Mike Duffy trial: Duffy used line of credit to pay off account shortfalls, court hears

Mike Duffy was withdrawing more money from his bank account than making deposits and forced to fund the difference with his line of credit, a forensic accountant testified at the suspended senator's trial.

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Forensic accountant Mark Grenon, who has reviewed thousands of Duffy's financial transactions, was testifying during a voir dire — a sort of trial within a trial to determine admissibility of evidence. ​Duffy's judge-only trial, which began April 7 in the Ontario Court of Justice, is in its 34th day.

Duffy has pleaded not guilty to 31 charges of fraud, breach of trust and bribery related to expenses he claimed as a senator and later repaid with money from the prime minister's then chief of staff, Nigel Wright.

"There was a continued amount of overspending in the account that had to be funded with some source of money," Grenon said. "That money was the line of credit."

In December 2012, Duffy's line of credit balance surpassed $100,000, attracting the attention of FINTRAC, the Canadian financial intelligence agency, Grenon said.

He said the balance in the line of credit was ultimately paid off in four lump sum payment transactions. Two of the transactions were from the refinancing of his residency in Ottawa, one was, Grenon believed, related to an inheritance and another was a payment from Duffy's company Mike Duffy Media Services.

Of those refinancing payments, one totalled $80,000, the source of which, Grenon concluded, came from a $91,600 deposit classified as a mortgage advance.

That deposit is nearly identical to the amount Duffy paid back the Senate after receiving a $90,000 cheque from Wright.

​Grenon said that he also discovered $159,477 of unknown deposits in Duffy's bank account. He said $50,000 of that total could be related to an inheritance, but that would still leave more than $109,000 unaccounted for. Grenon said if there is more information or documents available, he would be open to reconciling the remaining amount.

"Or Senator Duffy could," Duffy's lawyer Donald Bayne interjected.

Earlier, Grernon testified that Duffy expensed nearly $154,000 in travel expenses that the Crown alleges the suspended senator was not eligible to claim, a forensic accountant testified today in Ottawa.

Grenon found that Duffy expensed $493,193 in total travel. Flights made up the largest chunk of these claims ($338,109), or 68 per cent of all travel expenses.

Grenon also broke out the claims the Crown alleges Duffy was not entitled to, including claims related to living in Ottawa, or the National Capital Region (NCR), that came to $89,520. 

Residency is one of the central issues in the case against Duffy. He designated his home in P.E.I. as his primary residence, making him eligible to claim meals and living expenses for his time in Ottawa, even though he has lived and worked in Canada's capital since the 1970s. The Crown contends that Duffy should not have been eligible for those claims.

Grenon also found that Duffy's expenses for travel when allegedly not on Senate business (13 claims) totalled  $64,425. That total, along with the NCR claims, comes to $153,945. 

Following the voir dire, Judge Charles Vaillancourt will determine later how much, if any, of the testimony will be admissible. 

Bayne had argued against the admissibility of much of Grenon's testimony, questioning its relevance and the objectivity of Grenon.

Grenon has looked into the following areas of Duffy's financial records:​

• Claims analysis.
• Duffy's financial practices (bank records, credit, mortgages).
• The contracts with Duffy associate Gerald Donohue and the cheques from Donohue's family's business.
• Tracing the $90,000 payment from Wright.

The court has heard that Donohue had been awarded a series of Senate research contracts with Duffy worth nearly $65,000.

The RCMP have said Donohue received the money for "little or no apparent work." Instead, the Crown alleges, that pool of money was used by Duffy, through Donohue, to pay for a series of expenses, some of which the Crown says would not have been covered by the Senate.