SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-488391

DATE: 2014-06-26

RE: Trustees of the International Brotherhood of Electrical Workers, Local 353 Trust Funds, Plaintiff

AND:

Alireza Shojaei aka Alex Shojaei aka Hamid Eslami aka Behnam Shojaeel; and Koukab Shojaei aka Kokab Shojaei aka Koukab Shojaee aka Negal Shojaei, Defendants

BEFORE: Carole J. Brown J.

COUNSEL: Adrian Scotchmer, for the Plaintiffs

No one appearing for the Defendants

HEARD: June 11, 2014

ENDORSEMENT

[1] The plaintiff, moving party, Trustees of the International Brotherhood of Electrical Workers, Local 353 Trust Funds ("the plaintiff") brings this motion for default judgment pursuant to Rule 19.05. The plaintiff seeks judgment in the amount of $47,835.70 in this action. The underlying action claims damages for amounts paid out to the defendants, who it alleges fraudulently and improperly applied for and obtained $30,924.67 in pre-retirement death benefits and $16,911.03 in health and welfare benefits from the plaintiff. The plaintiff also seeks punitive and exemplary damages of $50,000 against each defendant and declarations that the plaintiff is not required to pay any further benefits to the defendants, unless and until all payments fraudulently obtained are reimbursed by the defendants or, alternatively, may set off or apply the awards granted herein from any benefits payable.

[2] The facts are as set forth in the plaintiff's motion materials and factum. Briefly, the facts are as follows.

[3] The plaintiff administers two plans on behalf of the Trustees of the International Brotherhood of Electrical Workers, Local 353 Trust Funds, pursuant to two benefit plans, the Short-Term Disability, Health and Dental Benefits Plan ("the H&W Plan") and the Pension Plan. As well, Great West Life issued a group life insurance policy (" the GWL policy") to the Trustees for eligible plan members, including the member defendant.

[4] Pursuant to the terms of the pension plan, pre-retirement death benefits are payable to a spouse living with a member on the date of the member’s death. Under the H&W plan, benefits are provided to the deceased member's eligible spouse and dependent children under age 21 or dependent children who are full-time students up to age 24 for a period of five years from the date of the member's death, including medical, dental, vision, hearing, prescription drug coverage, and travel medical emergency insurance (out-of-country coverage). Further, the GWL policy entitled the defendants to be paid $25,000 upon the death of the defendant member.

[5] The defendant, Alireza Shojaei ("the defendant member") was a union member from approximately 1999 to 2008, and participated in the pension plan, the H&W Plan, and benefited from the GWL policy. The defendant, Koukab Shojaei ("the defendant spouse") is married to the defendant member. The defendants have two sons.

[6] On December 11, 2008, the defendant spouse advised the plaintiff that the member defendant had passed away on August 6, 2008, while in Tehran, Iran, at the age of 39 years. With the assistance of the defendant member, the defendant spouse submitted a Pension Plan Benefit Application and Payment Authorization Form, as well as a document entitled "Identity Card-Deceased" along with the purported official translation dated October 2, 2008 indicating that the defendant member had passed away on August 6, 2008 in Tehran, and a document entitled "Forensic Medicine Center of Tehran Province", purporting to be an official translation from Persian, which also stated that the defendant member had died of heart failure on August 6, 2008. On December 18, 2008, the defendant spouse, with the assistance of the defendant member, signed and submitted a written GWL Group Life Claim Report claiming life insurance proceeds through the plan pursuant to the GWL policy. On the same day, she also submitted an application card for H&W benefits confirming that she was the surviving spouse and that the eligible dependents included herself and her two sons.

[7] As a result of the foregoing, payments were made to the defendant spouse including a pre-retirement death benefit of $30,924.67 in January of 2009 and, over the next five years, $16,911.03 of H&W benefits paid to the defendant spouse on behalf of herself and her two sons.

[8] Following the fraudulent applications for benefits made by the defendants, as set forth above, which resulted in the payments to the defendants, it was discovered that the purportedly deceased member defendant was, with his wife and sons, living in California. The defendants were arrested, extradited back to Canada, charged with fraud and, additionally, as regards the defendant, Koukab Shojaei, a charge of uttering forged documents relating to the fraudulent reporting of the death of her husband. They were held in detention in Toronto pending their criminal trial, which occurred on April 17, 2014 regarding fraud for falsely claiming that Ali Shojaee had died, applying for several life insurance policies totaling $3.525 million, settling an insurance payout and receiving $1.01 million from insurance policy payouts. In the criminal trial, both Ali and Koukab pled guilty to four counts of fraud involving the fraudulently reported death in order to obtain life insurance proceeds and, as well, Ms. Shojaei, for uttering forged documents relating to the fraudulent reporting of her husband's death. They were both convicted and sentenced to five years each in penitentiary. The fraud alleged in the matter before me relies on the same factual basis of fraud as existed in the criminal trial and, in this case, resulted in fraudulently obtaining pre-retirement death benefits and health benefits from the plaintiff.

[9] The factual matrix of those defrauding acts and the evidence entered at the criminal trial regarding the fraudulently reported death, are the same as in this action, based on all of the evidence before me. The evidence at the criminal trial and before this Court includes forged certificates of death indicating that the death occurred in Tehran, Iran on August 6, 2008 and of a forged medical forensic report from the Forensic Medicine Center of Tehran Province, also attesting to the death by heart attack of Mr. Shojaei, as set forth at para. 6, supra. Based on these documents, payments were made by the insurance companies pursuant to the policies held by the defendants and, as well, payments were made by the plaintiff in this case pursuant to the benefits plans for members of the plaintiff.

[10] In sentencing Alireza Shojaei and Koukab Shojaei in the criminal trial, Lipson J of the Ontario Court of Justice stated as follows:

Alireza Shojaei and Koukab Shojaei have pleaded guilty to serious offences involving gross dishonesty.… I would characterize this fraud as somewhat breathtaking in scope. As the Crown pointed out, the seeds of the fraud were sown several years ago when several life insurance policies were obtained.

The steps taken to perpetrate this fraud were elaborate, involving extremely well-planned strategy.… Forged state documents from Iran, forged medical reports, even false photographs of Mr. Shojaei's supposed grave.

The family, including the children, perjured themselves throughout court proceedings in both the United States and Canada to obtain the funds from the insurance companies.

The crimes were of sheer greed. The accused involved their children to assist them in perpetrating the fraud. They manipulated the justice system to perpetrate a fraud. The fraud continued even after they were arrested and in custody. The fraud netted them over $1 million and that is an aggravating circumstance.

[11] In this action, the defendants were noted in default on November 15, 2012, and are, therefore, pursuant to the Rules of Civil Procedure, deemed to admit the facts set forth in the statement of claim.

[12] I am satisfied, based on all of the evidence before me, that the plaintiff has established, as regards the allegations, that the defendants are liable for fraud, deceit and fraudulent misrepresentation, as well as for conspiracy, conversion and unjust enrichment. The plaintiff is entitled to judgment for the damages claimed in the amount of $47,835.70.

[13] The plaintiff also seeks declarations to preclude the defendants from obtaining further funds from the plans until their debts to the plaintiff have been paid and a declaration that the Trustees are not required to pay any further benefits to the defendants until the defendants' indebtedness to the plan has been repaid. The plaintiff argues that, given the circumstances, and the defendants' incarceration, it is unlikely that the defendants will repay the amounts owed to the plans. Further, the plaintiffs argue that if only a simple award of damages is granted, and the defendants declare bankruptcy, that judgment would likely not survive the bankruptcy.

[14] Further, the plaintiffs submit that absent a declaration that the Trustees are not required to pay any further benefits until the defendants’ indebtedness has been repaid, if the defendant member reached retirement age, he may seek pension benefits or, if he died before his retirement age, his wife could seek another pre-retirement death benefit. Further, the plaintiff argues that the defendant should be estopped from claiming any additional entitlement on the basis of their prior representations being fraudulent. They argue, as well, that any such claims would result in unjust enrichment by the defendants and would be tantamount to double recovery.

[15] I am satisfied that the declarations are appropriate, available at law and should be granted. The cases relied on by the plaintiff in its factum at paras 42 et seq., which I have reviewed, support the availability of the subject declarations.

[16] Further, the plaintiff seeks punitive and exemplary damages in the amount of $50,000 against each of the defendants. The plaintiff relies on the cases of Parsons Canada Limited v Nathoo, 2013 CarswellOnt. 13866 at paras 28-30; Elekra Ltd. v Rodkin, 2012 CarswellOnt. 3928 at paras 17, 31; Kaur v Moore Estate, 2003 CarswellOnt. 1536 at paras 113, 134 and 137-138; Transit Trailer Leasing Ltd. v Robinson, 2004 CarswellOnt. 1733 at para. 113. I am satisfied, based on these cases, that the amount sought against each defendant is appropriate in all of the circumstances. Further, I am satisfied that the defendants' conduct was high-handed, deliberate and contumelious and is deserving of such an award of punitive damages. Without such damages, an inappropriate message would be sent to those having engaged in fraud, fraudulent misrepresentation, conspiracy and unjust enrichment, such as the defendants, that they may have no more to lose than paying back their ill-gotten gains.

[17] Finally, the plaintiff seeks its costs of this action on a substantial indemnity basis, again, relying on the cases of Parsons Canada Limited v Nathoo and Elekra Ltd. v Rodkin, supra, for the proposition that costs on a substantial indemnity scale are appropriate in instances such as fraud. Further, it argues that the issues were relatively complex, having to do with the appropriate interpretation of the Pension Plan and the availability of set off in relatively novel circumstances, involved liaising with Crown counsel in the criminal trial, as well as the insurers involved in the criminal process, making substantial indemnity costs appropriate. Taking into account the circumstances of the case, the caselaw relied upon by the plaintiff, as well as the factors to be considered in exercising my discretion pursuant to Rule 57.01, I find the plaintiff to be entitled to its costs on a substantial indemnity basis in the amount of $24,294.58.

[18] Accordingly, I order as follows:

1. That the defendants pay to the plaintiff the amount of $47,835.70;

2. That the defendants each pay to the plaintiff $50,000, for a total of $100,000, for punitive and exemplary damages;

3. That the defendants pay to the plaintiff its costs of this action on a substantial indemnity basis in the amount of $24,294.58;

4. That any taxes payable upon any amount, as well as pre-judgment and post-judgment interest be payable by the defendant to the plaintiff;

[19] I further make the following declarations:

1. That the Trustees are not required to pay any further benefits to the defendants from the plans, including but not limited to pension benefits or health and welfare benefits, unless the defendants' indebtedness is repaid to the Trustees;

2. Alternatively, that the plaintiff may set off or apply the awards granted herein from any benefits payable, now or in the future to the defendants, out of the plans.

Carole J. Brown J.

Date: June 26, 2014