Ontario Court of Justice

Date: 2022 05 05 Court File No.: Toronto 4817-998-20-75004767

BETWEEN:

HER MAJESTY THE QUEEN

— AND —

RAPHAEL FORTUNE

Before: Justice H. Borenstein

Heard on: March 7, 2022 Reasons for Judgment delivered on: May 5, 2022

Counsel: M. Giovinazzo ...................................................................................... counsel for the Crown T. Inoue............................................................. counsel for the accused Raphael Fortune

Borenstein, J.:

[1] Raphael Fortune, also known as Raphael Kojokaru, is charged with offences in relation an alleged diamond fraud.

[2] The complainant, Mike Rantissi, lives in the United States and was contacted by email by Mr. Fortune in this regard.

[3] Fortune told Rantissi that he had unique investing skills in the diamond industry, with an impeccable record, and would earn his clients huge profits with no risk.

[4] The Crown alleges that Fortune ensnared Rantissi in a fraud that had two stages. First, he earned Rantissi’s trust with a small deal and then defrauded him in a large deal.

[5] Mr. Rantissi decided to invest with Mr. Fortune. He invested in the small deal. Fortune told him he earned a considerable profit on that investment in a very short time. He told Rantissi he had a large investment with no risk. Rantissi sent Fortune several wire transfers, representing his life’s savings of about quarter of a million US dollars. Rantissi never heard from Fortune again. Mr. Rantissi lost everything. He never received the diamonds, nor did not get his money back. Mr. Fortune stopped communicating with Rantissi after his last wire transfer.

[6] Rantissi was the main crown witness. Officer Lee, the officer in charge, testified as did two bank employees. Bank records were admitted on consent and an agreed statement of facts was filed.

[7] No defence was called.

[8] There is no issue Mr. Rantissi lost money investing in diamonds with Mr. Fortune. The issue is whether the Crown has proved beyond a reasonable doubt that the only reasonable inference at the end of the case was that Mr. Fortune willfully defrauded Mr. Rantissi of an amount over 5,000. If so, the related possession of proceeds of crime count follows. Conversely, if Fortune is not guilty of the fraud, he will be found not guilty of the possession of proceeds count.

Rantissi’s evidence

[9] Mike Rantissi is 48 years old. He is a Doctor of Physical Therapy, and owns a clinic in Las Vegas, Nevada.

[10] In June 2018, he received accreditation in an investors group which entitled firms to contact him and present him with investment opportunities.

[11] Rantissi received a call from Mr. Fortune regarding investing in precious stones; specifically coloured diamonds. Mr. Rantissi was interested but had no experience with stones. He asked Fortune for more information. Fortune emailed Rantissi more information.

[12] In that email, Fortune told Rantissi that he has had enormous success in the coloured diamond industry. His clients, he said, earned a 93% return the previous year and were one track for an even better year. He told Rantissi there was no downside risk. There was an important diamond mine in Australia, the Argyle mine, that would be shutting down which would present a good opportunity. Rantissi conducted a Google and Better Business Bureau search on Fortune and there were no red flags.

[13] I quote part of Fortune’s email which contains themes that continued throughout Fortune’s communications with Rantissi:

[14] Rantissi was interested in investing and Fortune presented him with an opportunity to buy a relatively small amount of diamonds. Rantissi agreed and wired Fortune $10,600 USD as required but Fortune replied that the diamonds had been sold by the time the money had been wired. Rantissi told him to let him know if another opportunity arose. Another opportunity arose and Rantissi sent Fortune a further $37,500 USD and received diamonds for both purchases at the same time. Accordingly, Rantissi sent Fortune about $48,000 USD and received diamonds. This was around July 2018.

[15] In August 2018, Fortune told Rantissi that he had a bigger, “once in a lifetime opportunity” for Rantissi. Fortune said his colleague in France had the opportunity to acquire uncertified diamonds of great quality. Fortune said he knew those diamonds would be easily certified and, until that occurs, they could buy the diamonds for pennies on the dollar for what they will be worth once certified. Fortune said he would fly to France, bring the diamonds back and get them certified. Not only would the value increase greatly once certified, when the Argyle mine shuts down, they would increase even more. This was referred to as the “French deal”.

[16] The total value of the diamonds in the French deal was $1,118,280.00 and would be split between Rantissi, Fortune and the unnamed colleague in France. Fortune said Rantissi would get a 24% cash discount by paying for the diamonds up front. Therefore, Fortune told Rantissi his cost would be $372,760 less 24% or $283,297 for his share of the French diamond deal. Fortune also told Rantissi that the diamonds he bought from Fortune the previous month for about 48,000 had increased in value to $77,522.00 and if he returned those to Fortune, he could use that as a deposit toward his $283,000 purchase.

[17] Rantissi was interested but did not have that kind of money available. He would have to sell all his investments to finance this deal.

[18] Rantissi and his wife wanted to meet Fortune face to face before committing to this deal, so they arranged a trip to Toronto to meet Fortune. They offered to bring Fortune a cashier’s cheque for the deposit, but Fortune said it had to be a wire transfer. They met in Toronto at Rantissi’s office. Following the meeting, Rantissi felt reassured by Fortune.

[19] Before sending the money, Rantissi emailed Fortune in October 2018 summarizing his understanding.

[20] He would send $50,000 and return his diamonds, ostensibly worth about $77,000, which would represent 50% of his investment in the French deal leaving a balance owing of $100,000. He wrote that, if for some reason, “we” could not complete the deal by December 21st, he would get his $50,000 back but would lose his diamonds. If the other side could not complete the deal, he would get his entire deposit back. Fortune replied “agreed in full” except the balance he owed would be $105,000, not $100,000.

[21] Rantissi couriered the diamonds and wired Fortune $50,000. When he liquidated his remaining investments, he wired Rantissi the balance. This was December 2018. By mid-2019, Fortune called Rantissi and sounded frantic saying they were short $40,000 due to the colleague in France being short his share. If they did not get the $40,000, the deal would not occur. Fortune asked Rantissi if he had $40,000. Rantissi told him all he could come up with was $12,000. Fortune said he would work day and night to come up with the money and save the deal. About two to three weeks later, Fortune said he was able to get the rest of the money. Rantissi wired Fortune the $12,000 on July 17, 2019.

[22] On August 6, 2019, Rantissi emailed Fortune asking what was happening with the deal but received an out of office reply. He emailed Fortune again a month later but again got no reply. He emailed him four times in October desperately seeking a reply. Fortune has never replied to Rantissi after that last $12,000 was wired.

[23] Rantissi never received the diamonds. Nor his money back. Nor were any of his calls, emails or texts returned.

[24] In cross examination, Rantissi agreed that he and Fortune communicated by email, text and phone calls. Rantissi turned over his emails, not his texts. He said he did not intentionally omit anything and could search the cloud for his texts but that was not pursued in cross examination.

[25] He was questioned about an incident at Pearson Airport following the Toronto meeting. At the airport on his way home, Rantissi realized he could not board his flight with hunting knives he purchased so he used Fortune’s FedEx account to send the knives home to Las Vegas. He then emailed Fortune saying he was sorry for doing so without asking first and asked Fortune how much the charges were so he could pay for the courier. He was cross examined on that use without prior authorization and it was suggested he acted dishonestly. He agreed it was wrong but not that it was dishonest.

[26] He was cross examined about his testimony that he asked Fortune if he could pay for the diamonds with a credit card so that he would have an added layer of protection whereas he told Fortune he would like to pay with a credit card for the points. He testified that Fortune’s reply that the credit card company would charge Fortune too much made sense so he wired the money as requested by Fortune.

[27] Rantissi was asked and did not know whether Fortune had bank accounts in New York but he did return the diamonds to a New York City address that Fortune provided.

[28] He disagreed with the suggestion that the French deal was for the purpose of making jewelery rather than investing in diamonds.

[29] He agreed with the proposition “the greater the risk, the greater the reward” but disagreed with the suggestion that adding a third person to the French deal would increase the risk. He thought it would reduce the risk although now he wonders whether there ever was a third person in France.

[30] He did not recall ever arguing with Fortune over wanting a copy of Fortune’s identification before the transaction but agreed that an email from Fortune to Rantissi where Fortune wrote “Hi Mike, it’s the crook” in a sarcastic tone suggests he may have called him that in some exchange.

[31] When Fortune stopped replying to Rantissi’s emails, Rantissi hired an investigator to look for Fortune, contacted the TPS, Officer Lee began an investigation, and he contacted his own bank about an internet wire fraud. His bank told him to contact the FBI which eventually lead Rantissi to file a criminal complaint with the Nevada Attorney General. Rantissi wanted to find Fortune and either get his diamonds or money back. He also hired a private investigator.

[32] In Rantissi’s complaint to the Nevada AG, and in his evidence, he testified that Officer Lee told him that he learned the money had gone from Fortune’s bank to a U.S bank and the TPS did not have jurisdiction in the U.S. It was suggested to him that Officer Lee never told him the funds were in the U.S. He said Lee did tell him the funds were transferred to a U.S Account, he did not make that up.

[33] Rantissi wrote in his Nevada complaint that he sent money to Fortune in August, October, December and July. It was suggested he never made an August payment. He replied that he has a list of payments from his bank and could correlate the payments and if there was an error with one of the dates, he simply made an error.

Officer Lee

[34] Officer Lee testified that he verified that monies were sent by Rantissi and he tried to follow the money trail. His evidence was vague, and his recollection was quite poor as it related to conversations with Rantissi. He agreed he updated Rantissi and likely told him they had a suspect but would not have told him where the money was spent, if he had been asked.

Bank records and ASF

[35] The agreed statement of facts and bank records admitted for their truth show that Fortune controlled a CIBC account ending in 412 which was the account into which Rantissi wired his transfers. Fortune also had accounts ending in 210 and 734 where he would transfer money from the 412 account, into and use those two accounts to make purchases, pay off credit cards and other matters.

[36] Between June and August, the 412 account never had a balance greater than $10,000 and there were no large deposits. As of July 31st, the balance in the 412 account was $42.00.

[37] On August 13th, Rantissi wired $37,585 USD into the 412 account. It was disbursed quickly, and by the end of August, there was about $1,000 left in that account. There was virtually no activity in the 412 account in September.

[38] On October 22, Rantissi wired another $49,985 dollars into the 412 account which was almost entirely depleted by way of withdrawals or transfers to Fortune’s two other accounts. By the end of October, the balance in that account was about $5,200.00. There were no deposits into the 412 account in November but another $4,000.00 was transferred out of the 412 account into one of Fortune’s other accounts.

[39] On December 3, 2018, Rantissi wired $123,275 USD into Fortune’s 412 account which had a balance at the time of just over $1,000 before the transfer. That same day, Fortune transferred out about $83,452 USD out of the account in to his two other accounts and made significant cash withdrawals. One of his accounts he transferred the money into (ending in acc # 210) had a balance of $49.05 before Fortune transferred in just under $65,000 CDN from Rantissi’s deposit. That same day, Fortune began paying off his various bills from account 210 including; $4,500 to RBC Visa, $2,180 to Amex, $2,000 to Mastercard, $8,300 to Home Depot, $4,800 to Visa as well as a couple of large internet transfers and cash withdrawals totaling over $37,000 in transfers or payments that same day. A $7,807.50 withdrawal occurred from the 210 account the next day as well. Four days later, Fortune transferred another $15,000.00 from 412 to one of his other accounts and withdrew $2,000. On December 28th, Fortune transferred another $22,000.00 from the 412 account leaving $800.00 in the 412 account by the end of the month.

[40] There was little to no activity in the 412 account from January until July 17th when Rantissi wired another $11,985 into the 412 account. Fortune immediately withdrew about $8,000 and used those funds to buy US bank drafts.

[41] It was also agreed in the ASF that, on August 3, 2019, Fortune used his Amex to purchase a $59,957 watch and watch winder. He also made other credit card purchases around this time.

[42] Between February and April 2019, the account ending in 412 purchased diamonds from Langermans SP Belgium.

Submissions

[43] The Crown submits that this was a two part fraud. The first part was to contact Rantissi and lure him in with a sense of confidence and security. Sell him diamonds. Tell him they have already gone up in value and there was a much bigger deal to be made with a much higher reward. Then, the second stage would be to get as much from Rantissi as possible.

[44] Fortune submits that this was just a high risk, high reward deal that fell apart which all parties entered into in good faith. The loss that occurred, while unfortunate, is at most, a civil matter. At one point, it was suggested that Fortune lost as much as Rantissi.

[45] Fortune submits that the money trail means nothing since the bank records do not show where Fortune bought the first diamonds. He may have had other accounts. He also submits the Langermans is irrelevant to this case.

[46] Further, Fortune submits Rantissi’s use of Fortune’s FedEx account without prior authorization shows dishonesty and the conflict between Officer Lee and Rantissi about whether Lee told Rantissi that the money trail went to NYC shows more dishonesty. Fortune submits that, while Fortune may possibly have defrauded Rantissi, that is not the only inference on the evidence.

Requirement of Fraud

[47] Fraud requires a dishonest act together with a risk of loss caused by the dishonest act. The dishonest act must be intentional, and the accused must subjectively be aware of the risk of loss.

[48] There are at least two dishonest acts alleged; first; Fortune’s continued representations to Rantissi that this was a risk free investment which would generate huge profits and second, that Fortune’s representation that Rantissi’s money would be used to purchase diamonds in the French deal. The Crown alleges these two representations were deliberately false.

[49] I begin with the second.

[50] It is clear from Fortune’s representations to Rantissi that his money was going to be used to purchase his share of diamonds in the French deal.

[51] That never occurred.

[52] Not only were the diamonds never purchased. Rantissi never got his money back.

[53] Instead, Fortune never responded to Rantissi once Rantissi wired all the money he had to invest. And the bank records show Fortune used Rantissi’s money to pay Fortune’ personal expenses. From this, I find that, not only were the diamonds never bought, they were never going to be bought. If they were, the money would not have been diverted to pay off Fortune’s debts and further, Fortune would have contacted Rantissi. Buying the French diamonds was never going to occur. This was about taking Rantissi’s money from him. That is obviously dishonest and the essence of this fraud.

[54] It is fanciful to suggest that there is an alternative, reasonable inference that Fortune, who did not testify, actually did use Rantissi’ money and bought diamonds in the French deal.

[55] There is no evidence that those diamonds were ever bought. I repeat, Fortune immediately transferred Rantissi’s money to himself to pay off his own debts and then failed to reply to Rantissi. This is not an investment that somehow declined in value to zero. The fact that Rantissi ended up with nothing, and Fortune used the funds for his own dues and went silent speaks volumes in this case.

[56] Rantissi’s comments in the AG complaint do not detract from Rantissi’s credibility or reliability in any significant way. To the extent that there is a conflict about what Lee may have told Rantissi, I prefer Rantissi’s version. Lee was extremely vague about whether and what he might have or would have told Rantissi, and his vagueness is not overcome by his comment that he would not have told him it was in the States. Moreover, Rantissi was far more motivated to know where his money went than Lee was in recalling a conversation several years later. And the use of the courier account at the airport is so minor that it is irrelevant. Further, Rantissi did not try to hide it. He emailed Fortune right away telling him he had done so and asking how much the charge would be so he could repay him. Rantissi acted in good faith throughout.

[57] The other area of dishonesty in this case was Fortune’s continual assertion to Mr. Rantissi that this was a safe investment with no risk whatsoever. Fortune wrote to Rantissi in an October 6th email which I quote in part:

“I am a straight shooter. I never embellish nor exaggerate. My transactions are well thought out and always expertly executed resulting in positive outcomes for all. I only benefit with my clients benefit and I never take my clients trust for granted. For these reasons, I’ve been able to earn my unblemished 30 year record in this industry and proud of it.”

[58] And later in that email:

This transaction has been constructed with so many layers of protection so to ensure we all walk away with sizeable returns. Aside from it all, we provide you and all our clients one more layer of protection with our lifetime moneyback guarantee, clearly marked on our invoices which no other firm provides. I have imagined and provided for every possible contingency, if for any reason the other party did not live up to the terms. I have taken into account any unforeseen event that could possibly derail this deal. This locked up tighter than two coats of paint.

There is literally no downside to you on this transaction. I just need you to have a little faith in the process and all will transpire exactly as I have laid it out. I’ve been doing this for a very long time and the deal as solid as they get. I’ve always been honest and transparent with you so let us please close this deal ASAP so we can move forward and enjoy the fruits of our labour.

[59] Those comments reflect the approach Fortune took to Rantissi throughout. Fortune promised that Rantissi would get the diamonds or his money back. That was clearly false as well.

[60] Despite Fortune’s constant representations to Rantissi that this was a no risk investment, Rantissi agreed in cross examination, based on one sentence in one email, that this was a high risk/high reward investment.

[61] I agree with the Crown that that must be seen in context and one sentence does not change the context or detract from the dishonest actions of Fortune and the loss.

[62] The context includes numerous, continuous representations to Rantissi that there was no risk whatsoever in this deal. a. “Invest with zero financial risk!” b. “In fifty years of recording prices, there has yet to be a downside.” c. “If at any time during ownership of your diamond, you are not completely satisfied for any reason, return your diamond or a full refund. No questions asked.” d. “I would be concerned if you didn’t have any doubts however Mike after all that’s said and done the worst case scenario is you make no profit.” e. “This opportunity fell into our lap’s [sic] last minute as you know and I immediately jumped all over it whilst ensuring we fully protected [sic] and guaranteeing a successful outcome for us all.” f. “This transaction has been constructed with so many layers of protection so to ensure we all walk away with sizeable returns. Aside from it all, we provide you and all our clients one more layer of protection with our lifetime money back guarantee, clearly marked on all our invoices which no other firm provides.” g. “I have taken into account any unforeseen event that could possibly derail this deal. It is locked up tighter than two coats of paint.” h. “We benefit on the way up and on the way down. This is a dream scenario, which does not often occur.” i. “There is literally no downside to you on this transaction.” [Emphasis added].

[63] Those representations were plainly false from the outset. I base that not only on the incredulity of those assertions but on the fact that it was never Fortune’s intent to invest Rantissi’s money in a legitimate investment. This was not an investment that went down in value. This was the taking of money from Rantissi for the purpose of buying diamonds in the French deal and then not buying the diamonds but using the funds for Fortune’s own purposes. Tracing the money shows that when Fortune received Rantissi’s money, he used it for his own purposes, not for the purposes of acquiring the diamonds.

[64] Fortune’s dishonest act caused loss to Rantissi. He took Rantissi’s money and used it for his own purposes. Rantissi ended up with nothing. Fortune knew his dishonest act would cause Rantissi loss. Indeed, it was designed to do just that.

[65] To conclude, I find Fortune intentionally deceived Rantissi causing him loss. He will be found guilty of both counts.

Delivered: May 5, 2022 Signed: Justice H. Borenstein