Sherman, son clashed over business decisions, sources say
Slain billionaire’s son raised doubts about father’s strategy and competence, insiders say
In the spring of 2015, upset with what he saw as reckless business decisions, Apotex billionaire Barry Sherman’s son Jonathon floated the idea to his three siblings that their father was incompetent and unable to manage the family’s affairs, according to three sources with knowledge of the matter.
This came at a time when Jonathon and Barry were having tense discussions about how the family fortune should be spent. Specifically, according to an email exchange he had with Barry over two days, Jonathon disagreed with what he saw as his father’s reliance on “gut” feelings instead of sound business plans. Jonathon also wanted more money invested with his own ventures, and less with his father’s friend, businessman Frank D’ Angelo.
Like many wealthy families, the Shermans had disputes over how the family wealth should be spent. In recent years, Canadian families the Stronachs and the Sorbaras have been locked in very public battles that have spilled over into the courts. Issues in those instances include money made by a wealthy entrepreneur and who in the family is best to steward that wealth. At one point in their 2015 email conversation, the then 73-year-old Barry told his 32-year-old son, “please also remember that I have been making business decisions for many decades, often making decisions with which others disagree. The result has been some big losses, but also some even bigger gains. As a result of my decisions, you will likely be a multibillionaire.”
Soon after these tense discussions between father and son in the spring of 2015, Jonathon sent an email to his sisters, with a subject line that referred to them as fellow shareholders. In the email, Jonathon suggested their father’s actions were jeopardizing their inheritance, according to three people who saw the email at the time and discussed its contents with Barry Sherman. Jonathon’s email referred to Barry as the founder, a reference to his founding of generic drug giant Apotex, which he grew into a multibillion-dollar enterprise over 43 years. The Star has not seen this email but its content has been described to the Star by three people.
Jonathon told his sisters in his short email that there was precedence for removing or overturning a company founder.
Barry, who got a copy of the email after it was sent by Jonathon, was taken aback when he read its contents. Barry talked to three people close to him about the email, saying to one: “Jonathon is talking with his siblings and he wants me declared incompetent and locked up,” according to one person who discussed this with Barry in 2015.
Jonathon’s three sisters did not agree with their brother’s thinking, according to sources. Following this exchange between father and son, Barry reduced his funding to his son’s company for a time but ultimately shrugged it off and provided more money to his son’s company, according to sources and public records.
It was just one step on the rocky-road relationship between father and son.
For the purpose of this story, sources have been granted confidentiality for different reasons, either because they fear economic reprisals; because they were not authorized to speak on behalf of the Sherman family; or because of a concern that by speaking publicly they will interfere with the police investigation. Toronto police are continuing their probe of the “targeted” double murder of Barry and Honey Sherman, found strangled in their home on Dec. 15, 2017. A police detective has said in open court during the Star’s unsuccessful attempt to unseal search warrant documents that police have a “theory” of the case and “an idea of what happened.”
In the Star’s attempt to learn about the earlier financial dispute between father and son, we reached out to Jonathon, both directly and through his lawyer, Brian Greenspan. As part of a back-and-forth exchange over the past six weeks, the Star sent 31 questions to Jonathon on May10, ranging from questions about the dispute with his father to queries about his businesses. Some questions also dealt with the investigation of his parents’ murders.
Greenspan, who represents the four Sherman children, responded that “Jonathon Sherman and his siblings have honoured the request of law enforcement that they not engage in interviews or discussions with non-police agencies.”
Instead, in a letter to the Star, Jonathon Sherman said he has prepared “comprehensive written responses” to each question posed by the Star and sent them to the Toronto police detectives who are investigating the murders.
“Although I believe that the Toronto Police have complete responses to all of Mr. Donovan’s misleading questions, I will also arrange an interview with Detective (Brandon) Price at his earliest convenience to further elaborate on, and if necessary explain, the details which I have provided to him in response to the inquiries made on behalf of the Toronto Star,” Sherman wrote.
Jonathon Sherman also said he cannot respond publicly to these questions because he “cannot interfere with the investigation.” In previous correspondence nine months ago, Sherman told the Star he would meet and answer questions, but only if he was given the authority to edit or remove any information concerning him in what was going to be published. The Star declined the offer.
The email regarding Barry’s competency, along with the 2015 email correspondence between Barry Sherman and his son, is in the hands of police, sources say.
In a letter to the Star, lawyer Brian Greenspan suggested that information the Star has seen reflects “a reliance upon information which we believe came into the possession of your socalled sources unlawfully.”
The Sherman case is cloaked in mystery, with judicial sealing orders on both police investigation documents and the estate files of the late Barry and Honey Sherman. In a recent story, the Star revealed that Sherman, who had already gifted more than $150 million to charity, was contemplating making additional donations, as well as provide his wife Honey with a substantial financial gift.
Barry Sherman founded Apotex in 1974. At the time of his death, the Bloomberg Billionaires Index estimated Sherman’s wealth at $4.7 billion, with much of it tied up in Apotex. In addition to his generic drug business, Sherman also invested in proposals brought to him by people who had an idea for a business or a real estate purchase, including family and friends.
One of those people was son Jonathon. In his December 2017 eulogy for his parents, Jonathon said his father always backed his forays into business, in particular the self-storage business.
“You were also my business partner,” Jonathon told 7,000 mourners at the memorial service. “When I entered your office about five or six years ago with my good friend Adam, we told you about our plan to start a business together and you were so incredibly supportive and excited. We had the world’s shortest shareholder agreement which basically said, anything, anytime.” The “Adam” Jonathon referred to is Adam Paulin, a graduate of the Richard Ivey School of Business. The two have been friends since meeting one summer at Camp Winnebagoe. Together, they set up Green Storage in 2014. It is a company that provides self-storage lockers in agrowing number of sites in the GTA and surrounding towns.
Paulin has not responded to the Star’s request for an interview.
According to friends of the late Barry Sherman, the Apotex founder would have preferred any or all of his children to follow him into the generic drug business. None were interested. Jonathon did work for a little under a year at Apotex after graduating with a civil engineering degree from Columbia University, but left to start his own business. The self-storage business caught his eye in 2014 and with support of his father, working with Adam Paulin, they began purchasing existing facilities under the company name of Green Storage.
The company’s website states that in addition to renting storage lockers, they have electric vehicle charging station and recycling depots on site — hence the “green” in Green Storage.
By the spring of 2015, according to provincial land title documents, Green Storage had a total of $71 million in loans registered against its properties from a company called Hour Holdings, which used Apotex as its mailing address. The directors of Hour Holdings and the related Hour Investments are Jonathon Sherman and Adam Paulin. Green Storage directors are Sherman and Paulin as well.
Sherman insiders with knowledge of these financial matters say that Hour Holdings was funded by Barry Sherman.
At the same time as the mortgages were registered against Green Storage, it made purchases of existing self-storage businesses in Ajax, Newmarket, Aurora and Bolton. According to land title documents, the storage businesses they purchased cost, in total, $22 million. The Star could not determine the extent and cost of the renovations as Green Storage is a private company with no requirement to release information to the public.
The smallest loan to Green Storage from Hour Holdings was in August 2014, to purchase a small boat storage facility in Apsley, Ont., north of Peterborough and near a marina and cottage property Jonathon purchased the year before through a holding company he and business partner Paulin own. Land title records show a loan of $500,000 from the Shermanrelated company and a purchase of $234,500 for the storage site in Apsley.
The year 2015 was a difficult financial stretch for Barry Sherman. He confided to close friends and executives at the privately held Apotex that “cash was tight.” He had several big generic drug litigation battles going on and while he typically won more than he lost, this period was a rough one financially. Consequently, Barry Sherman was being unusually cautious on investments, including advancing more money to Green Storage.
In a lengthy email exchange between Barry and Jonathon in late April of 2015, some of the stresses between father and son were laid bare. Jonathon acknowledges that in recent times “cash was tight.” Still, he writes, he is hoping his father will continue investing in the businesses he has with Adam Paulin.
“I have made a very successful investment in an apartment building (purchased for 4 and could be sold today for 7) and we have been looking for a second apartment building but I have held off on that because I thought cash was tight,” Jonathon writes. “We often reflect on the lost opportunities that we have had but passed because we didn’t want to ask for the funds in a time of tight cash.”
The emails between father and son reveal an ongoing sore point between them: Barry’s long-standing friendship and business relationship with Frank D’Angelo, a Toronto businessman who with Barry’s help had built several food and beverage-related businesses over the years, all under the heading of “D’Angelo Brands.” D’Angelo was also making movies and Barry Sherman was his funder and co-executive producer.
In an exchange that focuses on Barry’s ongoing financial support of D’Angelo, Jonathon writes to his father on April 28, 2015, with the subject heading “explain it to me.”
“You said ‘it’s not so simple,’ Can you explain it to me? I’m bright and educated. If you explain it to me I will try and understand,” Jonathon writes.
Barry shoots back one minute later, “Explain exactly what?”
Jonathon replies, asking how his father determines “that it is worthwhile to invest more money with Frank despite year after year of losses. What are you seeing that everyone else is missing?”
Jonathon alleges in the emails that his father has over the years given D’Angelo millions of dollars — Jonathon puts the figure at $250 million over15 years — with little to show for it.
In an interview this week, D’Angelo acknowledged that Barry Sherman financed many of his businesses, but said it is “ridiculous to say he gave me $250 million. That is absolutely, unequivocally wrong.”
D’Angelo said “Barry was the best partner I ever had.” In addition to their business interests in producing products un
der such brands as Steelback Brewery in the early 2000s, and more recently AriZona Beverages, D’Angelo said they were hoping to strike it rich in film. “Barry understood exactly what our plan was. The plan was to make one movie that would explode.”
In the 2015 email chain, Jonathon told his father that their arguments over the D’Angelo investments have caused strain between them. “In the past I have been accused of petulance for asking tough questions, and there has been much frustration for both of us. Years ago I did stop asking about Frank because of the strain it caused on our relationship, and have left it alone.”
Barry’s responses over the two days that the emails bounce back and forth include an explanation of his approach to investments. “It is always a judgment call as to whether it is a better bet to write off what is in, or to invest more to continue to try to increase value, to reduce the loss. Not as simple as you might think.”
Jonathon responds with a lengthy email, criticizing D’Angelo and pointing out his (Jonathon’s) positive attributes.
“I only wish you and I talked more so I could share stories about my interactions with people at the marina and storage facilities. I do everything possible to please my customers and my staff because I value them immensely. I don’t work because I want to make money, and I never will.”
He adds: “What gives me the greatest pleasure at work is being overly nice to people when they may not expect it, and to see their reactions! I go to work because I have fun providing a great service to people and working with happy staff.”
The email exchanges go back and forth. Jonathon’s emails are lengthy, Barry’s are short. In one, late in the day on April 28, 2015, Jonathon tells his father that he has “studied accounting and finance” and understands key business concepts.
The next morning, April 29, 2015, Jonathon writes a lengthy email, beginning:
“Dad, With all respect, I am trying to understand the specifics of the business logic with this investment ... I’m looking for the numbers being plugged into those equations,” Jonathon writes. He then pitches his father on a plan, which he says will require $250 million investment over 15 years. “Adam and I have great ideas for Hour Investments,” Jonathon writes, naming the company that he and Adam created as their holding company. “We would like to expand Green Storage to become a major player in the storage industry, and that will take 100 million over ten years.”
He also has plans to develop in cottage country east of Muskoka. “Adam and I would like to buy and manage about 25 per cent of the waterfront property on Chandos Lake.” Chandos Lake is north of Peterborough — the lake where he owns a small marina with several guest cabins and in late 2017, with business partner Paulin, completed construction of a new cottage. Locals believe the area is ripe for development, particularly because Hwy. 407 now makes the trip just a 21⁄ 2- hour drive from Toronto. Also, it is much cheaper to purchase lakefront properties than in the booming Muskoka market. In his email, Jonathon estimates it will cost $150 million to purchase one-quarter of the cottages on Chandos Lake.
In his email, Jonathon asks for a meeting with his father, with business partner Adam Paulin present, and suggests they can also discuss “succession and whether Adam and I can play some role in that.”
Two people close to Barry Sherman say that he was upset that his son would suggest that an outsider (Paulin) would be mentioned as someone who could be involved in succession planning at Apotex and Sherman’s other holdings, and also that Jonathon wanted to include Paulin in meetings.
Jonathon writes in the same email that he and Adam enjoy working together and plan to for many years. But he said he does not understand why his father is in business with D’Angelo.
Barry writes back that he cannot “debate” Frank D’Angelo’s business abilities. “It is simply a judgment call, implicitly based on intuition as to the expectations.”
Jonathon responds saying he does not understand why his father is relying on his “gut” in making these decisions.
To which Barry responds: “Each time, I need to consider the consequences of walking away vs. the prospect that value will be increased by continuing. While you may think that what to do is obvious, I do not.”
The email chain viewed by the Star concludes with Barry Sherman sending a link to what in 2015 was D’Angelo’s latest movie, Sicilian Vampire, starring Armand Assante, James Caan and Daniel Baldwin, along with D’Angelo, who acts in all of his movies.
Sherman, who funded this movie and others by D’Angelo, writes: “Absurd as it may seem to you, I believe that (D’Angelo) has a talent to produce films with value in excess of cost.” Sherman adds more details about the movie and the associated finances. “The cost was well under $1 million, of which about half comes back from grants. Major actors in Hollywood take him seriously, as you can see.”
Soon after this exchange, according to three sources, Jonathon sent the email to his sisters, suggesting their father was showing signs of incompetence. Sources say the email does not get into details on how specifically to deal with this.
(There is a provincial system for determining competence. The Ministry of the Attorney General, which oversees it, notes that people are entitled to make “bad decisions” and that is not necessarily a sign of incompetence.)
Following this interaction between Sherman son and father, there were no more advances of money to Jonathon’s Green Storage companies for some time, according to land title records. Two highly placed insiders within the Apotex-Sherman companies say that Barry asked Jonathon to put conventional bank mortgages on his properties in 2016 as a way to fund the expansion of the Green Storage business, but Jonathon refused to do so.
In December 2016, the Barry Sherman money tap was turned on again. Sherman insiders say that they had noticed that Jonathon and his father were getting along better at this time.
Land title records show a $5-million loan from Hour Holdings to purchase a storage company in Orillia and, in April 2017, a $50-million loan from Hour Holdings to purchase one on Eastern Ave. in Toronto. In both cases, land title documents do not record the cost of the purchase, noting a nominal “$2” value in each case.
Later that year, in September 2017, $1.5 million was advanced by Hour Holding related to the construction of the cottage owned by Jonathon and Adam Paulin, overlooking the small marina on Chandos Lake.
With the death of the Shermans in December 2017, many of the family investments were put on hold. The Sherman wealth, according to instructions left by Barry Sherman in his 2013 will, splits the family fortune equally between his four children. That fortune is controlled by four trustees he named in a 2017 codicil to the will: Jonathon Sherman, Brad Krawczyk (husband of his daughter Alex), Alex Glasenberg (who runs the Sherman family holding company), and Jack Kay, Barry’s second in command at Apotex for more than 30 years. Kay was fired by Jonathon from Apotex in December 2018 and since that time has not been at the estate trustee meetings.
In February of 2019, Green Storage paid $1.2 million for a storage facility in Scarborough. According to land title documents, a $25 million loan from Hour Holdings was registered on title.