Goudas Foods and the Royal Bank of Canada


Goudas Foods and the Royal Bank of Canada

Article by Jessica L. Lewis

Last Updated: April 3 2017

The Royal Bank of Canada (RBC) has also recently had to answer allegations relating to fraud.

Peter Spyros Goudas, an entrepreneur from Greece who founded Goudas Food Products and Investments Ltd. in Toronto in 1969, has pointed his finger at the Canadian bank, asserting in court documents that he lost his business to a fraud because he trusted his banker.

Goudas alleges that his company went bankrupt in 2014 after the bank encouraged him to trust John Simmonds, and because RBC neglected to conduct proper due diligence before it loaned millions to Simmonds.

Simmonds himself is not unknown to the fraud world, having been arrested three times on fraud charges – twice in 2016 and once in early February of this year.

Goudas and Simmonds reportedly met in 2014, and the Greek businessman was persuaded that Simmonds could grow Goudas Food Products and Investments Ltd into a billion dollar business.

However, the offer apparently was conditional on approval from the RBC.

According to Peter Goudas, the bank told him he could trust Simmonds.

In an affidavit, Goudas stated: "My contact at RBC, Donna O'Reilly, advised me that RBC had investigated John Simmonds, that he was a highly regarded businessman, that the deal was a fair one, and that RBC would be prepared to consent to a change of control in favour of Simmond's company.

" This is explicitly denied by the bank in its court documents.

The bank asserts that, contrary to Goudas' statements, Goudas informed the bank in 2014 he wanted to sell his ownership interest in the business to Simmonds.

In March 2014, Simmonds bought the Goudas Food Products and Investments Ltd business for $10m in shares in Simmonds' company.

Simmonds agreed to deposit $2.5m of the purchase price into Goudas' bank account five days after the closing. This did not happen and no money was deposited. Goudas claims he has not been paid.

Police have alleged that Simmonds and his associates forged the Goudas Food Products and Investments Limited books to make it appear as though the company was owed significantly more money than it actually was in order to secure additional funds from other lenders and investors.

After Simmonds took over Goudas Food Products and Investments Limited, RBC increased its loan to the company from $10m to $12m in June 2014. The bank says it is a victim of fraud, rather than a part of the problem.

In his affidavit, Peter Spyros Goudas went on to say, "It appears that Simmonds was able to borrow against artificial invoices made out to companies related to him or to non-existent companies.

I find this odd because when I controlled Goudas Food Products and Investments Ltd, RBC always rigorously reviewed all my new customers and invoices to ensure that receivables due from such customers were eligible for inclusion in the borrowing base."

Simmonds is out on bail and is under house arrest while awaiting trial.

Jessica Lewis Short Biography

Jessica Lewis has a broad corporate and commercial litigation practice.

Jessica Lewis has experience in civil disputes pertaining to public company litigation, including the appointment of auditors, oppression remedies, and shareholder and director disputes.

Jessica represents clients in matters involving real estate litigation, mining and securities, employment law, environmental and regulatory disputes also represents clients in ligation proceedings involving fraud and breach of fiduciary duties.

Jessica has appeared in front of the British Columbia Supreme Court.

Jessica is a member of the Canadian Client Consultation Committee that regulates and oversees the Canadian law school moot for client interviewing.

Jessica has also acted as a moot court judge for the first year moots at the Peter A. Allard School of Law and is a Board Member on the Peter A. Allard School of Law Alumni Association Board of Directors.

Jessica Lewis is a member of the Vancouver Bar Association and the Canadian Bar Association. 

Previous page: Archives  Next page: photogallery