must-win attitude was obviously “certitude”, i.e., a sense of having the absolute right.
But it would not have been “righteous” but rather ‘ungenerous’ had the other creditor not been a bank but an individual victim of Rubenstein’s – just like, as in Part 1, when Sherman’s target of aggressive generic drug push was not a major international brand-name drug company but the small Canadian company owned by Morton Shulman selling a brand-name drug that treated himself as a patient.
I note that the bail and restitution money Sherman provided for Rubenstein were only lent to the latter, and so Sherman did not go beyond the norm as with the help given his Winter cousins – namely helping Dana get out of jail by posting bail, but giving financial help mostly in loans.
In fact, the fact that the $100,000 bail money for Rubenstein was a loan was central for Sherman’s winning the legal fight in the U.S. court not to let City National Bank take the other half not intended for restitution. When the court determined that the money’s ownership was Sherman’s, it was ordered to be returned to him:
“13 Rubenstein spent 1989 vacillating with regard to the federal criminal charges pending against him. In February he withdrew his not guilty plea and pleaded guilty. In June, he changed his plea again. In January 1990, he again pleaded guilty. Sometime during this period, Rubenstein learned that he might avoid a long prison sentence by making restitution to victims of his fraudulent schemes. Rubenstein then convinced Sherman in late 1989 to assign half of the deposited funds, $50,000, to the district court clerk solely for use in paying restitution on behalf of Rubenstein. Rubenstein also assigned to the district court clerk whatever interest he retained in the bail funds.
14 When Rubenstein was sentenced on March 23, 1990, he was ordered to pay restitution. To assure performance, the district court set aside $50,000 of the bail funds for distribution to Rubenstein’s victims. The court then turned its attention to City National Bank’s recently-filed motion to compel the district court clerk to comply with the bank’s newly-obtained writ of garnishment. Because ownership of the remaining $50,000 in bail funds was unclear, the district court instructed the bank to apply to the state court “for [a] determination of who the balance of the bail money belongs to.”
15 At this point, Sherman and City National Bank returned to state court, where Sherman filed a claim of exemption alleging that he, not Rubenstein, owned the bail funds. …”
(July 24, 1992, United States Court of Appeals, Ninth Circuit. Court Listener)
The Harvey Rubenstein example was one of several cases mentioned in the April 2018 Maclean’s investigative article where persons who had done work for Barry Sherman did something wrong and Sherman pursued them in court rigorously – note that Sherman did have a lawsuit against Rubenstein for the fraud, despite bailing him out of the U.S. jail.
One of the other examples in the Maclean’s article involved Sherman’s accountants who failed to alert him of potential problems in his investments into luxury yachts Elegance and The Great Gatsby:
“Sherman, being Sherman, was often aggressive in seeking restitution. In the 1980s, he was one of many high-profile Canadians burned in what’s considered the biggest tax fraud in the country’s history—limited-partnership tax shelters involving luxury yachts Elegance and The Great Gatsby. When it was revealed that no yachts existed, Sherman tried, unsuccessfully, to sue his accountants for negligence, claiming he lost more than $600,000. The Ontario Court of Appeal said Sherman was an “astute businessman” and “experienced investor” who should have known better.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
According to a judgment by the Ontario Superior Court of Justice on September 3, 2003, The Great Gatsby and Elegance were two of 79 limited partnerships for luxury yachts in the Mediterranean and Caribbean marketed as tax shelters by businessman Einar Bellfield, 36 of which fully purchased by around 600 Canadian investors, including the two by Sherman alone. In most of the cases, no yacht turned out to exist and the investment’s tax benefit was denied by Revenue Canada – both were contributing factors to the financial losses suffered by Sherman and other investors:
“1. Background
4 Great Gatsby and Elegance were two of 79 limited partnerships registered by Einar Bellfield between 1984 and 1991 – ostensibly for the purpose of acquiring, and chartering, luxury yachts in the Mediterranean and Caribbean. Thirty-six of the partnerships were fully subscribed – their limited partnership units having been acquired by approximately 600 investors. The general partner of each limited partnership was Overseas Credit and Guarantee Corporation (“OCGC”) of which Bellfield was the sole shareholder.
5 The partnerships were marketed to investors in Canada as tax shelters and, for the plaintiff, this was certainly their primary – and, probably, their only – attraction. In 1987 Revenue Canada commenced an audit and investigation into their activities and, in a letter of June 15, 1989, the plaintiff was informed that the partnership’s tax losses, and interest deductions he had claimed in 1985, 1986 and 1987 in respect of his investment in Great Gatsby, would be disallowed. …
6 Ultimately, all of the losses and deductions claimed by the plaintiff in connection with the limited partnerships were disallowed and tax was assessed on that basis. …
7 At the trial of this action it was not disputed that the limited partnerships promoted by Bellfield were part of a scheme in which he obtained funds from investors by way of fraudulent misrepresentations. No yachts were ever chartered and the very few that were acquired may have been intended only to give an appearance of legitimacy to the scheme. …
8 On November 16, 1999, Bellfield was indicted on charges of defrauding the Crown of the tax payable in respect of losses of $ 118 million claimed on behalf of the 36 limited partnerships, and of defrauding their unit holders. He was convicted and sentenced to 10 years’ imprisonment and a fine of $1 million.”
(“Sherman v. Orenstein & Partners”, Cullity J., September 3, 2003, Ontario Superior Court of Justice, JD Supra)
Sherman then sued his investments’ accountant firm for negligence, asserting that at some point the firm should have sent him a “going concern note” to alert him of the risk. The lawsuit was dismissed by the Ontario Superior Court for the reasons that the accountant firm did not breach the standard of care in this case, and that Sherman himself did not give sufficient care to the investments – here as summarised in a judgement of the Ontario Court of Appeal on December 2, 2005:
“A. OVERVIEW
1 The issues in this lawsuit are whether the respondent chartered accounting firm, Orenstein & Partners (“Orenstein”), breached the standard of care required of it in performing a review engagement; and, if so, whether its breach caused the loss claimed by the appellant Bernard Sherman.
2 Sherman is an astute businessman, an experienced investor, and the chair of Apotex Inc., Canada’s largest generic drug manufacturer. In the mid 1980s, Sherman invested in two tax shelters by purchasing all the units of two Limited Partnerships: the Great Gatsby and Elegance. These and seventy-seven other similar limited partnerships were formed to invest in luxury sea-going yachts. Overseas Credit and Guarantee Corporation (“OCGC”) was the general partner of all the limited partnerships.
3 OCGC loaned Sherman the money to buy the units in Gatsby and Elegance. Sherman made monthly interest payments on the loans, which he deducted along with other expenses and losses for Gatsby and Elegance on his income tax returns for 1985-89.
4 The Limited Partnerships turned out to be a sham. They did not conduct the business they claimed to conduct. OCGC became insolvent and its principals were convicted of fraud. After an audit, Revenue Canada disallowed the tax losses and interest deductions that Sherman had claimed for the years 1985-88.
5 Orenstein performed review engagements of the financial statements of twenty-two of the limited partnerships, including Gatsby and Elegance. …
6 Sherman sued the respondents for negligence. He claimed that they negligently failed to include in the financial statements of Gatsby and Elegance a “going concern” note. He claimed this note would have alerted him that the Limited Partnerships would not likely become operating businesses. He alleged that had the respondents included a going concern note, he would have stopped making interest payments much sooner than he did. He quantified his loss at more than $600,000.
7 In comprehensive reasons, Cullity J. dismissed the action. He concluded that the respondents did not breach the standard of care required for a review engagement. He also concluded that even if the respondents had included a going concern note, Sherman either would not have noticed it, or, if he did, would not have stopped making interest payments.”
(“Sherman v. Orenstein & Partners”, J.I. Laskin, E.A. Cronk and E.E. Gillese JJ.A., December 2, 2005, Ontario Court of Appeal, JD Supra)
As cited above, the Ontario Superior Court judgment concluded that even if the accountants had sent Sherman a “going concern note” it would not have made a difference.
The primary reason for Sherman’s lack of attention to these investments was his reliance on the businessman Bellfield’s personal guarantee of the desired tax-shelter benefits:
“95 The plaintiff evidently decided that it would be a fruitless exercise to attempt to recover on the guarantees he had extracted from OCGC and Bellfield and that the defendants were likely to possess a more capacious pocket. He was, of course, entitled to do this but, to succeed, the fact that he may have been defrauded by Bellfield is not to the point. He was required to prove negligence in the performance of the defendants’ professional responsibilities and not merely an exercise of judgment with which reasonable accountants might disagree. In the light of the evidence of accounting principles applicable to review engagements in the period in question, I believe the area in which reasonable accountants might reach different decisions was not negligible. …
…
105 I should add that, if it were necessary to consider the question of reliance, I would not have accepted Dr. Sherman’s evidence that he relied on the absence of a going-concern note in the financial statements of the limited partnerships. I am not satisfied that he ever read – let alone relied on an implied representation in – the financial statements. He had obtained advice from his personal advisers before subscribing for units of Great Gatsby and they had secured for him a personal guarantee of Bellfield that he would receive the desired tax results. He referred to the existence of this guarantee as a reason for never asking to see the financial statements of OCGC even though, pursuant to the settlement agreement of April 1986, these were to be provided to his accountant annually. There was no persuasive evidence that, after making the investments, he paid any further attention to them before 1989. The burden of proving reliance was on him and, in my judgment, it was not discharged.”
(Cullity J., September 3, 2003, Ontario Superior Court of Justice, JD Supra)
As Justice Cullity asserted in the above, Sherman lost his investments and tax benefits, felt he could not recover the money from the fraudster and so sued the accountants in the hope of getting paid by them for the loss. One can sense that the judge stopped just short of scolding the wealthy Sherman for going after not necessarily so rich accountants to pay for investment losses in businesses about which he cared only for their tax-shelter benefits.
This last point is significant regarding these “tax shelters”, as the judge pointed out that Sherman probably did not even read the financial statements from the businesses once he had been given “a personal guarantee” of “the desired tax results”.
The fact that Sherman himself could be ignorant of his own finances – when he felt they were secure – is also shown in the Rubenstein case when he told the U.S. court that he did not know where his $100,000 bail money for Rubenstein actually came from, relying on his staff to get the money:
“His financial interests, conducted through a web of private companies, trusts and foundations were so Byzantine that even he had trouble keeping them all straight. During his Rubenstein deposition in 1990, a lawyer asked him where he got the bail money. “I don’t know,” he replied. “My banking is very, very complex. I simply instructed my staff to have the money forwarded.””
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
On can understand that when he found out that his staff or adviser failed him or even defrauded him, Sherman would become legally tough on them.
But it would not have been easy to manage money for Sherman, because like he said above, “My banking is very, very complex.”
The Maclean’s investigative article cited above mentioned the labyrinth of companies Sherman set up for his family investments:
“When the Shermans put their house on the market, they did what many rich people do to protect privacy: they used a numbered company as the seller. Sherman had a library to choose from; the one that was chosen listed him as president and his sister-in-law, Mary Shechtman, as a director.
That Sherman had a numbered Ontario company with his sister-in-law named as an officer wouldn’t surprise anyone familiar with his labyrinthine holdings outside of Apotex—ventures that put the test to Sherman’s claim he didn’t care about making money. Relatives pop up in the records of Sherman’s non-Apotex ventures held through “Sherm”-prefixed companies—including Shermco Inc., Sherfam Inc., Sherfam Industries Inc., Sherfam Holdings Inc.—as well as Bernard C. Sherman Limited and numerous trusts and private foundations. The Shermans’ real estate holdings—apartment buildings, condos, commercial properties, rumoured private islands—were held via Sherfam Inc., Signet Realty and Weston, Fla.-based Sherm Realty, as well as trusts. At one point, Sherman owned Deerhurst Inn, an Ontario resort, but sold it after failing to obtain a casino licence. Just months before he was killed, he partnered with a prominent Toronto developer to provide $61.5 million in financing for the most buzzed-about condominium project in the country: The One, an 85-storey structure to be built at the corner of Yonge and Bloor.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
It was not easy to provide service to Sherman in general: it could be complex or Sherman was just demanding, and he might not pay much attention himself; but when he discovered problems he would unleash his lawyers hard on the service provider.
Sherman really hit hard legally to get compensation for damages. If this point was not so clearly exhibited in the above example of the failed tax-shelter yacht businesses because the Ontario courts ruled against him, it was very glaring in another case of service that was unsatisfactory for him: the case of the architects and builders who designed and constructed his home.
The Shermans budgeted $2.3 million in 1985 to build their dream home. After moving in in 1991 they found a lot of problems with their new home, “a disaster” as Barry Sherman called it; so they sued the architects and builders, and recouped $2 million of the design and construction costs:
“When Barry and Honey Sherman bought their North York property in 1985, they planned to spend $2.3 million to build their dream home.
But they noticed problems with the home within months of moving in, in 1991, with Barry describing it as “a disaster.”
After litigation against the house’s designers and builders, they wound up recouping $2 million of the contracted amount to construct the home, according to a 2006 judgment.
The civil litigation that involved both the Shermans, who were found dead in the house on Friday, was one of many Barry was embroiled in, and offers a rare glimpse into the couple’s private life.”
(“Barry and Honey Sherman sued builders of North York home”, by Tamar Harris, December 19, 2017, Toronto Star)
A luxury “dream home” that took $2.3 million to design and build ended up costing the Shermans only $300,000, after a legal battle recouping $2 million.
That must have been a prime example of Barry Sherman’s legal prowess, although his lawyers would have cost money, too.
The house was an “architectural modern masterpiece” – despite all the problems when it was first built – according to a $6.9 million real estate listing in December 2017 when it was put on the market for sale by the Shermans shortly before their unexpected deaths:
“The house near Bayview Ave. and Highway 401 was listed for sale this month at $6.9 million.
The 12,000 square foot house is an “architectural modern masterpiece of poured concrete and steel construction,” according to an online real esate listing. The home has indoor and outdoor pools and hot tubs, a tennis court and underground parking for six cars with a heated ramp. The five-plus-one bedroom, nine-bath home is two storeys and features hardwood floors and a balcony.”
(Tamar Harris, December 19, 2017, Toronto Star)
Wow, what a bargain for $300,000! It was a 12,000 square-feet house with both indoor and outdoor pools, hot tubs, a tennis court and underground parking.
Let’s look at more details of this legal case:
“They went on to sue at least five of the people and companies involved in the home’s design and construction, including Jack Winston Designs, Thomas Marzotto Architects and Ewing Construction.
All but two settled.
The remaining two defendants, 21 Degrees Heating and Air Conditioning and Walter Kenyon of Walter Kenyon Designs, had designed the home’s heating and air conditioning system.
The Shermans sued 21 Degrees and Kenyon for negligence related to the design of the HVAC system, and 21 Degrees for breach of contract.
According to the judgment, “Mr. Sherman testified that there were so many things done wrong with respect to the construction of the house that it was a disaster.”
…
In their statement of claim, the Shermans asked for $500,000 in undefined damages for breach of contract or negligence from 21 Degrees and Kenyon. By the end of the trial, they sought nearly $34,000 in special damages and general damages of an unspecified amount.
…
In 2006, the judge presiding over the case found that 21 Degrees breached their contract and that both 21 Degrees and Kenyon were negligent.
But because the Shermans failed to prove they suffered any damages, the judge awarded them no damages and dismissed the case.
Two years later, an appeal to the Divisional Court was quashed.”
(Tamar Harris, December 19, 2017, Toronto Star)
As told, the Shermans’ sued at least five of the parties in the design and construction of the house, and all but two of the parties settled – that accounted for all the money recouped, so it would have been around $2 million. The Shermans continued to sue the remaining two defendants, asking for $500,000, and won their legal arguments in court; but because they failed to show the damages, the courts did not award them money from these last two defendants.
Had they shown serious damages with the last defendants, that magnificent home could have cost the Shermans absolutely nothing – other than any legal expenses for their own lawyers.
The problem, on the other hand, in my opinion given the home being an “architectural modern masterpiece of poured concrete and steel construction”, is how these architects, designers, builders and workers could make their living – with all the materials and parts, and time and work they had spent creating it and then the money paid them nearly all taken back.
But no doubt, these companies and persons learned a hard lesson of Mr. Barry Sherman’s “righteous certitude”.
I wonder now. In 2008 when Kerry Winter told Toronto Life as quoted earlier, “If Barry had his way, I’d be eating cold french fries out of a Dumpster at KFC”, did he only grieve his own plight after filing the $1 billion lawsuit against Sherman then seeing his properties and home taken away due to the loans he owed Sherman, or did his sentiment also reflect a perception by the community, including those who had created Sherman’s magnificent home?
It seems that, from my review thus far, it is the combination of his aggressiveness in competition and his vindictive certitude in winning that has been a formula of Sherman’s business success, but that also led to harsh outcome for the losers.
Here, let’s consider the examples of using private investigators.
In Part 1, we have seen the German pharmaceutical giant Bayer hire private investigators to loiter around Apotex company grounds, pose as employees to try to uncover anything illegal; and we have also seen Morton Shulman hire private investigators to look into Sherman’s businesses, and Sherman’s illegal mail-marketing of Apotex drugs into the U.S. was somehow conveyed to the U.S. Food and Drug Administration.
But neither matched the tenacity of Barry Sherman’s use of private investigators, here quoted like previously on the contrasts between his personality and Honey’s:
“As an entrepreneur, he hired private detectives to rummage through his competitor’s garbage, then got a court order so he could barge into their head offices and seize their papers. He didn’t hesitate to foreclose on the homes of people who owed him money, even relatives.”
(Tu Thanh Ha, Molly Hayes and Rachelle Younglai with reports from Andrew Willis, December 22/23, 2017, The Globe and Mail)
Rummaging through a competitor’s garbage to find something and then getting a court order to barge into its head offices to seize the papers – how many gentlemen would go to such lengths of breaking the social norms in order to achieve more successful business?
The above several cases of disputes between Sherman and others outside of the pharmaceutical field were all about persons who provided Sherman with service that went sour.
The following is a case where the other person was a convicted criminal getting some money from Sherman, allegedly to start his own business, but otherwise had no service relation or other business relation with Sherman.
Not long after the Shermans’ deaths, the media reported the story of a small investment Barry Sherman had made to a convicted Fraudster, Shaun Rootenberg, that then led to a legal dispute. Shaun Rootenberg, a convicted fraudster also known as Shaun Rothberg, wanted investment from Sherman in August 2015, intending to defraud him. Despite knowing the person’s criminal background, Sherman eventually made a $150,000 investment into Rothberg’s project, an app named “Trivia for Good”, as a result of lobbying by Sherman’s own friend Myron Gottlieb, a well-known convicted fraudster himself, on Rootenberg’s behalf:
“Many of Sherman’s non-Apotex ventures were coordinated within his company and listed the same address as his drug-maker: 150 Signet Dr. So it’s unsurprising that Apotex is where Sherman’s friend Myron Gottlieb showed up on Aug. 15, 2015. He went there to meet with company executives to vouch for Shaun Rootenberg, a convicted fraudster looking for Sherman to invest in an app he was developing, Trivia for Good. According to court documents, Gottlieb met Rootenberg (a.k.a. Shaun Rothberg) in prison when he himself was incarcerated for fraud related to Livent Inc., the theatre company he co-founded with Garth Drabinsky. Sherman would ultimately invest $150,000, at Gottlieb’s urging, but would later sue Rootenberg, alleging he and others defrauded him. (Gottlieb is not named in the suit.)”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
As told above, Rootenberg had been in jail for fraud, where he met Gottlieb, also jailed for fraud. It was after they had been freed that Gottlieb visited Sherman’s office to “vouch for” Rootenberg who was pitching an app business idea to Sherman.
Rootenberg had been convicted of defrauding family, friends and business associates out of “millions of dollars”, and would continue his fraudulent ways:
“Thornhill fraudster Shaun Rootenberg — aka Shaun Rothberg — has defrauded family, friends and business associates out of millions of dollars over the years.
Now it’s alleged the convicted scam artist may even have cheated murdered billionaire Barry Sherman.
…
As reported in 2017 by Toronto Sun crime writer Chris Doucette, Rootenberg was most recently arrested in June for allegedly defrauding the romantic partners he found on eHarmony.
He was in the cooler for a while after pleading guilty back in 2009 to fleecing friends and family out of $2.5 million.
Somehow, by 2014, he had talked his way into a Chief Financial Officer position with Algoma Pubic Health in Sault Ste. Marie. There, he kept an eye on the public health agency’s $23 million annual expenditures and $25 million in capital assets.
The long con appeared to developing the waterfront in the Sault, but it all ended after city officials were informed of Rootenberg’s past.”
(“Fraudster surfaces in Sherman case”, by Liz Braun, January 27, 2018, Toronto Sun)
As described above, after serving jail time, in 2014 Rootenberg became Chief Financial Officer at Algoma Pubic Health in Sault Ste. Marie, Ontario, where he supervised public budgets and investments.
It was only an interim position for Rothberg. But in January 2015 when he came again as part of a business trying to win approval for a development project, it was found out that he was actually Rootenberg with a criminal fraud background, and the region public health agency launched an independent audit to see if any money had gone missing under his management:
“Rothberg was introduced as part of a delegation from Canal Village Development Corp., unveiling big plans for the Sault’s Gateway properties.
In an adjoining media room, one reporter quipped that City Council appeared to have been hit that Monday by a pandemic of “infectious enthusiasm” for the project.
By Thursday, that enthusiasm was rather less infectious.
The City of Sault Ste. Marie had advised Canal Village’s lawyer that it now wanted nothing to do with Shaun Rothberg or any corporate entity in which he was involved.
Canal Village principal Paolo Rovazzi quickly provided assurances that neither Rothberg nor Henry Cole (another member of the Canal Village team with whom the city had issues) would be involved in the Gateway deal.
And Algoma Public Health announced that Dr. Kim Barker, its medical officer of health and chief executive officer, had been “shocked” Thursday to receive information about Rothberg that had prompted the health unit’s board to hire an independent audit firm to investigate a six-month period during which Rothberg had served as its interim chief financial officer.
Why all this fuss over a mind-mannered, bespectacled number-cruncher?
Dr. Barker, City Solicitor Nuala Kenny and Ron Hulse, the Toronto consultant who recommended Rothberg to Algoma Public Health, all insist he is actually Shaun Rootenberg, who did time at Beaver Creek Institution in Gravenhurst after pleading guilty to multiple counts of fraud involving more than $2 million.
…
So how does a convicted fraudster get hired to oversee Algoma Public Health’s $23 million annual expenditures and $25 million in capital assets?
The short answer, Dr. Barker says, is that Algoma Public Health (APH) didn’t check out Rootenberg’s credentials because he was hired through a third-party consultant, Ron Hulse of Toronto.
…
APH has certainly had difficulty with its financial operations in recent years.
In July, 2013, Jeffrey Holmes departed as chief financial officer and was subsequently charged with breach of trust and theft over $5,000.”
(“How on earth did this man end up overseeing Algoma Public Health’s cash?”, by David Helwig, January 21, 2015, SooToday)
As told above, Jeffrey Holmes, a previous chief financial officer who had left in July 2013, was charged with breach of trust and theft, and then the agency hired this interim chief financial officer who turned out to have a criminal fraud past. Rothberg’s background was not checked at the time of the hiring because he was recommended by a third-party consultant, Ron Hulse of Toronto.
Fortunately, no money was missing when it came to Rootenberg, and the former Ontario deputy health minister who led the independent audit, producing a report critical of the Algoma Public Health board, in June 2015 actually praised Rootenberg for his work there:
“Marchy Bruni has so far not resigned as chair and a member of the Algoma Public Health board, as he was asked to do this afternoon by Dr. Eric Hoskins, Ontario’s minister of health and long-term care.
“If that’s what they request from the ministry, I have to consider [that],” Bruni told SooToday after a news conference at the Sault Ste. Marie Civic Centre by Hoskins and Graham Scott (shown), the former deputy minister of health who conducted a governance assessment of the APH board.
Scott’s assessment concluded that the board failed to meet its legal obligations.
Hoskins demanded the resignations of all members appointed to the APH board prior to the 2014 municipal election.
Notwithstanding his sharp criticisms of Algoma Public Health’s governance, Scott spoke well of Shaun Rootenberg, APH’s former interim chief financial officer, whose criminal background helped prompt the provincial assessment.
“There was no loss of cash. There was nothing inappropriate or illegal. Mr. Rootenberg did, in fact, quite a credible job during the time he was there,” Scott told SooToday.”
(“Will Marchy Bruni resign?”, by David Helwig, June 16, 2015, SooToday)
As told above, Health Minister Dr. Eric Hoskins demanded the resignations of all members of that regional public health board, while at the same time the lead auditor, former deputy health minister Graham Scott, told the media that “Mr. Rootenberg did, in fact, quite a credible job during the time he was there”.
So, even though he previously had defrauded, and would continue to defraud family, friends and business associates, Shaun Rootenberg was recently praised for “quite a credible job” for interim work as chief financial officer of a public health agency, when in August 2015 his prison-acquainted friend Myron Gottlieb approached Barry Sherman, a pharmaceutical business billionaire, to vouch for investment for Rootenberg’s app business idea.
Such a business company was set up and the mobile app produced. However, the public announcements did not cite Rootenberg or Rothberg, but named Ronald Hulse, i.e., the person who had recommended Rothberg to Algoma Public Health, as its co-founder, president and chief operating officer:
“Trivia For Good is a Canadian start-up company in the digital advertising platform space that will give away $500,000 in its first five contests over the next ten weeks, with $400,000 of that going to winners and the rest donated directly to charity.
“We hope to unleash a ‘phenomena of kindness’ as we provide cash windfalls to our top contestant weekly, while paying forward large donations to our charity partners, Right To Play, Els for Autism and Jays Care Foundation,” said Ronald Hulse, President and COO.
…
“I don’t believe you’ll find another free game where someone can play and win that much cash while also directly helping charities,” said Steven Glaser, CEO of Trivia For Good.
“The prize pools will increase to USD$1Million per contest as the company expands to a global audience. We also have plans for even larger prizes and donations centered around the Olympics later this year,” said Glaser.
The idea for Trivia For Good came about when the company’s founders were discussing the difficulties brand advertisers face as they attempt to reach individuals without being seen as an intrusion through social programs and in-app mobile advertising.
“Trivia For Good rewards individuals for their time and offers them financial incentive to play trivia, a game everyone enjoys,” said Hulse, one of the founders.”
(“$500,000 in Prize Money to be won as Trivia For Good Launches its first FREE TO PLAY Contest in Canada”, May 9, 2016, Trivia For Good Inc., Cision)
Trivia For Good Inc. was a part of a larger company, Keek, of which Hulse was a former board member, and the mobile trivia game and advertising app’s launch campaign was featured on the Cineplex Theatre Network and Tim Horton T.V. across Canada. (“Keek Announces Restructuring of Its Social Trivia Division and TriviaForGood Announces Its First Contest and Market Launch Through the Cineplex Theatre Network”, March 2, 2016, Keek, Marketwired)
Whatever the marketing glitz, the hundreds of thousands of dollars, or potentially millions of dollars, of prizes given away and money donated to charities, Barry Sherman knew that it was a fraud and that he was defrauded of $150,000 in the process, and took legal action in May 2017:
“Ontario Superior Court documents show Sherman, founder of the Canadian pharmaceutical giant Apotex, intended to invest in an app called Trivia For Good, billed as a “mobile-trivia app that offers huge cash prizes.”
Sherman launched his lawsuit in May 2017 against Shaun Rootenberg and other parties. The lawsuit alleged “a fraudulent scheme” had cheated Sherman out of his investment.
Court documents show that Rootenberg, a previously convicted fraudster also known as Shaun Rothberg, came up with the Trivia For Good concept. The idea was to make money by selling advertising displayed on the app.”
(“Barry Sherman allegedly duped by convicted fraudster”, by Scott Anderson, Harvey Cashore, Joseph Loiero and Ronna Syed, January 27/28, 2018, CBC News)
Eric Paul, CEO of CannTrust Holdings, a company partnered with Apotex to develop a cannabis-based painkiller pill, has commented that various types of business figures went to Sherman for help and most of the time he would “loan or give them money”:
“Sherman trusted his gut and was willing to take risks, says Paul, who met Sherman 27 years ago when he approached him with a pharmaceutical-related venture. He was surprised at how quickly Sherman signed on. “Barry liked the story and said, ‘Let’s do it,’ ” Paul recalls. “Usually, people say: ‘Send the financials and we’ll do an analysis.’ ”
Such willingness made Sherman a target for people down on their luck or shilling a deal, says Paul: “He was well known in the community, so anyone who had a need—say a business going sideways—would go talk to Barry. Nine times out of 10 he would loan them or give them money.”
Shashank Upadhye, who worked as Apotex’s chief counsel from 2007 to 2012, heard many stories about Sherman’s quiet charity, whether it was covering someone’s tuition or helping an employee pay for a parent’s medical bills. “He was a real generous guy,” Upadhye says. “Now, anecdotally, I do know there probably were some people who took advantage of him, especially in business ventures, people he thought were his friends.”
Paul says he was familiar with the inner workings of these deals, and some left him aghast: “He was giving people money when there was no opportunity for success.””
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
As told, “Nine times out of 10 he would loan them or give them money”.
But many of these instances were not necessarily about business of Sherman’s own interest, but about the community he being a billionaire businessman in, that others in the community sought his help – often in the form of business deals.
The various examples reviewed thus far have shown that Sherman could give some money in small amounts, such as for living allowances or paying Visa bills for his Winter family cousins, but when it came to a larger amount he might lend to or invest in the business, but seldom give the money, be it Kerry Winter, fraudulent financial adviser Harvey Rubenstein or fraudulent businessman Shaun Rootenberg.
And Sherman would use his lawyers to enforce whatever the conditions he smartly devised for these loans and investments.
But as Paul pointed out as quoted above, that some of “these deals” had “no opportunity for success”. Worse, some deals were intended to rip off, period, when they were pitched by fraudsters. So now what would happen when Sherman unleashed his lawyers on them? Confrontations became inevitable.
For the case of the convicted fraudster Shaun Rootenberg, there was an even closer timing in relation to the Shermans deaths than the Winter family’s $1 billion lawsuit being struck down by the court in late 2017; Sherman’s lawyers made a legal motion on December 13 – the day the Shermans were last seen alive – to move the lawsuit more promptly to trial:
“On the day he was last seen alive, Barry Sherman’s lawyers filed documents in court supporting a lawsuit against a convicted fraudster who had allegedly duped the billionaire philanthropist out of a $150,000 investment, CBC News: The Fifth Estate has learned.
…
It was in the final week of his life that Sherman stepped up his legal efforts to recover the $150,000 he said he had lost, a relatively small amount for a man reportedly worth nearly $5 billion. Still, on Dec. 13 his lawyers filed an aggressive motion to the court — with the goal of moving the case more promptly to trial.”
(Scott Anderson, Harvey Cashore, Joseph Loiero and Ronna Syed, January 27/28, 2018, CBC News)
That similar timing also caused suspicion.
The CBC story reported that Sherman had given a statement to the police after Rootenberg’s arrest again for new criminal fraud in June 2017 – in a month after the May filing of Sherman’s lawsuit against him – but clarified that CBC did not know of any connection between the Shermans’ murder in December 2017 and Rootenberg:
“Rootenberg was arrested again last June on criminal charges. Toronto Police allege Rootenberg defrauded two women with whom he had intimate relationships. The Fifth Estate has learned that Barry Sherman provided a statement to police in the criminal case against Rootenberg.
Rootenberg was held at Toronto South Detention Centre after his arrest. He was released on bail earlier this month. The Fifth Estate was unable to reach Rootenberg for comment after leaving an email and phone message.
In his statement of defence filed in October, Rootenberg said he “disputes the claim … that he contributed to the loss” and requested that the lawsuit be “dismissed in its entirety.”
Sherman and his wife, Honey, were found dead in their Toronto mansion on Dec. 15 by their real estate agent. Toronto police say they were last seen alive two days earlier. Police said on Friday they believe the Shermans were murdered. CBC has no evidence that there is a connection between the lawsuit and the murder, nor that Rootenberg is a suspect.”
(Scott Anderson, Harvey Cashore, Joseph Loiero and Ronna Syed, January 28, 2018)
What I would wonder is whether Sherman clearly displayed partiality when he launched a legal action against Rootenberg and others and pushed it forward aggressively, but not naming his friend Myron Gottlieb, also a convicted fraudster who not only vouched for Rootenberg but actively procured for his investment, in the lawsuit:
“Gottlieb emailed officials at Sherfam Inc. in August 2015 to thank them for the promised $150,000 investment.
“You advised that Barry Sherman will purchase 750,000 units,” Gottlieb wrote on Aug. 19, 2015.
Gottlieb then provided instructions for how Sherman’s $150,000 should be wired to the trivia company’s bank account. But according to the allegations filed in court, Rootenberg was a participant in a scheme “to defraud” Sherman and divert the funds partly for his own benefit.
…
Gottlieb was convicted along with Livent co-founder Garth Drabinsky in 2009 for defrauding their now-defunct musical production company Livent Inc.
In an email to The Fifth Estate, Gottlieb noted, “I am not a party to the action commenced by Barry Sherman.” He declined further comment except to say he was “privileged to be a friend of Barry and Honey Sherman.”
Rootenberg was arrested again last June on criminal charges. Toronto Police allege Rootenberg defrauded two women with whom he had intimate relationships. The Fifth Estate has learned that Barry Sherman provided a statement to police in the criminal case against Rootenberg.”
(Scott Anderson, Harvey Cashore, Joseph Loiero and Ronna Syed, January 28, 2018)
As above, it was Gottlieb who lobbied Sherman’s family company Sherfam Inc., received the promise of purchase of 750,000 units of investment for $150,000, and then provided instructions for wiring the money to Trivia For Good’s bank account.
This may have been Rootenberg’s fraud scheme. But in the case of Sherman’s investment, it was Gottlieb who visited Sherman’s office at 150 Signet Drive on August 15, 2015, to urge Sherman’s company to invest, as previously quoted from the Maclean’s article, and then on August 19 emailed instructions for sending the investment to the Trivia For Good company’s account as reported in the above CBC story.
Yet, Gottlieb was not named in the Sherman lawsuit against Rootenberg just because, as Gottlieb alluded to and quoted in the above, that he was “privileged to be a friend of Barry and Honey Sherman”?
When Gottlieb met Rootenberg in prison, he was there along with Garth Drabinsky as co-founders of Livent Inc., known for producing popular theatre shows like Phantom of the Opera in Canada and internationally, after having been convicted of fraud, with Drabinsky also losing his Order of Canada honour as a result:
“Gottlieb and Garth Drabinsky, the co-founders of now-defunct Livent Inc., were convicted of two counts each of fraud in a scheme to falsify financial statements so they could keep pace with lofty earnings projections.
Livent, behind such hits as Phantom of the Opera, filed for bankruptcy soon after the fraud was discovered in 1998. Its demise is estimated to have cost investors about $500-million.
The parole board says the courts clearly found Gottlieb was active in arranging and facilitating the fraud, and expresses dismay that Gottlieb says he is guilty only insofar as he didn’t properly oversee those working below him.
Gottlieb was granted day parole from Beaver Creek Institution in Gravenhurst, Ont., to a halfway house in Toronto in July after serving about 11 months of his four-year sentence.
…
Since Gottlieb was released on day parole he has been unable to find work, the board said, but noted that was likely due to his age – he’s 69 years old – and notoriety.
…
Gottlieb apologized for his crime at his July parole hearing, saying he should have spoken up in August 1997, when he said he realized the second-quarter financial report was off by about $24-million.
“I spent a lifetime trying to build a reputation and I blew it very fast,” he told the hearing. “When I knew it was happening, it was like hitting a brick wall and I can’t forgive myself.”
Gottlieb said he has a negative net worth now.
Drabinsky, who was granted day parole in October after serving about 14 months of his five-year sentence, is in the process of fighting a decision to strip him of his Order of Canada appointment.”
(“Livent’s Gottlieb gets full parole, despite ‘abject refusal’ to own up to fraud”, by Darren Calabrese, March 28, 2013/May 11, 2018, The Globe and Mail)
As told in the above, at this point in his life Myron Gottlieb no longer had wealth, was unable to find work, and likely had little money to live on when in August 2015 he persuaded his privileged friend Barry Sherman to invest in Shaun Rootenberg’s Trivia For Good app idea, procuring and securing the investment in a way he knew how; and he succeeded.
Most likely Sherman spared Gottlieb – but not Gottlieb’s prison acquaintance Rootenberg who likely had no wealth either – in the ensuing legal fight to recover the $150,000 due to consideration of the difficult predicament this friend was in.
But Gottlieb was most likely tied to Rootenberg and his Trivia For Good business in far more than getting Sherman’s investment. A press release, quoted earlier, from Trivia For Good Inc.’s former parent company Keek on March 2, 2016, mentioned a Canada-wide advertising campaign at the Cineplex Theatre Network and Tim Horton T.V.; and Gottlieb and his ‘co-0fraudster’ Garth Drabinsky had once been leading executives at Cineplex prior to co-founding Livent:
“In 1979, Mr. Drabinsky co-founded Cineplex Odeon Corp. with the creation of a 21-theatre complex in Toronto’s Eaton Centre. By 1989, Cineplex had amassed more than 1,800 screens in more than 500 locations. On “Black Friday” (Nov. 27, 1989), Mr. Drabinsky and business partner Myron Gottlieb were booted from the company by the Hollywood conglomerate MCA and Montreal’s Bronfman family. Mr. Drabinsky and Mr. Gottlieb hung on to Cineplex Odeon’s tiny live-theatre division.
…
From Cineplex’s live-theatre division, Livent was born. Mr. Drabinsky and Mr. Gottlieb were awarded control of the Canadian rights to The Phantom of the Opera, and the newly restored Pantages Theatre, where the mega-musical had opened a few months before. Soon, Livent was mounting big-budget shows such as Showboat, Kiss of the Spider Woman and Ragtime. During his Broadway career, Mr. Drabinsky’s productions captured 19 Tony Awards.
…
On June 30, 1995, Mr. Drabinsky was awarded the Order of Canada. David Mirvish, of Livent rival Mirvish Productions, received the award on the same day.
…
In 1998, Hollywood power broker Michael Ovitz offered to buy a controlling stake in the Toronto company and inject some needed cash. A few weeks later, though, his accountants alerted authorities to some alleged “irregularities” in the books. Mr. Drabinsky and Mr. Gottlieb were suspended from the company, which later filed for bankruptcy and sold off its assets.”
(“The many roles of Garth Drabinsky”, March 26, 2009/April 28, 2018, The Globe and Mail)
As summarized above, the Livent debacle beginning in 1998 was not the first time Drabinsky and Gottlieb were ousted from the helm of a spectacularly successful entertainment company, by a Hollywood-based business partner – earlier from Cineplex in 1989 also by Montreal’s Bronfman business family.
I would guess that in 2015 the financially rather desperate Myron Gottlieb went back to his friends and old acquaintances, not only Barry Sherman but also some at Cineplex, to try making what he could out of the Trivia For Good idea.
For example, Ellis Jacob, the Calcutta, India-born and Montreal- and Toronto-educated Cineplex Chief Financial Officer at the time of the 1989 ouster of his bosses Garth Drabinsky and Myron Gottlieb from the North American theatre chain originally founded by Drabinsky in Toronto, stabilized the company, then founded a small company Galaxy Entertainment just as Livent went down in fraud, and by the early 2000’s was at the helm of a newly acquired, restructured and expanded Cineplex chain in Canada:
“… Hollywood narratives don’t fizzle without some prospect of redemption, and the hero of this tale is Cineplex’s Calcutta-born CEO, Ellis Jacob. Both here and abroad, he’s known as the man who’s not just reviving the flagging theatre industry but reinventing it. The average Cineplex-by far, Canada’s largest chain, with more than 1,337 screens at 132 theatres nationwide-moonlights as sports emporium, rock concert venue, arcade, lecture hall, food court and, yes, opera house. In some cases, it’s also a bowling alley, a watering hole, a billiards hall and a daycare centre-a cacophonous fusion of high and low culture. …
…
After graduating from McGill in commerce, he got his CA designation and went to work for an auditing firm. Unsatisfied with life as a lowly bean counter, however, he returned to school, earning an MBA from York University, as well as a CMA title. … Growing up in Calcutta, he’d regularly attended the Globe Theatre, a four-screen venue that hosted everything from Bollywood to live shows. In 1987, he got his entree into the movie biz when he was hired as the VP of finance at Cineplex Odeon, the chain started by Drabinsky in 1979, with a flagship 21-screen multiplex at Toronto’s Eaton Centre.
On his first day, Jacob had no desk or telephone. The place was in chaos; Drabinsky was in the midst of a worldwide buying spree that would eventually push the company $750 million into debt. In 1989, shortly after Ellis ascended to CFO, his impresario boss (along with his sidekick, Myron Gottlieb) was ousted. As Drabinsky and Gottlieb mounted an ultimately unsuccessful bid to take the company private, Jacob was left to right the ship. For four years, Cineplex Odeon flirted with bankruptcy. Negotiating day and night, Jacob managed to mollify all 19 banks banging at Cineplex’s door, and in 1998, the company completed an arduous path to solvency, merging with the massive Loews chain in the U.S. The combined business offered Jacob a new position outside Canada, but he and his wife, Sharyn, didn’t want to leave Toronto.
… Showing some of Drabinsky’s brass, Jacob left Cineplex in 1998 to start Galaxy Entertainment. …
Jacob had a lot of cred in the industry, and his promise to waive his salary for Galaxy’s first two years impressed investors. Former Alliance chairman Robert Lantos and Cineplex exec Steve Brown signed on. So did Onex head Gerry Schwartz, who became majority owner.
In 2001, Loews Cineplex, which by then owned more than 2,800 screens worldwide, filed for Chapter 11. Onex snapped up its Canadian assets. Schwartz persuaded Jacob to merge his 20-theatre Galaxy chain with Cineplex in 2003, and spun the movie assets into the Cineplex Galaxy Income Fund, with Jacob at the helm. …
…
Two years later, Onex and Jacob launched a $500-million bid for Canadian rival Famous Players, then owned by Viacom. Today, the combined company-23% owned by Onex-controls two-thirds of the screens in Canada.”
(“The dame stays in the picture”, by Patrick White, September 26, 2008/April 27, 2018, The Globe and Mail)
I would imagine that if Myron Gottlieb visited Cineplex to solicit help, like he did at Sherman’s company, Ellis Jacob would be glad to show his old boss the latest big-screen advertising powers for, well, anything goes probably.
‘All that glitters is not gold’, and in the ensuing legal dispute Trivia For Good had to face and Barry Sherman would not miss, Sherman’s partiality in “righteous certitude” may have been interpreted differently by different persons on the receiving end.
In any case, the scenario of the Shermans’ murder having connection to criminals who had money disputes with Barry Sherman appears credible or at least should not be easily dismissed, just like the scenario of possible connection to Sherman’s Winter family cousins, and the scenario, reviewed in Part 1, of connection to some of the brand-name pharmaceutical companies that Sherman called “the monopolies”.
Moreover, the possibility of links between these criminals and some of Sherman’s Winter cousins, particularly Kerry Winter with his criminal past and outrageously accusatory attitude in the legal and publicity feuds with Sherman, should not be overlooked.
Now, I should point out that there was a context to Sherman’s unsparing certitude towards even small acts of disputing him on the part of others when it came to money: Barry Sherman was once well known for frugality.
The July 2008 Toronto Life article republished in December 2017 pointed out that, at that point in time, Sherman had owned only four cars in his life:
“Barry Sherman parks his 2005 Chrysler Sebring convertible in the spot closest to the main door of the Apotex headquarters in Weston. Although Sherman, the CEO and founder, is the country’s 10th richest man, with a personal wealth of about $3.7 billion, he’s notoriously thrifty. He’s owned only four cars in his life, driving them until they’re ready to junk.”
(Geraldine Sherman, December 18, 2017, Toronto Life)
Considering that Sherman became an owner of Empire Labs in 1967, that was four cars only for a timespan of over four decades.
In his Daily Mail interview, Kerry Winter seemed to suggest that Sherman’s frugality – in contrast to Honey’s love of extravagance – could be a cause of the misery for others like the Winter cousins:
“But, for all that, he recognized Sherman as a ‘kook’ with ‘a bolt missing,’ who seemed to have everything but took pleasure in nothing.
Sherman was an atheist who only donated to largely Jewish causes because Honey chose to and it was a tax write off, and Winter said was an atheist who ‘couldn’t give a s*** about the State of Israel’.
Winter said: ‘He couldn’t enjoy life. I asked him if there was anything in life he enjoyed. He said “making f***ing money.”’
Yet he couldn’t bear to spend it. His favorite restaurants were McDonald’s and budget chain, Swiss Chalet – where he always ordered the special.
He drove a clapped-out old car, refused to buy a new television when his old one barely worked, bought cheap shoes and clothes and would sneak back into the theater when he went so that he could see a second movie for free.
In stark contrast, Winter said, Honey was rumored to have one of the world’s largest diamond collections.”
(Laura Collins, January 31, 2018, Daily Mail)
Kerry Winter’s speaking, in 2008 to Toronto Life, of the unbearable prospect of “eating cold french fries out of a Dumpster at KFC” seemed quite possible when Barry Sherman’s own favorite restaurant was McDonald’s.
In the Daily Mail interview, Kerry also discussed, in contrast to Barry Sherman’s thriftiness, how “enviable” the Winter family life had been when his father Louis was alive:
“The seeds of the feud were sown back in 1951 when Sherman’s father, Herbert, died from a heart attack age 46.
Sherman was nine and Winter’s father, Louis Winter, stepped into the role as a surrogate father, partly because he and his wife, Beverley, didn’t think they could have children of their own.
In 1958 they adopted a son, Tim. Then, two years later, Beverly fell pregnant with Jeffery. In 1961 Kerry was born and in 1962 brother, Dana, followed.
Winter’s father Louis, a biochemist, was the founder of generic drug manufacturer, Empire Laboratories.
Winter recalled: ‘We lived in a mansion overlooking the Humber River. We were enrolled in a posh private school. He drove a Rolls Royce. He had two yachts. He was a self-made millionaire.’
Pictures of the family at the time show an enviable existence. But those golden days were short lived.”
(Laura Collins, January 31, 2018, Daily Mail)
That good life was unfortunately short-lived for Kerry Winter as a child; and then he did not enjoy life in the Barkins’ home, either.
The April 2018 Maclean’s investigative article told of Honey Sherman’s shocked reaction once upon a time, and quick action to admonish her husband, when the couple visited the home of Barry Sherman’s Apotex underling Jack Kay and saw a swimming pool, something Barry had told her they could not afford:
“Where her husband could be frugal to the point of ostentation, Honey, herself known to fly economy, enjoyed a few upper-middle-class trappings: nice jewellery, a Lexus SUV, getaways with “the girls,” shopping in New York with her sister, Mary. At their funeral, long-time Apotex executive Jack Kay recalled Honey and Sherman visiting his house in the early days of Apotex. Taken aback when she saw a swimming pool, Honey called out her husband for telling her they couldn’t afford one. …”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
But in 1991 the Shermans moved into a luxurious custom-built home with both indoor and outdoor swimming pools and a tennis court, and if Barry still did not want a new car for his 50th birthday, well, that had become secondary anyway:
“… The differences were showcased at a 50th birthday party Honey threw for Sherman. Guests were guided outside to see a new sports car with a big red bow. “Barry was not happy with the gift,” says Rubin. “ ‘Take it back,’ he told Honey.” She did.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
By December 2017 when the Shermans were murdered, they were hung by their killers at the side of the indoor swimming pool, at their home that was on the market for sale as the couple were in advanced planning for the custom-building of an even grander, brick-and-stone home, here as described in the Maclean’s article:
“In the last months of 2017, Honey’s time was also focused on the construction of a grand new house; the move would see a couple known for their relatively low-key lifestyle upsizing at an age most people are doing the opposite. Honey purchased a prime corner property, held in her name, in the city’s exclusive Forest Hill neighbourhood in November 2016. (The purchase price is not disclosed in land registry documents.) The intent was to demolish the existing house and build a stunning structure. Architectural drawings filed with the city reveal a 16,000-sq.-foot brick-and-stone home with a separate pool house, a 41-foot retractable skylight over a central swimming pool, an event room, an elevator and a space for live-in staff. Sherman’s need for privacy was reflected in the “large shredder” planned for an upstairs office.
The ambitious plans called for 15 variances in the building code, some sizable, including increasing the maximum building depth to 47.6 m from the allowable 19 m, and a car stacker in the three-car garage. All the variances were approved on June 28, less than six months before the murders.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
The last day the Shermans were seen alive, on December 13, 2017, they appeared together to meet with the builder for their new home to discuss some design changes:
“Sherman wasn’t keen on moving from the house on Old Colony Road, but was doing it for Honey. “He just said: ‘You know, I wish I was staying here, but my wife wants to move so we’re moving,’ ” says Frank D’Angelo, Sherman’s close friend and business partner in non-Apotex ventures.
On Nov. 27, their house was listed for $6.9 million, described as an “architectural modern masterpiece.” Why the Shermans were selling when contractors hadn’t begun to build their new home isn’t clear. What is certain is that listing meant disruptions and privacy incursions—and a lockbox on the house, a rarity for such a high-end property.
Planning the house brought Honey to Apotex on Dec. 13, a day after she missed the Baycrest meeting. It was the last time the couple was seen alive. They were meeting with the builder to go over some design changes, Greenspan tells Maclean’s. Everything was going as planned. Or so it appeared.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
A potential problem, as pointed out earlier, is that in contrast to the luxury upgrades over the years to the Shermans’ lifestyles, Honey’s wishes as they might be, Barry Sherman’s overly stern and vindictive certitude toward those who he had trouble with in money matters continued to the last moment of his life.
Back in late 2017 after Ontario Justice Kenneth Hood struck down the Winter sons’ $1 billion lawsuit against Barry Sherman, the Winter family decided to appeal to the Ontario Court of Appeal. The decision was announced by their lawyer just days after the Shermans’ deaths, at a time when intense publicity was given to matters about the Shermans:
“The family of the Shermans released a statement over the weekend slamming media reports speculating that police are probing the theory that the pair died in a murder-suicide. CBC Toronto has not independently confirmed details about what led to the Shermans’ deaths.
The Winter brothers’ lawyer, Brad Teplitsky says his clients will be moving forward with their appeal because they believe the judge made legal errors in dismissing the case.
Teplitsky has been in contact with Kerry Winter since the Shermans’ deaths and says Winter has “no comment at this time other than to express his sincere condolences to the Sherman family and is requesting that the media respect their privacy during this period.”
Teplitsky told CBC Toronto his clients will not be attending the funeral Thursday, and have had no contact with the Shermans since they’ve been “in litigation for many years.””
(“Barry Sherman’s orphaned cousins fight for cut of Apotex fortune in lawsuit appeal”, by Nicole Brockbank, December 20, 2017, CBC News)
As in the above, the Winter family’s lawyer Brad Teplitsky mentioned the Shermans’ funeral to be held the next day.
On the part of the deceased Shermans, the matter was also gravely urgent; in that morning after their funeral, Barry Sherman’s lawyers filed an appeal of the judge’s decision ordering the Winter sons to pay them $300,000 legal costs – Barry Sherman had wanted a lot more legal costs from the Winters, over $980,000:
“One of Sherman’s final decisions, it turned out, involved the fractious lawsuit with his cousins. Unhappy that the judge ordered the brothers to pay him only $300,000 in legal costs (he wanted $984,813.73), Sherman appears to have instructed his lawyers to appeal the ruling. They did, the very morning after his funeral—a move that saw Sherman litigating from the grave.”
(Anne Kingston and Michael Friscolanti, April 5, 2018, Maclean’s)
On August 29, 2018, the Ontario Court of Appeal issued a ruling against the Winter sons’ appeal for their $1 billion lawsuit, and ordered them to pay an additional $60,000 legal costs to Sherman’s lawyers:
“A three-justice panel of the Ontario Court of Appeal ruled Wednesday that a lower court’s decision that there was no need for a trial in the case was correct. The justices also upheld the lower court’s decision last September that the decades-old fight was an “abuse of process” by the Sherman cousins.
The cousins have now been ordered to pay $60,000 to the Sherman side to cover its legal costs in defending the appeal, on top of the $300,000 in costs awarded Sherman in September 2017 when Justice Kenneth Hood of the Superior Court of Justice made the ruling that the court of appeal adjudicated.
“It would be unfair and an abuse of process” to allow the cousins to take the matter to trial, the court of appeal justices state in their reasons. (The court of appeal panel was made up of justices Robert Sharpe, Russell Juriansz and Lois Roberts.)”
(“Sherman cousins lose appeal for piece of drug company’s billions”, by Kevin Donovan, August 29, 2018, Toronto Star)
Kerry Winter immediately announced that the Winter family would take the matter to the Supreme Court of Canada – their final legal option – and asked the media to “wish us luck”:
“Kerry Winter, who has been the most vocal of the cousins in the court battle, said Wednesday that they will “seek leave to appeal to the Supreme Court” of Canada. “Wish us luck,” Winter said. Their claim has long been that it was Sherman’s involvement in their father’s company that gave him the leg up that allowed him to start Apotex. That’s why the cousins say they are deserving of part of the Apotex wealth, roughly a $1-billion share.
If the Supreme Court refuses to hear an appeal, the case will be over.”
(Kevin Donovan, August 29, 2018, Toronto Star)
If the Supreme Court of Canada refuses to hear the Winter sons’ appeal, their legal recourses would appear to be over.
It was not the first time the Winter family had something to do with Canada’s highest court. In 1964, just a year before their father Louis’s sudden death from a heart attack in 1965, his own Empire Laboratories won a landmark case at the Supreme Court of Canada, defeating the court appeal of an American brand-name drug company, Parke, Davis and Company, which alleged that Empire Labs’ generic drug packaging appeared too similar to the brand-name drug’s and thus infringed on their registered trade marks.
(“Parke, Davis & Co. v. Empire Laboratories Ltd.”, March 23, 1964, Supreme Court of Canada, Lexum)
Now, nearly a year after the Shermans’ gruesome deaths in a yet unsolved, “targeted” double homicide, led by Kerry Winter the Winter children have asked for the Supreme Court of Canada to intervene so that they would be awarded a total of 20% ownership of Canada’s leading pharmaceutical giant Apotex, which they claim had been denied them when Empire Labs was acquired and then sold by their father’s protégé and their cousin – and a brilliant young academic scholar and ultimately successful billionaire – Barry Sherman.
They have made this legal claim despite a condition in the over 50-year-old provision that to get such a chance each must be capable of being “a responsible employee” of the company – a condition their past troubled lives have been in sharp contrast to.
Will the Supreme Court of Canada even be willing to hear them?
(To be continued in Next Part)
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