ONTARIO COURT OF JUSTICE
FILE: OPP Project Gundy
R E :
IN THE MATTER OF AN APPLICATION FOR
A Production Order pursuant to s. 487.014 of the Criminal Code
Before Justice G.P. Renwick Considered on 26-27 February 2019
Reasons released on 27 February 2019
RENWICK J.:
REASONS FOR GRANTING A PRODUCTION ORDER
1I have read and considered the application submitted to me initially on 26 February 2019 by Detective Constable Martin Connell of the Ontario Provincial Police Serious Fraud Office for a Production Order in the “Project Gundy” investigation.
2The application consisted of the Information to Obtain (“ITO”) and related appendices. There was a “Judges [sic] Working Copy” which I have retained. When comparing the working copy with the actual ITO, I noticed that the affiant had signed the document, but it had not been sworn to before a “justice or judge/Commissioner of Oaths.” I advised my secretary to let Officer Connell know that I would continue to read the working copy, but I would not sign any order where the ITO was not properly sworn.
3I was advised on 27 February that the ITO was now properly sworn. I have looked at the ITO and confirm that Officer Connell swore to the information contained in the ITO today.
4After considering the sworn ITO and appendices I have determined that the ITO submitted by D.C. Connell meets all of the statutory prerequisites found in s. 487.014 of the Criminal Code for the granting of a Production Order. Specifically, there are reasonable grounds to support the affiant’s beliefs that a fraud over $5000 has occurred in relation to the Davies developments and evidence of the fraud will likely be found in the records kept by the chartered accountant for Bhaktraj “Raj” Singh, Harshad Parekh.
5Although the statutory prerequisites do not require this, I find that it is in the best interests of the administration of justice to issue the Production Order for the following reasons (in no particular order):
i. There are several irregularities in the investment process involving syndicated mortgage investments of the Davies Developments as revealed in the “fourth report” of KSV Kofman Inc.;
ii. On their face, the information of the five investors (“Draper,” “Adamson,” “Lockhart,” “Schlanger,” and “Vanhevel”) is compelling and credible, and corroborates the KSV report;
iii. It is suspicious that there were monies raised for 11 different development projects involving the same individuals (Mr. Singh, Mr. Davies, and Mr. Harris), yet none of the projects was ever completed;
iv. There are multiple conflicts of interest involving the principals (Singh, Davies, and Harris) in the investment fundraising and trustee processes which were not disclosed to the investors;
v. Individual investors never received independent legal advice;
vi. Individual investors appear to have been misled in material respects about the nature of their investments:
a) Investors were never advised that Mssrs. Singh, Davies, and Harris (either directly or indirectly) held a financial interest in the developments;
b) Investors were never advised that their monies may be used for other investments and/or developments;
c) Investors were improperly advised about the priority of their claims/loans; and
d) Investors were improperly advised about the value of the assets of the developments in which they were investing;
vii. I am satisfied that there is little personal or biographical core data which is likely to be contained in the records sought for production;
viii. The documents sought will likely assist investigators to learn how development projects were funded (or over-funded), exact relationships between the principals, where the invested monies were going, and whether or not unlawful business practises had in fact occurred;
ix. There is a strong public interest to investigate potential frauds and “ponzi” schemes to determine illegality and to bring perpetrators to justice; and
x. I have re-read the original ITO for a Production Order for documents in the possession of KSV and the additional information included in this ITO does not detract or call into question the original beliefs of the affiant. If anything, because there is the additional information found in the following paragraphs: at p. 18 (4.0 Davies Developer Transactions), p. 22 (3.2.3
Singh Entities), p. 23 (para. 33(e)), pp. 35-39 (the Victor Camba information), p. 52 (para. 44), p. 53 (paras. 45-46), and p. 58 (para. 51), not only do the original grounds continue to exist, but there are additional grounds for the affiant’s reasonable beliefs.
6While reading the ITO, I have noticed the following:
i. The dates of the records sought (from 31 May 2013 for RSCG and from 04 June 2012 for Tier One Transaction Advisory Services Inc.) extend to the present, which is beyond the time period of the alleged fraud;
ii. There is a missing footnote in the ITO (in the initial ITO it was footnote 8 and is now footnote 9) at p. 11, in the heading: “Ontario Superior Court of Justice – Commercial List – The Superintendent of Financial Services and (Tier One Projects)* dated October 20th, 2016; and
iii. As with the earlier ITO, there is still no amount stated for the investment of Kim Lockhart at para. 40 (pp. 47-49).
7I do not find that these items cause me to have any concerns about the general credibility of the affiant or the reliability of the information in the ITO for the following reasons:
i. The affiant is clear about the sources of his information;
ii. The affiant is aware of credibility issues (among other places, see the “Affiant’s Note” at pp. 36, 37 at the top, 38 in both places, and 39);
iii. The affiant is aware of the duty to be full, fair, and frank (see pp. 36, 38, and 39);
iv. The lack of a reference in a footnote and the missing amount of the alleged Lockhart fraud do not detract from or undermine any of the information in the ITO;
v. In respect of the records being sought beyond the end date of the alleged offence, it is unclear on all of the evidence whether any records exist after the Financial Services Commission of Ontario issued a Notice of Proposal (20 October 2016) in relation to its investigation of “serious contraventions” of the Mortgage Brokers, Lenders and Administrators Act, 2006. However, one possible inference for seeking records up until the present (well beyond the alleged offence end date of 20 October 2016) is that the investigators may want to consider the allegations in light of information that could exculpate the suspects of any culpability: for instance, if the records sought showed payments to the investors after the alleged offence date, this could obviate the need to lay charges. This is a reasonable purpose for seeking records beyond the date of the alleged offence;1 and
vi. I have considered whether Mr. Singh retains a reasonable expectation of privacy over records in the hands of his accountant which post-date the suspected offence. I have specifically taken note of paras. 51-56 in considering this issue. I conclude that it is a reasonable inference that the records sought, beyond the suspected offence date could be relevant to determine the authenticity of earlier records (i.e., whether or not the books were altered once the FSCO investigation was known). This inference is supported by the affiant’s knowledge that Mr. Singh had switched accountants (paras. 25 and para. 43). I have also taken into account Mr. Singh’s statement to police that Tier One Transaction Advisory Services has been inactive since “Oct 2016. It continues to exist, but does not run any business” (see para. 33(e)). In all of the circumstances, the extended time period does not undermine the reasonableness of the affiant’s beliefs and reasonably follows them.
8For the above reasons, the Production Order is granted.
Released: 27 February 2019
Justice G. Paul Renwick
Footnotes
- See CanadianOxy Chemicals Ltd. v. Canada, 1999 CanLII 680 (SCC), [1998] S.C.J. No. 87 at paras. 13-22.