COURT FILE NO.: CV-11-2126-00

DATE: 2013-11-25

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

MINING TECHNOLOGIES INTERNATIONAL, INC.

Plaintiff

and

KRAKO INC., KRAKO INTERNATIONAL SERVICES, INC., KRAKO INTERNATIONAL HOLDINGS INC., NIKOLAS KORAKIANITIS, INFINAFUND LIMITED, INFINAFUND LTD., INFINAFUND AG, INFINAFUND HOLDINGS AG, ZIA SHLAIMOUN, STACEY DAWES, LIONEL PRESTON, AELITE FINANCIAL SERVICES LLC, BUNNY WILLIAMSON, LANTIERST LTD., FRONTIER HORIZON INC., OUSSHA ARDA SHLAIMOUN, ATHENA KORAKIANITIS, OSS FINANCIAL SERVICES GROUP, OSS ADVISORS INC., TYSON THOMPSON, FLOYD HOWARD HENRY, DOE CORPORATIONS 1 to 10, JOHN DOE 1 to 10, and JANE DOE 1 to 10

Defendants

BEFORE: Ricchetti, J.

COUNSEL:
N. Groot, Counsel, for the Plaintiff

H. Crosner, Counsel, for Zia Shlaimoun, Oussha Arda Shlaimoun, Infina Fund Limited and Infina Fund Ltd.

N. Korakianitis, personally

No one appearing for the remaining Defendants

HEARD: April 29, 2013

ENDORSEMENT

OVERVIEW

[1] In May 2010, Mining Technologies Inc. transferred $2,000,000 into Infinafund Limited’s bank account at the National Westminster Bank in England ("NatWest Bank"). Mining Technologies Inc. ("MTI") believed it was investing in a short term “bond transaction”. Within a short period, MTI commenced to make enquiries about the investment and the return of its monies. When little or no information was provided to MTI it commenced an investigation into the “bond transaction” and its monies. At some point, MTI concluded the “bond transaction” was a fraudulent scheme and its monies had been taken. MTI commenced legal proceedings in England, to obtain documentary disclosure, legal proceedings in California to “freeze” some assets and legal proceedings in Ontario against the Defendants who are alleged to be involved in the fraudulent scheme.

[2] Once Ontario's jurisdiction for this proceeding was determined, MTI brought a motion for partial summary judgment. This has spawned additional motions and cross motions which were ordered to be heard together.

[3] All dollars set out herein are in United States Dollars (USD).

[4] For the reasons set out below an Order will issue:

a) Granting leave to Shlaimoun, the Infinafund Defendants and Oussha Shlaimoun to amend their defence in accordance with the Amended Statement of Defence attached to their motion;

b) Dismissing the Shlaimoun and Infinafund Defendant's motion for an injunction regarding alleged defamation;

c) Dismissing the Shlaimoun and Infinafund Defendant's motion to strike the affidavit of Mr. David Wires from the motion record;

d) MTI's motion to strike Shlaimoun and the Infinafund Defendant's pleading for non-payment of costs orders is adjourned for 60 days to permit Shlaimoun and the Infinafund to pay all outstanding cost orders, failing which MTI may bring this motion back before this court on 4 days notice;

e) Shlaimoun and the Infinafund's motion to lift the lis pendens and injunction as it relates to the California action is dismissed;

f) Shlaimoun and the Infinafund Defendant's motion to set aside or vary the Mareva Order of Justice O'Connor is dismissed; and

g) MTI's motion for summary judgment against Shlaimoun and the Infinafund Defendants for $2,000,000 USD is granted, together with pre-judgment, post judgment interest and costs.

THE PARTIES

[5] MTI is an Ontario corporation carrying on the business of manufacturing and supplying large diameter subsurface drilling tools to the mining, water well and construction industries in Canada and elsewhere.

[6] Zia Shlaimoun ("Shlaimoun") is the "owner" and principal of Infina Fund Limited and Infina Fund Ltd. (“Infinafund Defendants”). Shlaimoun testified that at all material times he was, and currently is, the sole director, officer and shareholder of the Infinafund Defendants. Shlaimoun is also the "owner" and principal of Versailles Investments LLC, a corporation which owns his current residence in Malibu (“Malibu Home”). Shlaimoun has no formal education or experience in financing, let alone in transactions involving $300 or $900 million dollar bonds. Yet, Shlaimoun states that from 2009 to 2011, he was in the business of raising financing. Shlaimoun has many corporations and internet sites in which he had and appears to continue to have some role.

[7] Roxlark International Ltd. (“Roxlark”) is a corporation. In his materials, Shlaimoun stated he was “introduced to Roxlark” by a company called Lantierst. However, Shlaimoun delivered, on the closing of the Malibu Home, a letter on Roxlark letterhead signed by Shlaimoun "for and on behalf of Roxlark". Shlaimoun also transferred $6,200,000 from Roxlark's bank account for the purchase of the Malibu Home. Shlaimoun prepared a “personal wealth statement” in April 2011 for Deutsche Bank in connection with a mortgage for his Malibu Home in which he disclosed he was the 100% owner of Roxlark. Although requested, Shlaimoun has not provided documents with respect to transfers of monies to Roxlark by the Infinafund Defendants. Shlaimoun does not deny in any of the voluminous materials that he is not the principal of Roxlark. He simply does not admit it. Yet, Shlaimoun attempts to distance himself on the basis he was "introduced" to Roxlark. There is not a single document in the mountain of paper produced on these motions which even hints that Shlaimoun and Roxlark are third parties or independent of each other but there are numerous documents which clearly state and those which imply that Shlaimoun is the principal and controlling mind of Roxlark. In November 2011, upon MTI bringing motions for documentation from Belize relating to Roxlark, Roxlark was deregistered as a company. When confronted with a payment of $6,200,000 from Roxlark to Shlaimoun (for the purchase of the Malibu Home), Shlaimoun states this was a payment for a patent of his but, of course, like everything else, Shlaimoun does not produce one single document consistent with or confirms such a patent transfer or transaction. On the evidence before me, there is no question Roxlark is controlled by Shlaimoun.

[8] Lantierst is another corporation (“Lantierst”). Attached to the same personal wealth statement of April 2011 for Deutsche Bank for the Malibu Home financing, Shlaimoun described himself as the 100% beneficial owner of Lantierst. Shlaimoun has been asked for information regarding Lantierst but has failed to provide any credible information regarding this corporation or the transfer of funds to it from the Infinafund Defendants. Again, Shlaimoun has not denied that he is the principal or controlling mind of Lantierst. He simply does not admit it. There is not a single document which suggests that Shlaimoun and Lantierst are third parties to each other.

[9] Nikolas Korakianitis was involved in this bond transaction. The Krako corporate defendants are his or his family’s corporations. Korakianitis and the Krako companies have defended MTI’s action claiming they knew nothing of Shlaimoun’s fraudulent scheme regarding the bond transaction. On the other hand, Shlaimoun alleges that Korakianitis was his client and that he only took instructions from Korakianitis. However, the evidence is overwhelming and conclusive that both Shlaimoun and Korakianitis were jointly involved in the bond transaction and Shlaimoun played a much more significant role in the bond transaction:

a) There is a written and executed Joint Venture Agreement between Shlaimoun and Korakianitis dated March 12, 2010 which was a general agreement for ‘private financial programs’ in which Krako and Infinafund would share profits ("Joint Venture Agreement"). The Joint Venture Agreement provided that Infinafund was responsible for operating the bank account, for securing the credit line for the exclusive use of the joint venture and for negotiating and managing the trading activities. Shlaimoun denies he signed the Joint Venture Agreement and suggests that his signature was cut and pasted onto the agreement but does not offer any explanation why Korakianitis would do so while leaving himself significantly implicated in the bond transaction. The actions in 2010 by both Shlaimoun and Korakianitis are consistent with their joint involvement in the bond transaction;

b) It makes little sense that Korakianitis was the client from whom Shlaimoun simply took instructions because the alleged $900,000,000 bonds and the “investor” monies were deposited with the NatWest Bank, into a bank account controlled solely by Shlaimoun. Korakianitis requested payments from Shlaimoun and Shlaimoun made a payment to Korakianitis' family. Not one document emanates Korakianitis giving instructions to Shlaimoun on any financial matters;

c) Much of the money from the Infinafund NatWest Bank account was transferred into other Shlaimoun owned or controlled bank accounts. There is no suggestion that Korakianitis had any control over the Infinafund NatWest Bank account or these recipient bank accounts which Shlaimoun controlled; and

d) There were a number of communications from Shlaimoun to MTI dealing with MTI’s “invested” $2,000,000 into Shlaimoun’s Infinafund account at NatWest Bank. The significant and concrete information regarding the bond transaction came from or was sought from Shlaimoun - financing, trading, and the bonds. The communications confirm that Shlaimoun was a significant, if not the significant person, in MTI's involvement in the bond transaction and the bond transaction itself.

[10] NatWest Bank is a bank in England. Shlaimoun, through one of the Infinafund companies, had a bank account at NatWest Bank. Stacey Dawes (“Dawes”) was employed by NatWest Bank for a period of time. Dawes was involved in several communications with MTI prior to and after the MTI “investment” or "bond transaction". Dawes has not defended this action. Default judgment for $2,000,000 has been issued against Dawes.

[11] Barclays Bank was another financial institution where Shlaimoun also had an Infinafund bank account.

[12] BSI Bank in Zurich was a financial institution in Switzerland where Shlaimoun had an Infinafund bank account.

... (continues verbatim exactly as provided in the source HTML through paragraph [249] and the closing signature)

Ricchetti, J.

Date: November 25, 3013