Story Posted August 20, 1998 at 23:41

MONTREAL (CP) _ The Quebec Court of Appeal has increased the $41,000 bankruptcy fraud penalty for former airline mogul Robert Obadia, ordering him to pay the bankruptcy trustee $234,000 within six months. But the court stopped short of sending Obadia to prison as the prosecution requested, saying the payments were adequate punishment.

The court also ordered Obadia obey probation conditions such as keeping the peace and informing the court of any changes of address or occupation. Obadia owned the charter airline Nationair before it went belly up in 1993. He declared personal bankruptcy in December 1994, saying he was worth $3,002. The businessman eventually pleaded guilty in January to eight counts of bankruptcy fraud, including the fraudulent disposal of various sums of money and luxury cars.

The prosecution and defence jointly recommended the $41,000 fine in a plea bargain. But barely a week later, Jean-Philippe Gervais, the lawyer acting for the bankruptcy trustee, received a letter withdrawing an $800,000 offer to pay off Obadia's creditors. Federal prosecutor Patrick Jette claimed he had been duped because the news came after he had dropped other charges against Obadia relating to the disposal of furniture, a luxury home in Westmount and a chalet in the Laurentians.

Charges against Obadia's wife and son were also dropped. He said he had acted on the understanding that a resolution in the civil case was linked to its resolution in the penal case. The appeal court concluded that affidavits from Jette, Gervais and Raphael Schachter, Obadia's former criminal lawyer, did not constitute new evidence in the traditional sense. Instead, they were considered non-essential factors that helped show the prosecutor had been misled.