Crimes of Community

When it comes to money, we trust too much — and vet too little — those we think we know.

Illustration by Ed Johnson

Illustration by Ed Johnson

[Institutional lnvestor would like to clarify that Alex Tapscott has not been charged with a crime. Any comparison to the crimes, and alleged crimes, of Bernie Madoff, Alex Casperson, and Harold Backer was not intended to equate their actions to Mr. Tapscott’s.]

There is something unique about financial crimes. With rare exception, it’s not a gun to the back in a dark Detroit alley. It’s a handshake from a friend of a friend, or someone who went to your high school.

The truth behind this first struck home — almost literally — for me with the actions of Harold Backer. Backer is a three-time Canadian Olympian in rowing and a graduate of Princeton University, and was a teacher at my rival high school on Vancouver Island. He was also a financial adviser to many family friends. I saw him casually at Christmas parties, and felt a sense of camaraderie, if not closeness, when I followed in his footsteps and also rowed for Canada. Many people I knew felt the same way about him: the comfort of shared experiences.

On a Tuesday morning in November 2014, Backer went out for a bike ride. He did not return. After his wife called the police, many of our mutual friends went looking for him. All they found, however, was that he had taken his bike across the border aboard a ferry bound for Washington state. It was a complete mystery — for two days.

That Thursday, letters began arriving in his clients’ mailboxes. Their money was all gone, the letters stated. Backer had lost it 15 years before in the dot-com bubble, and attempted to hide the fact in a Ponzi scheme. The letters implied he was going to kill himself. His clients, obviously, were devastated. In my reporting at the time, I spoke to Backer’s high school rowing coach and husband of my preschool teacher, the man who got Backer into Princeton and nurtured him from a young age. He simply could not believe he had been fooled for 15 years by a man he saw almost every day, and whom he considered nearly as close to him as his own children. After almost 18 months on the run, Backer walked unannounced into a Vancouver Island police station to turn himself in. He has pleaded not guilty to fraud and currently lives with his mother.

I was reminded of Backer recently when a friend from Toronto told me the story of Alex Tapscott. In early November she emailed me a Forbes article that detailed how Tapscott — the son of Canadian management guru Don Tapscott — had been forced to abort a planned IPO of his company, NextBlock Global. Tapscott had “falsely named four crypto stars as advisers in an investor deck,” and got caught in excruciating fashion. According to Forbes’ Laura Shin, “Vinny Lingham, CEO of blockchain identity startup Civic and a shark on South Africa’s Shark Tank, told Alex via email he was hearing he had been named an adviser and Tapscott wrote back, ‘You are (obviously) not an adviser and have not been listed as one! So bizarre.’ Lingham responded he was looking at the deck with his face and bio on it and said, ‘Please don’t lie to me.’”


Tapscott’s misstep pales into comparison to Backer’s alleged crimes, but I still found it fascinating — and wondered why I knew Tapscott’s name. I emailed another friend in Toronto, asking why the name resonated. “I invested with him,” the friend replied. Tapscott had raised $25 million from friends, family, and some venture capitalists. My friend — who wasn’t the only person I knew who had invested with Tapscott — had put in a minimal amount of money, more as a favor than a serious financial investment. With the unwinding of the business, the investors were getting their capital back, along with a percentage of some returns made by the business.

The investment seemed an odd one for several of the people I knew in town. What had made them invest, I asked? Their responses had echoes of Backer’s victims: They knew Tapscott through shared activities, through school connections, through friends referring friends. Toronto, to a degree unseen in other large cities I know, has an insular, clubby feel to it. If you went to the elite Upper Canada College high school — where Tapscott did — or Queen’s, a prominent nearby university, that counts for a lot. Attending the right charity events, and sitting on the right boards, also holds importance. Manners matter in elite Toronto society, and Tapscott had them. And just as with Backer, those shared experiences very likely stopped investors from examining closely enough where they put their money.

Bernie Madoff preyed on his Jewish community. Wall Street darling Andrew Caspersen bilked friends out of $40 million before being caught and sentenced to four years in prison. And, in its own little way, it happened to me too. The reason I remembered Tapscott’s name is that three years ago, a mutual friend asked me to introduce Tapscott to Cameron and Tyler Winklevoss, the Bitcoin billionaires who are college friends of mine. The email account I used at the time is now lost, but my friend tells me I happily obliged. I remember doing no research on Tapscott before vouching for him. A friend’s recommendation was good enough.