Ponzi scheme

The plaintiffs brought a motion for a Mareva injunction to freeze approximately $6.1 million in settlement funds held in the defendant's solicitor's trust account.

The funds were allegedly derived from a fraudulent investment scheme involving the defendant corporation, which was controlled by individuals connected to a Ponzi scheme operated by Arash Missaghi.

The plaintiffs alleged they were induced to invest substantial sums through misrepresentation and fraud.

The court granted the Mareva injunction, finding the plaintiffs established a strong prima facie case of fraud, that assets were in the jurisdiction, that there was a risk of dissipation, and that irreparable harm would result if the funds were distributed.

The court also allowed the defendant to withdraw $250,000 from the frozen funds for legal expenses.

The accused pled guilty to fraud over $5,000, uttering a forged document, and committing theft under false pretenses in connection with an elaborate Ponzi scheme operated through Mac Glamour Inc. between 2015 and 2019.

The accused targeted members of her Filipino community, promising high investment returns on a fictitious lipstick manufacturing business.

A Gardiner hearing was held over 30 months to determine the quantum of loss and whether a fine in lieu of forfeiture should be ordered.

The court accepted a joint submission of 4 years imprisonment and ordered a fine in lieu of $610,856.00 based on losses that were readily ascertainable from documentation provided by certain victims.

The court rejected the Crown's submission that losses totaling nearly $5 million were proven, finding that many victim claims lacked sufficient documentation to meet the "readily ascertainable" threshold.

The Court of Appeal for Ontario dismissed Surefire Dividend Capture, LP’s appeal from the Superior Court’s decision denying insurance coverage for losses suffered in a Ponzi scheme perpetrated by Brenda Smith, CEO of Broad Reach Capital, LP.

The court held that the fidelity bond did not cover losses caused by fraudulent acts of a sub-advisor’s directing mind, as the bond’s language did not extend “Employee” status to such individuals.

The court also found no coverage for “Theft of Customer Property” because SDC no longer had a property interest in the funds once invested in BRC.

The trial judge’s interpretation of the bond was entitled to deference, and no reversible error was found.

This decision concerns a dispute over millions of dollars lent to Trip Support Inc., a failed “Book Now, Pay Later” airline ticket financing business.

The plaintiffs sought a contempt order for the defendants’ failure to disclose assets as required by a Mareva injunction, while the defendants moved to set aside the injunction for inadequate disclosure by the plaintiffs.

The court found the defendants in contempt for failing to disclose Spanish property, but also set aside the Mareva injunction due to the plaintiffs’ significant omissions in their ex parte motion materials.

The decision addresses the standards for contempt and the duty of full and frank disclosure in urgent injunction proceedings.

The Honourable Mark Falk (Ret.), as U.S. Ancillary Receiver for Broad Reach Capital, LC (BRC), sought leave to intervene as an added party in an appeal under Rule 13.01 of the Rules of Civil Procedure.

The appeal concerned a fidelity bond claim by Surefire Dividend Capture, LP (SDC) against National Liability & Fire Insurance Company (Berkshire) for losses from a Ponzi scheme.

The Ancillary Receiver argued that the trial judge's findings, including that BRC was an insured entity under the bond and the non-determination of the alter ego issue, were favorable to BRC's potential claim against Berkshire and could be prejudiced on appeal.

SDC consented, while Berkshire opposed the intervention.

The court granted the motion for leave to intervene, conditional on the U.S. Court confirming the Ancillary Receiver's authority, finding that BRC had a common question of law or fact with the appeal and that intervention would not unduly delay or prejudice the appeal.

The appellant insurer appealed a decision that found it had a duty to pay defence costs for the respondents in underlying lawsuits.

The insurer had denied coverage based on alleged material misrepresentation in the insurance application regarding the source of financing for the respondents' real estate development companies.

The Court of Appeal found that the failure to disclose syndicated mortgages as the financing source constituted a material misrepresentation by omission, triggering an exclusion clause in the D&O insurance policies.

The appeal was allowed, and the insurer was declared to have no duty to pay defence costs and was entitled to recover previously advanced funds.

The appellant, David Holden, appealed his conviction for fraud over $5,000 and money laundering, and his 12-year sentence, in relation to a multi-million dollar Ponzi scheme.

The conviction appeal argued the trial judge impermissibly inferred guilt from fabricated evidence.

The sentence appeal challenged the application of aggravating factors and sought a reduction due to COVID-19 incarceration conditions.

The Court of Appeal dismissed both the conviction and sentence appeals, finding no error in the trial judge's reasoning regarding the conviction and upholding the sentence as fit given the extensive aggravating circumstances, including the large scale of the fraud, its devastating impact on victims, and the appellant's history of similar offenses.

SureFire Dividend Capture LP (SDC) sought indemnification from Berkshire Hathaway Specialty Insurance under a fidelity bond for losses incurred due to a Ponzi scheme perpetrated by Brenda Smith, manager of Broad Reach Capital, LP (BRC), in which SDC had invested.

SDC claimed coverage under three insuring agreements (A)(1), (A)(4), and (B)(1)(b) of the Bond.

The court found that SDC failed to establish that its loss fell within the initial grant of coverage under any of the agreements, primarily because the stolen funds belonged to BRC, not SDC or its investors, and Brenda Smith was not an "Employee" of SDC as defined by the Bond for the purposes of SDC's direct claim.

The court also noted that SDC failed to disclose a material "in-kind" transfer of interests from other funds to SDC, which would have excluded coverage for that portion of the loss.

SDC's claim for punitive damages for bad faith was also dismissed.

The Plaintiffs brought a motion for a Mareva injunction and ancillary relief, alleging a significant fraud where over $17,000,000 in investor funds were misappropriated from a litigation financing business and diverted to companies controlled by the Defendants to purchase real estate and other assets, resembling a Ponzi scheme.

The court granted the Mareva injunction, finding a strong prima facie case of fraud, a serious risk of asset dissipation (evidenced by attempts to sell properties and the defendants' lack of forthrightness), and that the balance of convenience favored the plaintiffs.

The court also ordered the net proceeds from the sale of a specific property to be held in trust and granted substituted service for two defendants.

The Joint Liquidators of Stanford International Bank Limited (SIB) appealed the dismissal of their negligence claim against The Toronto-Dominion Bank (TD Bank).

SIB was a vehicle for a massive Ponzi scheme.

The Liquidators claimed TD Bank was negligent in providing correspondent banking services by failing to detect and protect SIB from insider abuse.

The Court of Appeal upheld the trial judge's finding that TD Bank did not owe a novel duty of care to monitor SIB for internal fraud, as this fell outside the scope of TD Bank's undertaking as a correspondent bank.

The court also affirmed the trial judge's alternative finding that even if a duty existed, there was no breach of the standard of care, and that the trial judge's procedural rulings regarding witness recall were fair.

The appeal was dismissed.

This endorsement addresses the costs arising from an appeal and cross-appeal concerning a dispute between appellant investors and a respondent trustee in bankruptcy of a failed financial company involved in a Ponzi scheme.

The main appeal was dismissed, and the trustee's cross-appeal was allowed in part.

The trustee sought $85,000 in partial indemnity costs, citing case complexity and novelty of arguments.

The appellants argued this was excessive, proposing $30,000.

Applying the principle that costs must be fair and reasonable, the court considered the trustee's partial success on the cross-appeal and the disparity in costs, ultimately awarding the trustee $40,000, all inclusive.

David Holden was found guilty of fraud exceeding $54 million and money laundering in a large-scale Ponzi scheme.

This decision outlines the sentencing, which includes 12 years imprisonment for fraud (concurrent with 8 years for money laundering), a restitution order, and a fine in lieu of forfeiture of $54,159,737, with a default imprisonment of 5 years consecutive.

The court emphasized denunciation, general deterrence, and separation due to the egregious nature of the fraud, its devastating impact on 65 victims, and Holden's significant prior record of similar offences and lack of remorse.

The appellant, a registered investment advisor, was convicted of fraud over $5,000 in connection with a large-scale Ponzi-type scheme perpetrated over eight years.

He defrauded fourteen complainants of $413,500 by falsely representing that their money would be invested in shares or positions in various companies.

The trial judge rejected the appellant's testimony as implausible and found he had deliberately misled complainants about the nature and risks of their investments, ultimately converting the funds to his own use.

The appellant was sentenced to four years in custody with restitution and fine in lieu of forfeiture orders.

On appeal, the conviction was upheld and the sentence was partially modified to include an additional restitution order and increase the fine in lieu of forfeiture.

April Vuong and Hao Quach, a married couple, were found guilty by a jury of defrauding the public of over $5,000 through a sophisticated Ponzi scheme totaling $5,175,000.

The sentencing hearing addressed the appropriate sentence, restitution, and forfeiture.

The Crown sought a nine-year penitentiary sentence, restitution of $3,567,992, and a fine in lieu of forfeiture for the same amount.

The offenders, who were self-represented, argued for a conditional sentence, emphasizing their intent to repay victims.

The court found the fraud to be large-scale, complex, prolonged, and to have had devastating impacts on numerous victims, many of whom were vulnerable.

The court rejected a conditional sentence, emphasizing denunciation and general deterrence for such commercial frauds.

The offenders were sentenced to six years imprisonment (net 5 years, 8 months, 19 days after credit for pre-trial custody and bail conditions), ordered to pay joint and several restitution of $3,567,992, and a fine in lieu of forfeiture of the same amount, with a default term of five years imprisonment.

A 15-year prohibition from managing others' money and a DNA order were also imposed.

This appeal concerns an auditor's liability action arising from the Bernard Madoff Ponzi scheme.

The appellants, three Fairfield feeder funds incorporated in the British Virgin Islands, invested in Madoff's company and suffered losses when the fraud was revealed in December 2008.

The funds sued PricewaterhouseCoopers for breach of contract and negligence in auditing their financial statements for 2006 and 2007, claiming damages of approximately $2.5 billion.

The motion judge granted summary judgment dismissing the action on the basis that no damages were suffered, applying the Livent damages methodology.

The appellants appealed on five grounds, all involving findings of fact or mixed fact and law regarding the calculation of damages.

The Court of Appeal dismissed the appeal, finding no palpable and overriding errors in the motion judge's analysis.

The respondent bank sought indemnity under an insurance policy for losses arising from a Ponzi scheme operated by a customer.

The bank obtained partial summary judgment on the interpretation of the "direct financial loss" element of the fidelity coverage section.

The appellants (insurers) appealed, arguing the motion judge erred in granting partial summary judgment on a constituent element of a claim rather than on the claim itself, failed to interpret the policy as a whole, adopted a theory of liability not advanced by the parties, and misconstrued the relief sought by the appellants.

The Court of Appeal allowed the appeal, set aside the order, and directed the action to proceed to trial.

The appellant was convicted of 28 counts of fraud over $5,000 in connection with a Ponzi scheme involving three accused persons and losses exceeding $2,000,000.

He appealed his convictions and sentence on grounds of delay contrary to s. 11(b) of the Charter and alleged errors in the trial judge's jury instructions.

The appeal was dismissed.

The Court of Appeal found that while the total delay of 59½ months exceeded the presumptive ceiling under the Jordan framework, it was justified by defence delay, discrete events (including the co-accused's illness), case complexity, and the transitional exceptional circumstance based on the parties' reasonable reliance on the Morin framework.

The jury instructions were found to be fair and balanced when reviewed as a whole.

The appellants appealed from an order dismissing their motion to strike claims for usurious interest and unlawful commissions in actions brought by the trustee in bankruptcy of the promoters of an alleged Ponzi scheme.

The appellants argued the order was final because it determined a question of law regarding whether the claims were statute-barred under the Limitations Act, 2002.

The Court of Appeal held that the order was interlocutory, not final, and therefore the court lacked jurisdiction to hear the appeal.

The court found that the motion judge did not formally invoke the applicable rule for determining questions of law, the formal order simply dismissed the motion without making a binding determination, and the motion was premature as pleadings had not closed.

The plaintiff, Doyle Salewski Inc. (DSI), as Trustee in Bankruptcy for Golden Oaks Enterprises Inc. and Joseph Gilles Jean Claude Lacasse, brought claims against various defendants, including Victor Laschewski, for recovery of usurious interest and unlawful commissions arising from an alleged Ponzi scheme.

The defendant Laschewski brought a motion to strike DSI's claims, arguing they were statute-barred due to expired limitation periods and failed to disclose a cause of action.

DSI brought a cross-motion for leave to amend its statements of claim to explicitly plead unjust enrichment.

The court dismissed the defendant's motion to strike, finding that the claims were not statute-barred due to the discoverability rule in bankruptcy/fraudulent schemes and that unjust enrichment was a valid cause of action.

The court granted DSI leave to amend its statements of claim.

A real estate lawyer pleaded guilty to two counts of fraud over $5,000.

The first count involved operating a Ponzi scheme over 14 years (1994-2008) defrauding individual clients of approximately $4.9 million.

The second count involved defrauding financial institutions of approximately $4.8 million between November 2007 and March 2008.

The Crown sought 10 years imprisonment; the defence sought a blended sentence of 3 years in penitentiary plus a 2-year conditional sentence.

The court imposed a concurrent 6-year penitentiary sentence, rejecting the conditional sentence component and finding that general deterrence and denunciation were paramount given the breach of trust by a member of the legal profession.