ONTARIO SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

v.

MOHAMMAD MEHDI TOOZHY AND SAMEEN SIDDIQI

R E A S O N S F O R J U D G M E N T

BEFORE THE HONOURABLE MADAM JUSTICE M. FUERST,

ON JANUARY 14, 2013,

AT NEWMARKET, ONTARIO.

INFORMATION CONTAINED HEREIN IS PROHIBITED FROM

PUBLICATION PURSUANT TO SECTION 539 OF THE CRIMINAL CODE

APPEARANCES:

P. Campbell

Counsel for the Crown

L. Ben-Eliezer

Counsel for Sameen Siddiqi

J. Navarrete

Counsel for Mohammad Toozhy

MONDAY, JANUARY 14, 2013

R E A S O N S F O R J U D G M E N T

FUERST J. (Orally):

The charges against Mohammad Mehdi Toozhy and Sameen Siddiqi relate to three bank loans obtained in 2005 and 2006 under the Federal small business financing program. Each loan went into default, resulting in loss to the bank and/or to Industry Canada.

Mohammad Medhi Toozhy (who I shall refer to as Mr. Toozhy, to avoid confusion with other persons of the same surname) and Sameen Siddiqi (who I shall refer to as Mr. Siddiqi) are charged with three counts of knowingly making a false statement or misrepresentation in an application, report or other document, contrary to s. 16(1)(a) of the Canada Small Business Financing Act (“the Act”). Mr. Toozhy additionally is charged with three counts of using the proceeds of the respective small business loans with fraudulent intent for a purpose that did not fall within the scope of any prescribed class of loans, contrary to s. 16(1)(c) of the Act. Mr. Siddiqi additionally is charged with three counts of laundering the proceeds of crime, by unlawfully using or transferring the possession of or transporting or transmitting or disposing of or otherwise dealing with, currency, with the intent to conceal or convert it knowing or

believing that all or part of it was obtained or derived directly or indirectly as result of an offence contrary to s. 16(1)(c) of the Act.

The case for the Crown was presently primarily by the filing of a book of documents, with limited viva voce evidence called.

Summary of the Evidence

Lorenzo De Franco, a policy officer with the Canada Small Business Financing Directorate, testified that in 2005 small businesses that could not otherwise get financing could obtain loans through this Federal government program, of up to $250,000 for leasehold improvements and equipment. The financial institution acting as the lender registered the loan with the Directorate. In the event the loan went into default, the lender was required to attempt to collect on the security pledged. If that attempt was unsuccessful, the lender could seek reimbursement of up to 85 percent of the loan from Industry Canada by submitting to it all documents related to the loan.

Counts 1, 2 and 3

Counts 1, 2 and 3 relate to a $250,000 loan made by the Canadian Imperial Bank of Commerce to Ashhood Company Ltd. operating as Ashhood Technologies. “Mohammad Medhi Toozhy” with an address of 33 Weldrick Road East, Suite 1005, Richmond Hill is shown in printed Ministry of Government Services records as a Director of the company. The company’s address is shown as 20 Harding Boulevard, Suite 516, Richmond Hill.

The Loan Registration Form was signed in the name “Dr. Mohammad K. Toozhy” as the “responsible officer of the company”, on August 9, 2005. The Loan Application was signed in the same name.

There is no indication as to how the bank verified the identity of the signatory, or his authority to act on behalf of the company.

The exhibits on the trial include driver’s licence information in the name Mohammad Karim Toozhy, and the application for the licence made on November 19, 2003, showing a date of birth of January 25, 1952, and an address of 33 Weldrick Road East, Richmond Hill. Notations appear to indicate that proof of identity including photo identification and Social Insurance Number, was submitted with the application. The licence photograph is of a dark haired man wearing eyeglasses.

Absent the suite number, the address on the application is the address listed for “Mohammad Medhi Toozhy” in the corporate records for Ashhood Technologies.

The same address with the suite number appears in Mr. Toozhy’s application for a driver’s licence dated October 8, 2002, and in his Driver’s Licence History beside entries bearing the date November 19, 2003. The application states that Mr. Toozhy’s date of birth is May 9, 1971. It appears that an immigration document was submitted as proof of identity. The licence photograph is of a dark haired man not wearing eyeglasses, although the application specifies that he wears corrective lenses.

Both the Loan Registration Form and the Loan Application state that the address of Ashhood Technologies is 25-855 Alness Street, North York or Toronto. The Loan Application states that equipment in the amount of $298,417.52 is to be purchased with the loan proceeds. With the loan documents is an invoice from Aspen Ridge Equipment at 10520 Yonge Street, Unit 35B, Suite 274, Richmond Hill. It is dated August 3, 2005. The invoice is addressed to Ashhood Company operating as Ashhood Technologies at 855 Alness Street, Unit 25, Toronto. The invoice lists seven pieces of equipment and shows a total cost of $298,417.52.

The invoice particularizes the equipment in terms that are almost identical to the invoices related to the two subsequent loans that are the subject of the other charges. It bears the same grammatically incorrect salutation, “We thank you for you [sic] patronage” as appears on those other two invoices. The Business Number used for taxation purposes on this invoice, 8-7-3-3-7-3-4-6-8-R-T-0-0-0-1 is the same as that on the other two invoices.

“Sameen Siddiqi” is named in a printed Ministry of Consumer and Business Services record as the person who authorized the registration of the business name Aspen Ridge Equipment, with a head office at the same Richmond Hill address as on the invoice. In Ministry of Government Services documents, he is named as the person authorizing the registration of Aspen Ridge Equipment at the same Richmond Hill address, under the Business Names Act, on July 21, 2005. The company is described as manufacturing industrial equipment.

Bank records for Aspen Ridge Equipment name “Sameen Siddiqi” at 70 Silver Rose Crescent, Markham as the contact officer for the company. The records contain a driver’s licence number that is the driver’s licence number of Mr. Siddiqi before the court. Bank statements for Aspen Ridge Equipment for the period July 2005 to the fall of 2007 when the account was closed were addressed to 70 Silver Rose Crescent. Mr. Siddiqi’s driver’s licence indicates that his personal address at that time was 70 Silver Rose Crescent.

Paul Coort, a chartered accountant, gave evidence as an expert in forensic accounting. He testified that after the loan proceeds were deposited into a CIBC account, on August 30, 2005, a bank draft for $250,000 issued from Ashhood Technologies to Aspen Ridge Equipment. That bank draft was deposited into the Aspen Ridge Equipment bank account on September 2nd. Immediately before the transfer, the balance in that account was approximately $20,000. After the deposit, $100,000 was wire transferred to Bank Melli Iran in favour of Mehrnegar Toozhy. On September 7, 2005, a cheque for $20,000 was issued to M. Karim Toozhy. The following day $80,000 was wire transferred to Bank Melli Iran in favour of Mehrnegar Toozhy. The remaining $50,000 was comingled with other funds and Mr. Coort cannot say what happened to it.

There is no evidence as to the identity of Mehrnegar Toozhy.

On November 2, 2009, Corporal Torberne Williams of the RCMP went to the address shown on the Aspen Ridge Equipment invoice, 10520 Unit 35B, Yonge Street, Suite 274, Richmond Hill. He found that the municipal address was at that point a UPS store. Suite 274 was a mailbox in the store. He also went to the Alness Street address shown in the loan documents as that of Ashhood Technologies. He found that it was an industrial unit, but a different business was operating there at the time.

Mr. De Franco testified that Industry Canada did not reimburse the lender bank in any amount, because it was not satisfied that the borrower actually purchased the assets in respect of which the loan was made.

Counts 4, 5 and 6

Counts 4, 5 and 6 relate to a $250,000 loan made by Scotiabank to 1582202 Ontario Ltd. operating as SMT Manufacturing. “Mohammed Mehdi Toozhy” is shown in printed Ministry of Government Services records as a Director and President of the numbered company. His address is listed as 33 Weldrick Road East, Suite 1005, Richmond Hill. “Mohammad Mehdi Toozhy” is shown as the person who registered SMT Manufacturing under the Business Names Act in September 2005. I find that nothing turns on the two different spellings of the given name, and that the documents refer to the same person.

Scotiabank business account records for SMT Manufacturing dated October 14, 2005, variously show “Mehdi Toozhy” and “Mohammad Mehdi Toozhy” of the Weldrick Road address and a date of birth of May 9, 1971, as the President and sole Director of SMT Manufacturing and the person responsible for the company bank account. Those documents are signed in the name “Mohammad Mehdi Toozhy”. With them are photocopies of a Social Insurance card and an Ontario driver’s licence, both in the name “Mohammad Mehdi Toozhy” and signed in that name.

The Loan Registration Form was signed by “Mohammad Mehdi Toozhy” as the responsible officer of the company on October 19, 2005. The loan is shown as being registered in respect of equipment. “Mohammad Mehdi Toozhy” also signed a Credit Agreement. In the portion that asks for a description of the equipment, the words “See Supplementary/Receipt Schedule A” are written. With these documents is an invoice from Aspen Ridge Equipment dated September 20, 2005. It is addressed to 1582202 Ontario Ltd. Operating as SMT Manufacturing, 151 Amber Street, Unit 4, Markham. This address also appears on the Loan Registration Form with the phone number 905-944-0289. The invoice lists seven pieces of equipment and shows a total cost of $402,027.42.

In the Loan Registration Form, “Mohammad Mehdi Toozhy” declared that the total amount of the loan and any amount outstanding in respect of the borrower and related borrowers did not exceed $250,000.

The invoice lists, in the same order but with some minor variances and different prices, the same seven pieces of equipment that are listed on the invoice in respect of the earlier loan to Ashhood Technologies. It bears the grammatically incorrect salutation found on the other two invoices, “We thank you for you [sic] patronage”. The Business Number used for taxation purposes is the same one that appears on the other two invoices.

Sheldon Miller, an appraiser, testified that on September 21, 2006, he went to the Amber Street address to examine the assets of SMT Manufacturing. He found seven pieces of equipment as described on the invoice, but all of them were missing major components and none of the equipment was hooked up. The value of the equipment said to have cost over $400,000 was only $500 to $600.

Mr. Coort testified that the loan proceeds were advanced to SMT Manufacturing on October 27, 2005, and deposited to the company’s bank account. That same day it provided a bank draft to Aspen Ridge Equipment for just over $400,000. The bank draft was deposited into the same Aspen Ridge Equipment bank account that I referred to previously. The account had a balance of just over $100,000 immediately prior to this deposit. After the deposit, funds totalling $220,000 were wire transferred to Bank Melli Iran in favour of Mehrnegar Toozhy; a bank draft for just over $100,000 was issued in favour of Silver Sky Tech; cheques payable to cash totalling $45,000 were cashed; a cheque was issued to Vtech Manufacturing for $10,000; and a cheque for just under $32,000 was paid to Acura of North York, such that by November 16, 2005, the balance in the Aspen Ridge Equipment account was again just over $100,000.

Mr. De Franco testified that Industry Canada reimbursed Scotiabank for just over, $242,000 in respect of this loan.

Counts 7, 8 and 9

Counts 7, 8 and 9 relate to a $250,000 loan made by the Bank of Montreal to 1482416 Ontario Ltd. Ministry of Government Services records show each of “Saadeh Soudah” and “M. Mehdi Toozhy” as an Administrator and Director of the company commencing in June 2001. The company address is shown as 170 Maple, Richmond Hill. On May 24, 2006, “Mohammad Mehdi Toozhy” authorized the registration of the name SMTEE Manufacturing under the Business Names Act. The company’s address was shown as 151 Amber Street, Suite 4, Markham.

The Loan Application and Agreement was signed by “Mohammad Mehdi Toozhy” on behalf of the numbered company on August 30, 2006. In it, the purpose of the loan was stated to be, “[to] finance the purchase of new equipment”. The document indicates that the bank took a chattel mortgage and guarantee as security. With the Loan Application and Agreement is an invoice bearing a fax date of August 30, 2006. It is from AGF Technologies with an address of 24-155 East Beaver Creek Road, Richmond Hill. It is dated June 29, 2006. It lists seven pieces of equipment at a total cost of $385,279.12.

The invoice is addressed to the numbered company operating as SMTEE Manufacturing at 151 Amber Street, Unit 4, Markham, phone number 905-944-0289. That address and telephone number also appear on the Loan Registration Form in respect of the small business loan made earlier, by a different bank, to a different numbered company carrying on business as SMT Manufacturing, with “Mohammad Mehdi Toozhy” shown as its responsible officer.

The invoice dated June 29, 2006, lists, albeit in a different order with different prices and without serial numbers, the same seven pieces of equipment that are listed on the invoice dated September 20, 2005, in respect of the loan to SMT Manufacturing. This is significant because the two invoices were issued by two different businesses. The invoice to SMTEE Manufacturing was issued by AGF Technologies, while the earlier invoice to SMT Manufacturing was issued by Aspen Ridge Equipment. Notwithstanding that the business names on the invoices are different, the invoices have other similarities. They each bear the same grammatically incorrect salutation, “We thank you for you [sic] patronage”. As well, they each bear the same Business Number used for taxation purposes, 8-7-3-3-7-3-4-6-8-R-T-0-0-0-1.

In the Loan Application and Agreement regarding SMTEE Manufacturing, “Mohammad Medhi Toozhy” declared that there was no other Government Guaranteed Loan in the name of a person related to the borrower, including a corporation controlled by the same person who controls the borrower.

The loan was advanced on September 1, 2006, to a law firm that in turn made payment of just over $245,000 to AGF Technologies, described as “Supplier”.

Bank of Montreal statements for September and October 2006 were addressed to SMTEE Manufacturing at 151 Amber Street, Unit 5, Markham. The bank records are accompanied by cheques signed “Mohammad Medhi Toozhy”, including a cheque to cash and three cheques to AGF Technologies.

Ministry of Government Services documents show that “Sameen Siddiqi” authorized the registration of the business name AGF Technologies. Its head office and mailing address is shown as 155 East Beaver Creek Road, No. 24, Richmond Hill. However, 70 Silver Rose Crescent, Markham also appears as its business address.

Bank records show that “Sameen Siddiqi” was the contact officer for the AGF Technologies bank account. Bank statements for the company for the period September 2006 to the fall of 2007 when the account was closed were addressed to 70 Silver Rose Crescent, Markham. As I have said, this was the address on the driver’s licence of Mr. Siddiqi before the court.

Mr. Coort gave expert evidence describing the flow of the loan proceeds. They were deposited into the bank account of AGF Technologies on September 5, 2006, which had an existing balance of about $85,000. On September 29, 2006, AGF Technologies purchased five bank drafts totalling just over $20,000 in favour of SMTEE Manufacturing, but redeemed one of them. The remaining four were deposited into the SMTEE Manufacturing account. Also on September 29, AGF Technologies issued a cheque for $175,000 to Aspen Ridge Equipment, which the latter company deposited to its bank account. Before that deposit, Aspen Ridge Equipment had only $13.27 in its account. After the deposit, Aspen Ridge Equipment wire transferred $175,000 to Bank Melli Iran in favour of Mehrnegar Toozhy. On October 3, 2006, AGF Technologies purchased six bank drafts totalling approximately $10,000 in favour of SMTEE Manufacturing. The drafts were deposited into the SMTEE Manufacturing account.

Corporal Williams checked the East Beaver Creek address attributed to AGF Technologies in November 2009 and found it to be a UPS store. He also checked the Maple Avenue address attributed to SMTEE Manufacturing and found it to be a residential address.

Mr. De Franco testified that Industry Canada reimbursed the Bank of Montreal in an amount just under $215,000.

The Positions of the Parties

All counsel provided written submissions and made brief oral submissions.

In his written submissions, Mr. Campbell contended that the modus operandi for the three loans was strikingly similar. However, no formal count-on-count similar act application was brought by the Crown for response by the defence. Accordingly, while I have compared the three invoices and drawn inferences from them, I have not considered in reaching my decision on the individual counts whether the modus operandi of the three transactions was strikingly similar.

On behalf of the Crown, Mr. Campbell submits that in each of the three instances, Mr. Siddiqi through his company supplied a false invoice purporting to sell equipment to a company controlled by Mr. Toozhy. The falsity of the invoices is established by their close similarity to one another. Mr. Toozhy, whom the evidence establishes is one and the same person as Mohammad Karim Toozhy, then used the relevant invoice and made additional representations in order to obtain a small business loan to the particular company. The loan proceeds were paid over to the company controlled by Mr. Siddiqi and then disbursed by Mr. Siddiqi, who also controlled the company bank account, for purposes that the Act and its Regulations did not permit. Money was wired to Iran, converted to cash, and paid to companies that were not equipment suppliers. Some money quickly flowed back to Mr. Toozhy’s company, as a “kickback”. In September 2006, Mr. Miller found equipment that was not functional and was nearly worthless at the address that appears on two of the invoices. This indicates that the equipment described in the invoices never existed. Mr. Siddiqi’s knowledge that the loan proceeds were obtained by deception, or at least his wilful blindness to that fact can reasonably be inferred from the invoices, the receipt of the money by companies he controlled into their bank accounts, and the disbursement of the funds through those bank accounts.

On behalf of Mr. Toozhy, Mr. Navarette submits that the Crown has failed to prove his client’s guilt beyond a reasonable doubt. Much of the case is circumstantial, and all favourable inferences must enure to the accused’s benefit. With respect to the first loan, the evidence does not establish that Mr. Toozhy and Mohammad Karim Toozhy are the same person. The exhibits include documents for two different driver’s licences with two different signatures. No evidence was called that either licence was false, nor did the police make inquires with any other government agency to try to determine whether Mohammad Karim Toozhy was fictitious. The Crown called no one from the bank to say that he or she dealt with Mr. Toozhy. He is not the only person named in the corporate documents. With respect to the second loan, the photocopied identification does not clearly show that Mr. Toozhy was the loan applicant. Even if it did, the Crown has not proved that he had an outstanding loan that he failed to disclose when he applied for this one. Moreover, the wording on the loan document is confusing, the paragraph said to require disclosure of another loan is not initialled, and no one from the bank testified that that paragraph was explained to the borrower. With respect to the third loan, the Crown did not call anyone to say that Mr. Toozhy signed the loan application. It is dangerous to establish identification by simply comparing signatures. The evidence does not establish that the invoices were fraudulent, or that the equipment was not purchased.

On behalf of Mr. Siddiqi, Mr. Ben-Eliezer submits that while the evidence raises suspicion, the Crown has failed to prove beyond a reasonable doubt that the invoices were false, that Mr. Siddiqi knew them to be false, that he knew the invoices would be used in support of the small business loan applications, and that the money deposited into the Aspen Ridge Equipment and AGF Technologies accounts was obtained as a result of an offence under s. 16(c) of the Act. The evidence shows that Mr. Toozhy was the person who dealt with the banks and was responsible for the loan applications and supporting documentation. If the invoices were false, it is a reasonable inference that Mr. Toozhy produced them to obtain the loans. However, the information on the face of the invoices is insufficient to establish that they were false, and no other evidence was adduced such as the identity of whomever rented the mailboxes located at the addresses on the invoices. Mr. Miller’s evidence about the equipment found at the premises of a company controlled by Mr. Toozhy three weeks after the money from the third loan was advanced does not assist the Crown, because there is no evidence about how long it might reasonably take for delivery of equipment after payment was made. The expert evidence was that Aspen Ridge Equipment and AGF Technologies disbursed the loan proceeds to third parties, and Mr. Siddiqi does not seem to have benefitted financially. In some instances, the loan proceeds were comingled with other funds and it is difficult to tell which funds were disbursed.

Findings and Analysis

In deciding whether Mr. Toozhy and Mr. Siddiqi are guilty of any of the offences charged, I must apply the standard of proof beyond a reasonable doubt as it was defined by the majority decision in R. v. Starr (2000), 2000 SCC 40, 147 C.C.C. (3d) 449 (S.C.C.).

As the majority pointed out in that case, the standard of proof beyond a reasonable doubt is not one of mathematical certainty, but it can be described as falling much closer to absolute certainty than to proof on a balance of probabilities.

While each essential element of an offence must be proven beyond a reasonable doubt, the standard of proof beyond a reasonable doubt does not apply to individual pieces of evidence: R. v. Morin, 1988 8 (SCC), [1988] 2 S.C.R. 345.

The evidence in this case is largely circumstantial and invokes the inference-drawing process. In order to infer a fact from established facts, all that is required is that the inference be reasonable and logical: R. v. Katwaru (2000), 2001 24112 (ON CA), 153 C.C.C. (3d) 433 (Ont. C.A.).

In order to find a defendant guilty of an offence charged in a circumstantial case, the trier of fact must be satisfied beyond a reasonable doubt that the only rational inference that can be drawn from the circumstantial evidence is that the defendant is guilty of that charge: R. v. Griffin, 2009 SCC 28, 2009 S.C.C. 28.

Counts 1, 2 and 3

It was not argued that “Sameen Siddiqi” referred to in the various documents and materials is not Mr. Siddiqi before the court. In any event, I find beyond a reasonable doubt on the evidence including Mr. Siddiqi’s driver’s licence that they are one and the same person. It is an issue whether the Crown has proved beyond a reasonable doubt that “Mohammad Karim Toozhy” is in fact Mr. Toozhy. I am unable to find beyond a reasonable doubt that Mr. Toozhy and “Mohammad Karim Toozhy” are one and the same person, as the Crown alleges.

A driver’s licence was applied for and issued to Mr. Toozhy in his name. Additionally, one was applied for and issued in the name “Mohammad Karim Toozhy”. The applicants had different dates of birth. Different degrees of vision impairment were noted. The documents indicate that licensing personnel viewed identity documents when processing each application. No evidence was called by the Crown that puts that identity verification in question. While the addresses for each applicant were identical as of November 19, 2003, with the exception of a suite number that is missing from Mohammad Karim Toozhy’s application, there are reasonable and logical inferences available other than that the applicants were the same person, including that they are related persons who lived together at that time.

Both licence photographs resemble Mr. Toozhy who was arraigned before me and was present in court. However, I cannot conclude with any certainty by looking at the two photographs, which are small and somewhat blurry, that they are of the same person.

The loan documents were signed by “Mohammad Karim Toozhy” as a responsible officer of the company. No-one from the bank was called to testify about with whom he or she dealt on behalf of the borrower. I note that the bank obtained security for the loan, which is described as “Personal and or Corporate Guarantees $62,500 to Dr. Mohammad K. Toozhy”.

I am unable to find beyond a reasonable doubt that Mr. Toozhy applied for and obtained the loan to Ashhood Technologies.

The Crown alternatively contends that even if Mr. Toozhy and “Mohammad Karim Toozhy” are different people, Mr. Toozhy is shown in the printed corporate records as an Administrator and Director of Ashhood Technologies, and is the person who controls the company. I agree that evidence of such a position could ground an inference of knowledge on Mr. Toozhy’s part of the seeking and obtaining of the loan by “Mohammad Karim Toozhy”, which in turn might render Mr. Toozhy liable as a party to a s. 16(1)(a) offence. The Corporation Profile Report shows Mr. Toozhy began as Administrator and Director of the company on December 31, 2003. However, in the Corporation Document List another person is named as the “Person Authorizing Filing” of particular documents after that date. This is some evidence that someone other than Mr. Toozhy was involved with the company. I am unable to find beyond a reasonable doubt that Mr. Toozhy had knowledge of the application for and obtaining of the loan by “Mohammad Karim Toozhy”, including any representations made by “Mohammad Karim Toozhy”.

For these reasons, I find Mr. Toozhy not guilty on count 1.

The evidence does not show that the loan proceeds flowed into and out of an Ashhood Company Ltd. bank account for which Mr. Toozhy was the signing officer or contact person, or that he received bank statements for that account that would fix him with some knowledge of the loan proceeds. In fact, the chart prepared by Mr. Coort shows that the loan proceeds flowed into and out of a bank loan account.

I am unable to find beyond a reasonable doubt that Mr. Toozhy used the loan proceeds. I find Mr. Toozhy not guilty on count 2.

In considering the allegations against Mr. Siddiqi, it is necessary to consider the invoices, particularly the one addressed to Ashhood Company Ltd. Although there was no direct evidence that any of the three invoices were submitted with the loan applications, it is a reasonable inference that they were, given the information in the loan applications and the manner in which the banks advanced the loan proceeds.

The Crown’s position is that all three invoices were false and that this constituted a false statement or misrepresentation on each loan application. The three invoices list seven pieces of equipment described in very similar terms. On the two invoices purporting to be from Aspen Ridge Equipment, different models of the same equipment are described with identical serial numbers. Those two invoices have the same invoice number even though they are addressed to different recipients on different dates. All three invoices bear the same Business Number, even though they purport to be issued by two different companies. Each invoice concludes with the same grammatically incorrect salutation, even though they purport to be from two different companies. The invoices were submitted individually to three different banks, in three very disparate locations. I find beyond a reasonable doubt that each one of the three invoices is false. The submission of the August 3, 2005, invoice constituted a false statement or misrepresentation on the first loan application.

There is no direct evidence as to who prepared the invoice dated August 3, 2005. It is not signed by anyone on behalf of Aspen Ridge Equipment. The corporate documents however, link Mr. Siddiqi to Aspen Ridge Equipment. The loan proceeds flowed into the Aspen Ridge Equipment bank account, for which Mr. Siddiqi was the sole contact officer. The bank records indicate that Mr. Siddiqi was self-employed with Aspen Ridge/AGF. They contain his driver’s licence number. Bank statements for the account were sent to Mr. Siddiqi at the address associated to his driver’s licence. Further, the telephone number on the invoice is the same telephone number shown in the bank records as the business telephone number for Mr. Siddiqi. I find that Mr. Siddiqi controlled the Aspen Ridge Equipment bank account.

On September 2, 2005, the Aspen Ridge Equipment bank account received a deposit of $250,000 from Ashhood Technologies by way of a CIBC bank draft. The balance in the account prior to the deposit was approximately $20,000. The same day as the money was deposited, $100,000 was transferred out of the account to Mehrnegar Toozhy in Iran, with $80,000 following a few days later, and a cheque for $20,000 going to M. Karim Toozhy. I find that Mr. Siddiqi, the person who controlled the bank account, knew that the money had been deposited to the account and carried out the transactions that followed the deposit.

From all the evidence, the only reasonable and logical inference is that Mr. Siddiqi prepared the false invoice dated August 3, 2005.

With respect to count 1, there is no evidence that Mr. Siddiqi was present when the loan application was made, but from all of the evidence the reasonable and logical inference is that he and the person referred to as “Mohammad Karim Toozhy” were acting together to obtain the loan proceeds. From all of the evidence, the only reasonable and logical inference is that Mr. Siddiqi not only knew the invoice was false, but that he provided it to “Mohammad Karim Toozhy” knowing it would be used to apply for and obtain the loan on the pretext that it was to purchase equipment, and I so find beyond a reasonable doubt.

I am satisfied beyond a reasonable doubt of Mr. Siddiqi’s guilt on count 1.

Count 3 charges the offence that is sometimes referred to as laundering the proceeds of crime. The mens rea of the offence has two elements: the intent to conceal or convert property or proceeds of property obtained by the commission of an offence, specified in this case to be currency; and knowledge or belief that the proceeds were derived from a designated offence. In R. v. Daoust (2004), 2004 SCC 6, 180 C.C.C. (3d) 449 (S.C.C.) the court agreed that “conceal” means to hide, while “convert” means to change or transform.

The evidence of Mr. Coort, along with the bank records, establishes that the proceeds of the loan were deposited in the Aspen Ridge Equipment account controlled by Mr. Siddiqi and then disbursed at least in part to Mehrnegar Toozhy in Iran and M. Karim Toozhy. I am unable to find beyond a reasonable doubt in the circumstances of this case that in disbursing the funds through a bank account that was associated to him, Mr. Siddiqi’s intent was to hide or transform the loan proceeds, as opposed to simply distributing them to enrich himself and/or others.

I am not satisfied beyond a reasonable doubt of Mr. Siddiqi’s guilt on count 3.

Counts 4, 5 and 6

I am satisfied beyond a reasonable doubt that the person who applied for and obtained the small business loan on behalf of SMT Manufacturing was Mr. Toozhy. I have compared the signature on the loan documents to that of Mr. Toozhy on the Undertaking Given to a Peace Officer releasing him from custody, which forms part of the court file: see R. v. Abdi (1997), 1997 4448 (ON CA), 116 C.C.C. (3d) 385 (Ont. C.A.); R. v. Hunt (1986), 18 O.A.C. 78 (C.A.). Mr. Toozhy signed the Undertaking in his full name. His signature on that document is similar to the signature on the SMT Manufacturing loan documents. I am alive to the potential danger in making such a comparison in the absence of expert evidence and caution myself accordingly. In this case, there is additional evidence. I have compared the signature on Mr. Toozhy’s driver’s licence, which also is in his full name, to the signature on the loan documents. They too are similar. Additionally, records for the SMT Manufacturing bank account opened around the same time as the loan application was made and for which “Mohammad Mehdi Toozhy” was the person responsible contain a photocopy of Mr. Toozhy’s driver’s licence, and show the same date of birth as in the records associated to his driver’s licence. The similarity of the names on the Undertaking and the driver’s licence to that on the loan documents is some further evidence of identity.

In light of my finding on count 1, the failure of Mr. Toozhy to disclose the previous loan to Ashhood Technologies on the SMT Manufacturing application was not a false statement or misrepresentation. I have, however, found beyond a reasonable doubt that the invoice submitted to the bank to obtain the loan to SMT Manufacturing was false. That finding is strengthened by the testimony of Mr. Miller that the equipment he found at the premises of SMT Manufacturing less than a year after the small business loan was obtained was virtually worthless. I find that the equipment described on the invoice dated September 20, 2005, was never obtained from Aspen Ridge Equipment by SMT Manufacturing. On all the evidence, the only reasonable and logical inference is that Mr. Toozhy knew the invoice he submitted to obtain the loan was false, and I so find beyond a reasonable doubt. The submission of the September 20, 2005, invoice constituted a false statement or misrepresentation.

I am satisfied beyond a reasonable doubt of Mr. Toozhy’s guilt on count 4.

Mr. Toozhy was the person responsible for SMT Manufacturing’s Scotiabank account. I find beyond a reasonable doubt that he obtained the bank draft payable to Aspen Ridge Equipment that included the loan proceeds. Given my findings, the only reasonable and logical inference is that by paying over to Aspen Ridge Equipment the loan proceeds obtained using the false invoice, Mr. Toozhy knew that they would be disbursed other than for equipment, and I so find beyond a reasonable doubt. I find beyond a reasonable doubt that with fraudulent intent he used the loan proceeds for a purpose that did not fall within the scope of any prescribed class of loans.

I am satisfied beyond a reasonable doubt of Mr. Toozhy’s guilt on count 5.

There is no direct evidence as to who prepared the false invoice dated September 20, 2005. It is not signed by anyone on behalf of Aspen Ridge Equipment. As I have already discussed, the corporate documents link Mr. Siddiqi to Aspen Ridge Equipment. The telephone number on the invoice is the same telephone number shown in the bank records as the business telephone number for Mr. Siddiqi. The proceeds of this loan flowed into the Aspen Ridge Equipment bank account, which I have found he controlled.

On October 27, 2005, the Aspen Ridge Equipment bank account received a deposit of just over $400,000 from Ashhood Technologies by way of a Scotiabank bank draft. The balance in the account prior to the deposit was just over $100,000. Between then and November 17, 2005, over $400,000 went out of the account with the bulk of it going to Mehrnegar Toozhy in Iran and Silver Sky Tech and the rest to Vtech Manufacturing, Acura of North York and cheques payable to cash. I find that Mr. Siddiqi, the person who controlled the bank account, knew that the money had been deposited to the account and carried out the transactions that followed.

From all the evidence, the only reasonable and logical inference is that Mr. Siddiqi prepared the false invoice dated September 20, 2005.

With respect to count 4, there is no evidence that Mr. Siddiqi was present when the loan application was made, but from all of the evidence the reasonable and logical inference is that he and Mr. Toozhy were acting together to obtain the loan proceeds.

From all of the evidence, the only reasonable and logical inference is that Mr. Siddiqi not only knew the invoice was false, but that he provided it to Mr. Toozhy knowing it would be used to apply for and obtain the loan on the pretext that it was to purchase equipment, and I so find beyond a reasonable doubt.

I am satisfied beyond a reasonable doubt of Mr. Siddiqi’s guilt on count 4.

Count 6 charges the offence that is sometimes referred to as laundering the proceeds of crime. The evidence of Mr. Coort along with the bank records establishes that the proceeds of the loan were deposited into the Aspen Ridge Equipment account controlled by Mr. Siddiqi as part of a larger deposit. The funds represented by that larger deposit were then disbursed as I have described. It is not clear which of the recipients received funds that represented the loan proceeds in particular. Nonetheless, I am unable to find beyond a reasonable doubt in the circumstances of this case that in disbursing the funds through a bank account associated to him, Mr. Siddiqi’s intent was to hide or transform the loan proceeds, as opposed to simply distributing them to enrich himself and or others.

I am not satisfied beyond a reasonable doubt of Mr. Siddiqi’s guilt on count 6.

Counts 7, 8 and 9

I am satisfied beyond a reasonable doubt that the person who applied for and obtained the small business loan on behalf of SMTEE Manufacturing was Mr. Toozhy. Again, I have compared the signature on the loan document to that of Mr. Toozhy on the Undertaking Given to a Peace Officer releasing him from custody, which forms part of the court file. His signature on the Undertaking is similar to that on the loan document. I am alive to the potential danger in making such a comparison in the absence of expert evidence and caution myself accordingly. In this case, there is additional evidence. The signature on the loan application is also similar to the signature on Mr. Toozhy’s driver’s licence. The similarity of the names on the Undertaking and the driver’s licence, to that on the loan documents is some further evidence of identity. Additionally, the address for SMTEE Manufacturing shown on the invoice is the same address as for SMT Manufacturing.

I have found beyond a reasonable doubt that the invoice submitted to the bank to obtain the loan to SMTEE Manufacturing was false. It is a reasonable and logical inference from the evidence and I find beyond a reasonable doubt that the equipment described on the invoice dated June 29, 2006, was not supplied by AGF Technologies to SMTEE Manufacturing. On all the evidence, the only reasonable and logical inference is that Mr. Toozhy knew the invoice he submitted to obtain the loan was false, and I so find beyond a reasonable doubt. He knowingly made a false statement or misrepresentation to the bank.

Additionally, I find beyond a reasonable doubt that Mr. Toozhy failed to disclose to the bank that a company he controlled, SMT Manufacturing, was the borrower on another outstanding small business loan. This too constituted a false statement or misrepresentation.

I am satisfied beyond a reasonable doubt of Mr. Toozhy’s guilt on count 7.

Given my findings, the only reasonable inference is that by arranging payment to AGF Technologies of the loan proceeds obtained using the false invoice, Mr. Toozhy knew that they would be disbursed other than for equipment. I find beyond a reasonable doubt that with fraudulent intent he used the loan proceeds for a purpose that did not fall within the scope of any prescribed class of loans.

I am satisfied beyond a reasonable doubt of Mr. Toozhy’s guilt on count 8.

There is no direct evidence as to who prepared the false invoice dated June 29, 2006. It is not signed by anyone on behalf of AGF Technologies. The corporate documents however, link Mr. Siddiqi to AGF Technologies. The loan proceeds flowed into the AGF Technologies bank account, for which Mr. Siddiqi was the sole contact officer. As of September 2006, bank statements for the account were sent to Mr. Siddiqi at his personal address. The telephone number on the invoice is the same telephone number shown in the bank records as the business telephone number for Mr. Siddiqi. The bank records indicate that Mr. Siddiqi was self-employed with Aspen Ridge/AGF. I find that Mr. Siddiqi controlled the AGF Technologies bank account.

On September 5, 2006, the law firm trust cheque in the amount of just over $245,000 was deposited to the AGF Technologies bank account. It was attributed on the deposit slip to SMTEE Manufacturing. The transactions carried out after that included payment of a large amount of money to Aspen Ridge Equipment, which Mr. Siddiqi also controlled, payments to SMTEE Manufacturing, and the transfer of a large sum to Mehrnegar Toozhy in Iran. Although the loan proceeds were comingled with other money in the AGF Technologies bank account, it is a reasonable inference that at least some of those proceeds were disbursed in these transactions. I find that Mr. Siddiqi, the person who controlled the bank account, knew that the money had been deposited to the account and carried out the transactions that followed.

From all of the evidence, the only reasonable and logical inference is that Mr. Siddiqi prepared the false invoice dated June 29, 2006.

With respect to count 7, there is no evidence that Mr. Siddiqi was present when the loan application was made, but from all of the evidence, the reasonable and logical inference is that he and Mr. Toozhy were acting together to obtain the loan proceeds. From all of the evidence, the only reasonable and logical inference is not only that Mr. Siddiqi knew the invoice was false, but that he provided it to Mr. Toozhy knowing it would be used to apply for and obtain the loan on the pretext that it was to purchase equipment, and I so find beyond a reasonable doubt.

I am satisfied beyond a reasonable doubt of Mr. Siddiqi’s guilt on count 7.

Count 9 charges the offence that is sometimes referred to as laundering the proceeds of crime. The evidence of Mr. Coort along with the bank records establishes that the proceeds of the loan were deposited into the AGF Technologies account controlled by Mr. Siddiqi. As I have already found, Mr. Siddiqi carried out the transactions that followed. It is not clear which of the recipients received funds that represented the loan proceeds in particular. Nonetheless, I am unable to find beyond a reasonable doubt in the circumstances of this case that in disbursing the funds through a bank account associated to him, Mr. Siddiqi’s intent was to hide or transform the loan proceeds, as opposed to simply distributing them to enrich himself and or others.

I am not satisfied beyond a reasonable doubt of Mr. Siddiqi’s guilt on count 9.

Conclusion

I find Mr. Toozhy guilty on counts 4, 5, 7 and 8. I find him not guilty on counts 1 and 2.

I find Mr. Siddiqi guilty on counts 1, 4 and 7. I find him not guilty on counts 3, 6 and 9.

Form 2

CERTIFICATE OF TRANSCRIPT (SUBSECTION 5 (2))

Evidence Act

I, Dana Blum, certify that this document is a true and accurate transcript of the recording of R. v. Mohammad Mehdi Toozhy and Sameen Siddiqi in the Ontario Superior Court of Justice held at Newmarket, Ontario, on January 14, 2013, taken from Recording No. DB-4911-105-20130114-085706, which have been certified in Form 1.

March 21, 2013 __________________________

(Date) Dana Blum

(Signature of authorized person)

Transcript Ordered: January 14, 2013

Transcript Completed: March 21, 2013

Ordering Party Notified: March 21, 2013

THIS IS NOT A CERTIFIED COPY UNLESS ORIGINAL SIGNED.

Photostatic copies of this transcript are not certified and have not been paid for unless they bear the original signature of D. Blum in blue ink, and accordingly are in direct violation of Ontario Regulations 587/91, Court of Justice Act, January 1, 1990.