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Former Hickman Equipment managers plead guilty in Newfoundland and Labrador Supreme Court

Gary Hillyard (left) and John King stand as Newfoundland and Labrador Supreme Court Justice Deborah Paquette enters the courtroom in St. John's Thursday morning.
Gary Hillyard (left) and John King stand as Newfoundland and Labrador Supreme Court Justice Deborah Paquette enters the courtroom in St. John's Thursday morning. - Tara Bradbury

Lawyers submit joint suggestion for house arrest for Gary Hillyard and John King in fraud case

Two former managers of now-defunct Hickman Equipment Ltd. pleaded guilty to fraud-related charges in court Thursday, nearly ending their 16-year involvement with the law.

Former Hickman Equipment chief financial officer Gary Hillyard, 64, admitted he circulated false accounting records for the company between Jan. 1, 1997 and Dec. 31, 2001. John King, 62, the company's former sales manager, pleaded guilty to a charge of defrauding a leasing company of an amount over $5,000 between March 1, 1998 and Oct. 31, 2001.

An investigation by auditors and then police revealed Hickman Equipment, which went bankrupt in 2002, had sold construction equipment out of trust — equipment that had been used as collateral to secure loans for the business were sold or leased without the creditor being told or paid in full — and falsified records, including rental contracts.

Hillyard and King are not alleged to have developed a fraud scheme or produced the fake documents; their charges were laid based on their willful blindness to the false documents.

Crown and defence lawyers have presented a joint submission on sentencing to Justice Deborah Paquette for the two men: nine months of house arrest for Hillyard and six months of house arrest for King.

"There was no evidence, no indication that the money was taken from someone and put into their pockets," prosecutor Lloyd Strickland told the judge. "The frauds were basically committed to keep the business going, though it made the bankruptcy worse in the end."

Following the bankruptcy, King repaid $50,000 in compensation for bonuses that he would not have earned if the company's financial statements had been accurate, Strickland noted.

Both men were co-operative with the RCMP investigation.

John Duggan, representing Hillyard, told the court his client is the sole financial supporter for his family and cares for family members with health issues despite having serious health conditions of his own. Hillyard has suffered significant financial loss as a result of the criminal charge and a subsequent failed business venture, and expects to have to work long after retirement age, Duggan said.

Representing King, lawyer John Brooks said his client has used his life savings to pay his legal bills, and suffers emotionally from the stigma associated with his crime, among other related issues. Brooks noted that after Hickman Equipment went bankrupt, King was employed by a company affiliated with John Deere Ltd., which essentially was one of the fraud victims.

"Some of the very people involved in the case welcomed him with open arms, (although they) knew of the investigation and that he had been charged," Brooks said.

Paquette will render her sentencing decision for Hillyard and King on Nov. 23.

Two other former Hickman Equipment managers were charged in connection with the case: general manager Hubert Hunt and vice-president of sales William Parsons. Hunt pleaded guilty to a charge of fraud over $5,000 and received one year of house arrest, while Parsons, who was in the courtroom briefly Thursday morning, will be arraigned on his charge early next month.

The men were originally charged in 2012. Back and forth over pre-trial delay saw the case make it all the way to the Supreme Court of Canada, but in April of last year it was ordered to trial.

In an application to the court earlier this year, defence lawyers argued for a stay of proceedings, saying the trial had seen an unreasonable time delay. Paquette dismissed that application in August, saying the Crown had proven the delays were reasonable given the complexity and volume of information in the case.

Hickman Equipment creditors were forced to swallow more than $93 million in losses when the business went under, out of a total debt of $113 million.

The investigation that followed began with auditors and was turned over to the RCMP, eventually including about 30 police officers, hundreds of witnesses, 850 banker boxes with hundreds of thousands of scanned documents and two forensic auditor reports.

– With files from Ashley Fitzpatrick
tara.bradbury@thetelegram.com
Twitter: tara_bradbury

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