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Fox Guarding the Hen House


'I was counting on that'
Witness shocked his account was blocked



Tuesday, January 25, 2005

His years are numbered since a diagnosis of terminal cancer three years ago, but clothing importer Ara Markarian, 58, cannot access most of his savings at CIBC Wood Gundy.

The brokerage has blocked him from touching about $380,000 in his investment account, claiming it covers a guarantee made on the trading account of his business partner and cousin, Harry Markarian.


Ara Markarian said he had no knowledge of the guarantee until he called the brokerage in February 2002, hoping to take out $250,000 for a business opportunity that had come up.

The adviser who replaced his previous CIBC broker, Harry Migirdic, told him she could still manage the portfolio for him, but couldn't withdraw the money.

"For the years I have left, I can't do much with my money blocked. I was counting on that money for my retirement," Ara Markarian testified yesterday in Superior Court.

He was a witness in the lawsuit of his brother and sister-in- law, retirees Haroutioun and Alice Markarian, two other former Migirdic clients who are seeking from CIBC World Markets (parent company of CIBC Wood Gundy) $1.4 million they claim was taken from them by the CIBC under fraudulent guarantees, as well as $10 million in punitive damages.

Ara Markarian said he became a Migirdic client in the late 1980s, when both were members of the Canadian Armenian Business Council.

His instructions to the broker, he said, were to put money in the safest, most secure investments.

At first, Migirdic complied, but later he recommended more speculative titles such as Intergold and Bre-X, Markarian said.

In the early 1990s, he recalled receiving a phone call one morning from Migirdic who said his bosses wanted to update the files and needed him to sign a guarantee covering the investment account of his wife, Janet.

When Migirdic arrived at his home that night with the form, Markarian said, "I noticed there was no name of who I was guaranteeing,"

Markarian said he planned to write Janet's name in the blank space, but Migirdic told him it had be typed in and he'd take care of it at the office. Markarian signed, but said he asked Migirdic to send him a copy, and was assured that would be done.

He never did get a copy, and forgot about it, Markarian said.

Asked why he signed, Markarian replied: "I had invested $500,000 with him. ...To invest half a million, you have to believe it's in good hands. It's a reputable firm, supposedly."

Evidence introduced at the trial indicated the name on the guarantee was Harry Markarian, Ara Markarian's cousin and business partner.

But Ara Markarian said he always assumed the guarantee was for his wife and never had cause to doubt it, since there was never a follow-up communication from CIBC.

Even a phone call from his brother, Haroutioun, in the summer of 2001, advising him to look closely at his CIBC statement, did not spark any concerns. Though the actual name of the person he was guaranteeing did not appear on the statement, there was an account number, and since it was only one digit higher than his own eight- digit number, Ara Markarian said he felt reassured it was indeed his wife.

He found out otherwise in 2002. On the copy of the guarantee document in CIBC's files, the witness was someone he said he didn't know.

Surprised and "very mad," Markarian confronted his partner. But Harry Markarian - also a Migirdic client - denied knowing about or asking for any guarantee.

"He was very upset by the situation," Ara Markarian said.

Throughout a partnership that dated from 1970, the two had always kept their personal and business interests separate, Ara Markarian testified. "I didn't know his investments; he didn't know mine. We never did anything together in our private accounts."

When they called Migirdic, Markarian said the broker told them: " 'I'm sorry. I regret what happened. I talked to my bosses. They know.' "

The trial resumes next week.


"CIBC must assume responsibility for the fraud.
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