COURT FILE NO.: Crim J(P) 533/17 DATE: 20181018

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

HER MAJESTY THE QUEEN Maria Stevens, for the Crown

• and -

FATTAH ABDEL Thomas W.G. Pratt, for the Accused

HEARD: April 10, 11, 12, 13, 16, 17, 22, 2018

REASONS FOR JUDGMENT

FRAGOMENI J.

INTRODUCTION

1Fattah Abdel (Abdel) stands charged that on December 4, 2014 he unlawfully had in his possession money knowing that it had been obtained by the commission of an indictable offence. He is also charged that he unlawfully transferred money with the intent to conceal or convert it, knowing or believing that all of the money was derived, either directly or indirectly, as a result of an act or omission that would have constituted a designated offence contrary to the Criminal Code, section 462.31(1)(b).

2The Crown alleges in this case that the money in question was obtained as a result of a fraud committed on Air Palace. The Crown submits that the money was deposited into an account accessible by Abdel and from which he withdrew the funds. The Crown asserts that the trial evidence will show that Abdel converted the funds for his own use, paying off a debt he had to a third party, namely Fadl Kanaan. The Crown alleges further that Abdel actually knew or at the very least was wilfully blind about the fact that the money did not belong to him and he had no lawful authority to convert it to his own use.

TRIAL EVIDENCE:

Mark Kelly – Rotor Maxx

3Mark Kelly is the Chief Financial Officer of Rotor Maxx Support, Ltd. Rotor Maxx is situated in British Columbia. Rotor Maxx engages in the maintenance and repair of helicopters and helicopter parts. It has clients worldwide. Air Palace is a client located in South Korea.

4In late November 2014 his company was finalizing negotiations on the pricing and timing for a rotor wing head exchange for Air Palace. Communication was conducted by way of email. Rotor Maxx and Air Palace decided on a price of about $309,000 US funds for the work. Rotor Maxx provided the banking details to Air Palace. The banking details included information with respect to Rotor Maxx’s account at the CIBC. Air Palace would do a wire transfer to pre-pay for the work.

5Daniel Koh was the CEO of Air Palace. As the funds had not arrived immediately Kelly emailed Koh for confirmation of the banking details. On December 3, 2014, Kelly received an email, purportedly from Koh, attaching Rotor Maxx’s correct banking information at CIBC.

6Kelly testified that it was not until December 15, 2014 that he realized that the emails had been intercepted. He noticed this when Koh sent an email advising that his company had deposited the funds into “trust bank” and attached the financial directions that had not come from Rotor Maxx.

7Kelly reviewed the emails and discovered that Rotor Maxx had been receiving emails from SUNJINQROUP.COM (with a Q) rather than SUNJINGROUP.COM (with a G).

8Kelly also noticed that the email redirecting payment to a TD Canada Trust account in Mississauga came from ROTORMAXX.BIZ rather than ROTORMAXX.COM.

9Kelly tried but could not have Air Palace reverse the transaction.

10Kelly confirmed the following:

• Rotor Maxx did not do business with any taxi companies in Mississauga
• Rotor Maxx did not have business dealings with Khaled Elridi
• Rotor Maxx did not have business dealings with Fattah Abdel
• Rotor Maxx did not authorize anyone to receive payment of the funds transferred from Air Palace to Rotor Maxx.

11The emails are set out at Exhibit 1, Tab 2, pages 1-5.

Kang Ho Lee – Air Palace

12Lee is the Auditor and Chief Financial Officer at Air Palace. Lee testified that Air Palace received emails from ROTORMAXX.BIZ. Air Palace’s proper email address is SUNJINGROUP.COM. Air Palace is the son company of SUNJINGGROUP. Air Palace owns a number of helicopters.

13Air Palace sent the funds as directed on the email sent from ROTORMAXX.BIZ believing they were paying Rotor Maxx.

14Lee identified the wire transfer documents in Exhibit 1, Tab 4 as showing the payment was deposited into an account by Air Palace as a result of hacking and misdirection.

15Air Palace had to subsequently pay the full amount of the negotiated contract with Rotor Maxx again to make up for the diverted wire transfer.

16Lee confirmed that Air Palace did not have any business dealing with or knowledge of Elridi, Abdel, Kanaan, 7311141 Canada Inc., Air Globe Taxi and Limousine or Mississauga Taxi.

Angelo Cristello – TD Canada Trust

17Mr. Cristello testified on behalf of TD. Exhibit 2 is TD Account 5034444-1597 for 7311141 Canada Inc. / Alfa Trading. The account profile identified both Abdel and Elridi as having 50% ownership in the company. Exhibit 2, Tab 2 sets out the nature of the business as Retail Trade – Automotive – Tire, Battery, Parts and Accessories.

18Mr. Cristello identified the December 2, 2014 wire transfer in the amount of $348,751.57 foreign currency, being deposited into the TD Canada Trust account. (See Exhibit 2, Tab 2, page 15, line 111) At line 112 is the purchase of a bank draft for $350,007.50 from that account.

19Exhibit 2, Tab 2, pages 17-19, sets out the following:

Page 17 – Driver’s licence of Abdel – Signature of Abdel Page 18 and 19 – Bank Draft purchase for $350,000.00 on December 4, 2014 and payable to Air Globe Taxi and Limousine.

20Mr. Cristello also identified, in relation to Exhibit 3, TD Canada Trust account of Mohamed Fahmi. Page 19 of Exhibit 3 shows a deposit made into the account in the amount of $100,000.00 on February 2, 2015. The deposit for $100,000.00 is dated January 30, 2015 as shown on page 26 of Exhibit 3. This draft is from the Royal Bank of Canada.

David Skea – Royal Bank of Canada

21David Skea is a senior manager in the Ontario investigations team of corporate investigations for the RBC. He testified in relation to the documents filed as Exhibit 7. These are the records of AMBK Holdings Limited. The account was opened on December 19, 2014. Fadl Kanaan is the president and sole signing officer. The trade name of the company is Mississauga Taxi.

22Exhibit 7, Tab 2C, page 304 is a bank statement for AMBK Holdings showing a deposit of $99,158.59 USD. Initially the deposit was twice that amount but then later corrected by the bank as the source was a bank draft from BMO at Tab 2B, page 308 dated January 2, 2015 for $99,158.59 USD. On January 26, 2015, this account had a balance of $88,632.93, as shown at Tab 2C, page 304. On that date, $88,600 in US funds were transferred to the CAD account which, after the exchange rate was applied, resulted in a deposit of $109,531.75 (See Tab 2C, page 316)

23Exhibit 7, Tab 2B, page 38 shows a bank statement for AMBK Holdings and reflecting a deposit of $109,531.75 CAD. At page 39, there is a withdrawal of $100,007.50. At Tab 2B, page 199, the withdrawal of $100,007.50 is explained as a purchase of a bank draft for $100,000.00 and with a service charge of $7.50. At page 200, the bank draft, which was purchased by Mr. Kanaan, is shown to be made out to Mr. Fahmi and dated January 30, 2015. The teller stamp on the back of the draft shows it was deposited into a TD Bank account.

Ranjit Rai – TD Canada Trust

24Ms. Rai testified that it is not possible to open a business account without providing the relevant documents. A production order was obtained for the opening documents for the account at Exhibit 2 for 7311141 Canada Inc. / Alpha Trading. Exhibit 2, Tab 1 at page 6 sets out that Abdel and Elridi and Ms. Abdelghany had signing authority while Abdel and Elridi each had a 50% ownership in the company.

25With respect to the December 4, 2014 bank draft shown at Exhibit 2, Tab 2, page 17, the client’s driver’s licence is noted because the branch required identification to be presented as the amount involved was significant.

26In cross-examination Ms. Rai confirmed that with respect to a business account, the client would sign the opening documents. She also confirmed that this payee information for the draft, namely Air Globe Taxi and Limousine, would be provided by the customer who purchased the draft.

27Ms. Rai stated that it was Abdel who purchased the draft because his driver’s licence was on the receipt. The initials noted on the receipt were those of a supervisor due to the large amount involved in the transaction.

Amanpal Dhesy – Bank of Montreal

28Ms. Dhesy was, at the relevant time, the manager at the branch at 1350 Crestlawn Drive where the account for Air Globe Taxi and Limousine was held. She had prior contact with Abdel, Kanaan and Mr. Krayem. Krayem received the funds from Kanaan after Kanaan was paid by Abdel.

29Ms. Dhesy was present when the TD Canada Trust bank draft was deposited. There were two drafts purchased on December 4, 2014, one for $235,000.00 and one for $100,000.00. She countersigned both of those drafts as the bank manager.

30Exhibit 4 contains the bank records for the Air Globe account 2950 1060-780.

31The records establish the following:

• the account was opened on February 25, 2014 by Abdel listed as president and Mr. Abdelghany listed as secretary
• both Abdel and Abdelghany were signing officers on the account
• Abdel is listed as having 50% ownership
• March 6, 2014 – signing authority now included Hussamaldin Alhudhairy and Marwa Ramadan and Abdel approved this change.

32Ms. Dhesy testified that Exhibit 4, Tab 2, page 39 shows the deposit of a TD Canada Trust draft for $350,000 to Air Globe Taxi and Limousine on December 4, 2014 at 12:46 p.m. at her branch. Ms. Dhesy advised that Mr. Abdel conducted this transaction as he presented his bank card at the time of the transaction. She also stated that the reverse side of the draft, on page 40, shows the teller stamp of the BMO staff member who received the bank draft on December 4, 2014 and the account number into which it was deposited. At page 41, Ms. Dhesy identified a $100,000 BMO draft payable to Mohammad Ballout purchased at her branch and deposited at her branch into Mr. Ballout’s account, which is written on the reverse side of the draft. At page 42, Ms. Dhesy identified a $235,000 bank draft payable to 2313258 Ontario Inc. purchased at her branch and deposited at her branch into the company account, which is written on the reverse side of the draft. Ms. Dhesy testified that the money could not have been transferred from Air Globe’s bank account into the payees’ accounts without incurring a service charge for purchasing the draft. By January 2, 2015, the bank had frozen the Air Globe account. (See Exhibit 4, Tab 2, page 54)

33Ms. Dhesy also testified about the documents contained in Exhibit 5, BMO accounts of Mohammad Ballout and 2313258 Ontario Inc., operating as Mississauga Taxi. On December 4, 2014 the draft for $100,000.00 is deposited into the account of Ballout as shown on Exhibit 5, Tab 2, page 12. The same amount is then transferred out on December 9, 2014. The money is transferred to the account of 2313258 Ontario Inc.

34Kanaan is shown as 100% owner and sole director of 2313258 Ontario Inc., operating as Mississauga Taxi. Kanaan had sole signing authority.

35Exhibit 5, Tab 3, page 52 shows a deposit of $235,000.00 on December 4, 2014 at Ms. Dhesy’s branch. That same day a draft is purchased for $40,000.00 to Mr. Krayem. At page 54 it shows that on December 9, 2014 a transfer of $100,000.00 is made to Ballout’s account. The very next transaction is for a wire transfer of $100,000.00.

36Ms. Dhesy also testified with respect to Exhibit 6, the BMO account of Mohamad Krayem. At Tab 2, page 11 a deposit of $40,000.00 is shown for December 5, 2014. A copy of the bank draft dated December 4, 2014 is shown at page 13.

37Ms. Dhesy had a recollection of the transaction activity in her branch on December 4, 2014 involving the above accounts. She recalled Mr. Abdel, Mr. Krayem and Mr. Kanaan being present. She recalled that due to the size of the TD Canada Trust draft for $350,000 being deposited, she wanted to confirm that the funds were available. She and her staff waited for over an hour to an hour and a half before processing the subsequent transactions.

38In cross-examination Ms. Dhesy testified that for all of the transactions in her branch that day, debit cards were presented and that her tellers would have required identification. She recalled her teller coming to her to obtain the fax number of TD Canada Trust to confirm the bank draft. She advised that the drafts purchased would have been provided to the purchaser.

Marwa Ramadan

39Marwa Ramadan testified that she first met Mr. Abdel in 2005 through his wife, Heba Abdelghany. She and Ms. Abdelghany met as they were dropping off their children at school. Subsequently, Ms. Ramadan met Mr. Abdel and she ultimately introduced her husband, Mr. Elridi, to Mr. Abdel. The relationship was primarily between the women who would occasionally see each other and talk or have coffee when dropping off the children. Several years later, in late 2013 at a coffee shop near to the children’s Arabic school, after her husband and Mr. Abdel began doing some business together, Mr. Abdel asked her to work in the office at 1115 Crestlawn Drive in Mississauga doing filing and dealing with the taxi drivers. During the same conversation, Mr. Abdel asked Ms. Abdelghany to work in the office as well. Ms. Ramadan agreed to go in to the office when she had time.

40Ms. Ramadan understood that the business related to limousine and taxi services. Her husband would be involved in creating the business and providing money.

41The 1115 Crestlawn Drive address had a sign at the front door with Alfa Auto Supply and BDG (Business Development Guru). At the back door was a sign Alfa Auto Supply. She saw herself working for Abdel filing bank statements and bills. She recalled seeing bank statements from CIBC in the name of Air Globe Taxi and Limousine and from RBC for Travel Land. There were no statements for 7311141 Canada Inc. or Alfa Trading.

42Ms. Ramadan’s work also included dealing with taxi drivers.

43In terms of banking responsibilities Ms. Ramadan would withdraw and deposit cash. She did not write cheques, purchase bank drafts, or do money transfers.

44Ms. Ramadan identified in Exhibit 4, Tab 2, page 39 that the signature in the transaction for the $350,000.00 deposit into the BMO account on December 4, 2014 was that of Abdel. She had no knowledge of this transaction. She had no discussions about it with Abdel. She had never seen such a sizable transaction before in her work for Abdel.

45In terms of the business she observed going on in the 1115 Crestlawn Drive location, Ms. Ramadan knew of the mechanic shop which was servicing taxi and limousine drivers. It was not busy and usually there was one car a day, sometimes no cars. Ms. Ramadan also was aware that they ordered parts that were to be used on the drivers’ cars being serviced. She testified that they dealt with two or three parts suppliers that were nearby to their business. She was also aware that some sort of business was occurring between Mr. Abdel and Mr. Kanaan. She saw Mr. Kanaan in the shop and knew he was a driver for Mississauga Taxi. She took receipts from him and processed them on the point of sale terminal for Mississauga Taxi.

46Ms. Ramadan testified that the mechanic shop was not very busy. She indicated that on one occasion she received a call from a collection company regarding a $2,000.00 debt. She had to pay it as she had signing authority. In late 2015 another collection agency had called. On this occasion she met Abdel at his house and told him to deal with it and to take her name off as having signing authority.

47Ms. Ramadan was never a signing officer on 7311141 Canada Inc., and had no ownership of any of the companies.

Khaled Elridi

48Mr. Elridi testified that 7311141 Canada Inc. was incorporated by him in 2010 for his IT consulting business. Mr. Elridi met Abdel back in 2004/2005 and knew Abdel to be an accountant and he hired him to do his personal taxes.

49In 2013 Abdel approached Elridi to do business together under the 731 company so they established a subsidiary called Alfa Auto Supply. Alfa was to be a garage with a mechanic. They rented space, bought a hoist and tire changer.

50Mr. Elridi testified that at the outset, he went to the business location every now and then, perhaps once or twice a week to put in furniture. Later on, he went in to assist in setting up the network, fix the computers and the website. The arrangement was that Mr. Abdel would be running the business on a day-to-day basis and that Mr. Elridi would be an investor. Mr. Elridi understood Mr. Abdel to have lots of contacts with limousine and taxi drivers who would need to have their vehicles repaired.

51Mr. Elridi testified that the expectation of getting customers to come to the business was not realized and the business was always in debt. They were late on payments on the leases and Mr. Elridi had to make the payments. The business did not pick up in 2013 and 2014. He asked Mr. Abdel to find someone to buy him out in early to mid-2014. Mr. Elridi wanted to step away from the business by the end of 2014. He said he would continue to pay the equipment leases but that Mr. Abdel had to pay the rent. Whoever would buy him out would get his share of the equipment. However, nobody ever bought him out. By the end of 2014, Mr. Abdel was not happy that Mr. Elridi had plans to leave the business. At that point, he saw Mr. Abdel perhaps once a month either at the business or at a coffee shop. In 2015, Mr. Abdel left the country for a period of time and the equipment was locked in the unit which was now under Mr. Abdel’s control. Mr. Abdel continued to pay the leases as they were in his name.

52Mr. Elridi testified that the Alpha shop was always in debt. Business was slow.

53Mr. Elridi had no knowledge of the December 3, 2014 deposit of $348,000 or the bank draft received the next day for $350,000. He only noticed this transaction in January 2015 when he obtained the bank statements for the 2014 year.

54Mr. Elridi called Mr. Abdel on February 2, 2015. He recorded the conversation and made a transcription of the discussion which was entered as Exhibit 9. Mr. Elridi recalled that Mr. Abdel had often spoken about scrap metal import/export to China in the past, among many other business opportunities. When he called Mr. Abdel, he was told that the $350,000 amount had to do with scrap metal. Specifically, Mr. Abdel advised that the money was “for business, someone got some goods and we paid them back”. He told Mr. Elridi that the wire transfer came from China. Mr. Abdel also told Mr. Elridi that the money was “withdrawn as bank draft then I gave it to someone and we got the goods and commission from it, so we can pay for the equipment lease.” When questioned further, Mr. Abdel advised that it was for “people buying goods through us and we got our commission to pay for the equipment lease and pay off for Atlas Tire…National leasing and RCAP.” He advised that the goods were “spare parts and scrap metal and things like that” and that Mississauga Taxi shipped the goods. As the conversation continued, Mr. Elridi demanded to have his name removed from this bank account. (See Exhibit 9, lines 11-77 of the recorded conversation).

55Mr. Elridi recorded this conversation due to the fact that he had had numerous calls with Abdel and did not always understand what Abdel was saying to him so he recorded them to play them back.

56In terms of the references in the phone call, Mr. Elridi explained that Atlas Tire was the company that supplied tires for their mechanic shop. National leasing was the company they paid for the hoist and RCAP was the company they paid for the tire balancing machining on a monthly basis. Although Abdel said he would be using the proceeds to pay for the leases, Mr. Elridi testified that he was the one who paid them. He had no idea of any debt to Atlas Tire. Mr. Elridi was not involved with Mississauga Tire and had no knowledge of that company shipping parts. He had understood Mississauga Taxi to be their main client for oil changes. Prior to this phone call on February 2, 2015, Mr. Elridi had no conversation with Abdel about shipments to China. As for the explanation provided by Abdel for the transaction, Mr. Elridi didn’t think it was a good explanation but assumed that the bank would figure it out if there was anything wrong.

57When shown Exhibit 2, the bank records for 7311141 Canada Inc., Mr. Elridi advised that he had not seen the transaction record for the $350,000 bank draft purchase. He believed the signature to belong to Mr. Abdel.

58Mr. Elridi testified that he had heard of Air Globe Taxi and Limousine from Mr. Abdel. He believed that was one of Mr. Abdel’s businesses. Mr. Elridi thought it was operated out of either Mr. Abdel’s office on Dundas or the Crestlawn location. Mr. Elridi had no involvement in Air Globe nor was he a signing officer in relation to this company. He testified that he had no ownership interest in Mississauga Taxi and was never a signing officer on any accounts for Mississauga Taxi. Mr. Elridi knew of Mr. Kanaan as Mr. Abdel mentioned him a couple of times but had never met Mr. Kanaan. Mr. Elridi did not know of Mohammad Ballout, Air Palace or Rotor Maxx. Mr. Elridi had no discussions with Abdel where either Air Palace or Rotor Maxx was mentioned.

59In terms of Mr. Hussamaldin Alhudhairy, Mr. Elridi had contact with him as a limo driver and saw him in the office a couple of times. Mr. Elridi knew Mr. Alhudhairy to be a relative of Mr. Abdel.

60In cross-examination, Mr. Elridi testified that he had not seen the corporate documents in Exhibit 4 for Air Globe Taxi and Limousine before. He was not involved in setting up the BMO account for Air Globe. He assumed that Mr. Abdel must have added Marwa Ramadan as a signing officer on the BMO account as she worked in the office. However, he was not previously aware that she had signing privileges. He testified that Mr. Abdel was not an officer or director in 7311141 Canada Inc. but was a signing officer on the TD account ending in 4444. His evidence was that Mr. Abdel was the accountant for the company and was running the company. He recalled that the branch they went to, to open the account, was at Derry Road and McLaughlin Road in Mississauga. Mr. Elridi did not see the statements on the account but may have gone online or into a branch to get the balance. Mr. Elridi had not been involved in the business since early 2014. He was certain that it would not have been December because if he had seen the $350,000 amount he would have called Mr. Abdel at that time.

61Further in cross-examination, Mr. Elridi testified that he had spent about $60,000 in costs related to the business. He cared about his investment and wanted Mr. Abdel to find someone to buy him out. However, Mr. Abdel left the country in 2015 for a long time and he contacted Mr. Abdel on an Egyptian cell phone number. In 2016, Mr. Elridi was contacted by the police in relation to the $350,000 transaction.

62In relation to other businesses, Mr. Elridi testified that Mr. Abdel had access to the business account and access to create subsidiaries through the Canada Business website. Mr. Elridi did not sign any documents authorizing Mr. Abdel to do that. He recalled that Mr. Abdel spoke about creating Tahrir Trading if they were to get into the import/export business but was not sure if that was created. Mr. Elridi had wanted one of the businesses to be called Business Development Guru. He was aware of Alfa Trading and Alfa Auto. The idea of Neverland Property never materialized but they talked about it. Mr. Elridi believed that Aerolift was Mr. Abdel’s company but it was not under 7311141 Canada Inc. Mr. Elridi had heard of Mississauga Taxi in relation to the auto repair services business they were going to do with that company as clients. Mr. Elridi denied any involvement in establishing Mississauga Taxi and Limousine. He was aware the business at 1115 Crestlawn Drive had a point of sale terminal but testified that he didn’t rent them nor were they in the name of Mississauga Taxi to his knowledge. Contrary to the suggestion put to him he denied knowing there were “a dozen” point of sale terminals owned by Mississauga Taxi and owned by Fadl Kanaan. He testified he only heard of Kanaan through Mr. Abdel. He assumed that Mississauga Taxi’s office was close by their location because the point was to service their vehicles. He never saw any sign or a car displaying Mississauga Taxi.

63Further in cross-examination, Mr. Elridi acknowledged that Mr. Abdel said at one point that he was disappointed that they were not getting much business from Mississauga Taxi. Mr. Elridi did not consider approaching the owner of Mississauga Taxi to bring in business nor did he encourage Mr. Abdel to do that. Mr. Elridi only did online marketing campaigns to stir up business on Google. He did not accept the suggestion that he was the “boss” but testified that Mr. Abdel was the boss for everything at 1115 Crestlawn Drive. He denied telling Mr. Abdel to withdraw $350,000 from the TD account in December of 2014 or to buy a bank draft payable to Air Globe, Mississauga Tax or Mohammad Ballout. Mr. Elridi equally denied having any plans to purchase Mississauga Taxi. He further denied buying into Air Globe.

64In cross-examination Mr. Elridi testified that they opened the bank account for 7311141 Canada Inc. The branch was located at the CIBC on Dundas and Burnhamthorpe. Ultimately the account was closed but he was not clear how. He did recall the bank calling about an overdue amount at one point. In terms of RBC, Mr. Elridi recalled them sending a letter directing him to close both his personal and business accounts. When he questioned Mr. Abdel about it, Mr. Abdel advised that he had deposited a cheque into the account which resulted in the bank sending the letter. The next bank account they had for 7311141 Canada Inc. was at TD at Derry and McLaughlin. There were no other TD accounts for this numbered company. It was in December 2014 that Mr. Abdel suggested bankruptcy for 7311141 Canada Inc., advising that the company owed a lot of money to a lot of people. At that point, Mr. Elridi began recording their conversations. Following being contacted by the police in 2016 about the $350,000 transaction, Mr. Elridi decided to cut all ties with Mr. Abdel and effectively abandoned the equipment he owned which was located in 1115 Crestlawn Drive.

65In re-examination Mr. Elridi clarified that Mr. Abdel told him that the issue that arose at the RBC was that Mr. Abdel had written a cheque on the RBC account and deposited it into the RBC account.

Fadl Kanaan – 2313258 Ontario Inc., aka Mississauga Taxi

66Kanaan is the owner of 2313258 Ontario Inc., aka Mississauga Taxi. He was the sole owner and signing officer.

67Fadl Kanaan testified that he was the owner of 2313258 Ontario Inc., operating as Mississauga Taxi and Limousine since 2012. He was the sole owner and sole signing officer on the bank accounts in relation to his company. Mr. Kanaan knew Mr. Abdel as his business was located at 1105 Crestlawn Drive, Unit 16, not far from 1115 Crestlawn Drive where Mr. Abdel’s business was located. Initially, Mr. Kanaan’s drivers had their own point of sale terminals in their taxis. However, Mr. Abdel approached him suggesting that Mr. Kanaan’s drivers use Mr. Abdel’s terminals and they could share in the profit. Mr. Kanaan agreed and had his drivers use Mr. Abdel’s point of sale terminals. Mr. Kanaan testified that Mr. Abdel said that if they increased the volume being processed they would increase their profits.

68Mr. Kanaan testified that he paid out money to the drivers and was expecting reimbursement from Mr. Abdel, however Mr. Abdel continually told him to be patient and wait. Because Mr. Kanaan saw Mr. Abdel owned property he trusted him and believed he would be repaid. In addition, Mr. Kanaan paid for auto parts and paid other invoices for Mr. Abdel. Mr. Kanaan testified that he borrowed from friends to the total of over $300,000 over time.

69Eventually, Mr. Kanaan demanded to be repaid. In mid-2014, approximately August, Mr. Abdel advised Mr. Kanaan that he would sell some land that he owned in Egypt to repay him. Mr. Kanaan testified that Mr. Abdel also had lots of parts and goods in his garage, at an unspecified time, which he sold to get revenue to buy more parts. Mr. Kanaan raised the issue of repayment more frequently until it became a daily request, resulting in conflict between the two of them. Ultimately, Mr. Abdel repaid Mr. Kanaan in December 2014.

70Mr. Kanaan testified that Mr. Abdel called him at the end of 2014 and advised that he was at the bank and had the money owed to Mr. Kanaan. Mr. Kanaan went to BMO on Crestlawn and Dixie and saw that Mr. Abdel had a bank draft for $335,000 or more. The bank teller was going to put a hold on the money to ensure there were sufficient funds but Mr. Abdel said he would wait at the bank for them to check the funds and then deposit the money into Mr. Kanaan’s account. He provided his account number to Mr. Abdel and told him to deposit the money. Later in the day, Mr. Kanaan saw that only $235,000 was deposited but he was owed a further $100,000. He called Mr. Abdel and demanded his funds right away. He provided Mr. Abdel with a friend’s bank account number to have the funds deposited there. He intended to get his friend, Mr. Ballout, to assist him in repaying some of the debts as he had done in the past. Ultimately, Mr. Ballout was upset with this and transferred the money back to Mr. Kanaan’s account.

71Mr. Kanaan confirmed in his testimony that the bank statement in Exhibit 5, Tab 2, page 52, reflects the $235,000 paid to him by Mr. Abdel on December 4, 2014 and that the subsequent drafts he purchased, reflect his repayment of his creditors. He acknowledged that Mr. Krayem and Mr. Fahmi were some of the persons to whom he owed money. He further explained that he sent a wire transfer of $100,000 USD to try to make money on a deal arranged by his brother. Subsequently, the money was returned because the bank information was erroneous. He ultimately used the last $100,000 to repay Mr. Fahmi via his other business account at RBC.

72Mr. Kanaan testified that when Mr. Abdel repaid him the $335,000 in December 2014 he told Mr. Kanaan that he had sold his land in Egypt and the money was the proceeds from that sale. Mr. Kanaan further testified that his company did not ship auto parts. He had not seen the draft in Exhibit 4, Tab 2, page 39 for $350,000 before but he may have seen a receipt showing that amount. He had no knowledge that the funds had come from Air Palace in Korea and had not heard of that company. He acknowledged having been charged in relation to receiving these funds from Mr. Abdel but noted that his charges were ultimately withdrawn in court.

73Mr. Kanaan testified that he has no ownership interest in 7311141 Canada Inc., Alfa Auto Supply, Alfa Auto Trading or Air Globe Taxi and Limousine. Nor did he have any signing authority in relation to those companies.

74In cross-examination, Mr. Kanaan testified that he trusted Mr. Abdel and relied on Mr. Abdel’s calculation of the debt owed. The calculations provided by Mr. Abdel reflected a debt of $335,000. He no longer had any documents in relation to the debt because he was repaid and he had sold the taxi company. He testified that he stopped doing business with Mr. Abdel around October 2014 due to the debt owed. He had no knowledge of Khaled Elridi nor did he have any information about this person being involved with Mr. Abdel’s company.

75Mr. Kanaan testified further in cross-examination that in addition to the credit card debt, he provided Mr. Abdel with money for the importation/exportation of olive oil from Lebanon to Canada on the promise of making $20,000 for each container. He’s paid Mr. Abdel for his auto parts purchases and “many other pursuits”. Mr. Kanaan mentioned providing money for computers as well.

76In re-examination, Mr. Kanaan provided further explanation of how the investment in Mr. Abdel’s company was supposed to work. He also advised that Mr. Abdel had plans to ship olive oil containers to Egypt which was supposed to result in a $15,000 profit. Further, there were plans to improve a website for Mr. Abdel’s auto parts and that Mr. Abdel’s garage was full of auto parts so his business would be more reliable. Mr. Kanaan further testified that they discussed buying two stretch limos for weddings.

Hussamaldin Alhudhairy

77Mr. Alhudhairy testified that he worked part-time as a driver and also created two or three websites for 7311141 Canada Inc. He was in the office daily during the first quarter of 2014. He described the business as slow. He also found the taxi business slow. The garage did not have many customers for maintenance, tire changes, or oil changes.

78Mr. Alhudhairy’s involvement with banking was described as follows: he was involved in an account at BMO at Crestlawn as well as an account at TD near Hurontario and Matheson. He recalled there were 3 or 4 bank accounts that himself, Mr. Abdel and Ms. Ramadan created. One account involved Ms. Abdelghany, Mr. Abdel’s wife. The TD account was opened between February and April 2014 approximately. He recalled Mr. Abdel and Ms. Ramadan being present so all three of them would have authorization on the account. In November or December of 2014, Mr. Alhudhairy closed the TD account at Hurontario and Matheson which was in the name of Alfa Auto. He did so because he and Mr. Abdel had argued about what Mr. Alhudhairy saw as poor management of the company. At times he saw that the bank account had been in the negative and he was not getting paid on time for his taxi services.

79In relation to the BMO account for Air Globe Taxi and Limousine, Mr. Alhudhairy testified that he became a signing officer around February to April of 2014. He never had deposits, withdrawals or transfers nor did he buy any bank drafts. He identified his signature on Exhibit 4, Tab 2, page 5. He acknowledged that the date of March 6, 2014 accorded with his recollection of the timing of going into the bank to become a signing officer. Mr. Alhudhairy advised that he did not make the deposit of $350,000 into the BMO account for Air Globe Taxi and Limousine on December 4, 2014. He had only ever seen the TD bank draft in Exhibit 4, Tab 2, page 39 for $350,000 during the court proceedings. He had equally not seen the drafts made out to Mr. Ballout or 2313238 Ontario Inc. before court proceedings.

80Mr. Alhudhairy stated that in November or December 2014 he observed that there were not many customers for mechanical services and Mr. Abdel was doing the work. By the end of November he was not going into work. He was owed about $2,000 for his driving services and was paid this by Abdel later in 2015. He never did receive his capital of $10,000 paid to Abdel for the purchase of shares.

POSTION OF THE CROWN

81The Crown submits that the $348,751.57 deposited into the TD Canada Trust account on December 3, 2014 were illicit. Those funds were obtained through deception, by an unknown party, directed at Rotor Maxx and Air Palace as a result of intercepted email communications.

82The Crown argues that there was no legitimate reason for the Air Palace payment to Rotor Maxx to be deposited into the TD account held by 7311141 Canada Inc.

83The Crown points to the timing of the various transactions in support of her position that the funds deposited had been illegally intercepted.

84Once the funds were deposited Abdel immediately removed the funds and placed them into another bank. Abdel tried to hide the true origin of the funds by telling Mr. Kanaan that the funds originated from the sale of property in Egypt. Abdel later told Mr. Elridi the funds came from China as a result of shipping auto parts through Mississauga Taxi.

85The Crown submits further that Abdel was desperate for money in December 2014. The Crown argues that even if he did not know the source of the funds, he had no colour of right to the funds. At a minimum he was wilfully blind as to the nature of the funds.

86The Crown also submits that another factor to consider is the recent possession of the illicit funds. By taking control of the funds on December 4, 2014 in the TD account by buying a bank draft payable to Air Globe Taxi and Limousine, Abdel is guilty of both offences. He took money that did not belong to him and converted it to his own use. The funds were moved in such a manner by Abdel that the funds were placed permanently outside the reach of TD.

87The Crown submits that evidence called in this trial establishes beyond a reasonable doubt that Mr. Abdel is guilty of both charges. The testimony of Mr. Elridi, Ms. Ramadan and Mr. Alhudhairy was clear as to the state of business at 1115 Crestlawn Drive. None of the witnesses called in this case was shaken as to their version of events. The evidence of all of the witnesses, while not identical, was confirmatory of each other. In particular, the fact that Mr. Abdel was in debt and sought investments from various sources was made out on the evidence of Mr. Alhudhairy, Mr. Elridi and Mr. Kanaan who all provided him with money. There is no doubt on all of the evidence that Mr. Abdel was the person who conducted the various transactions on December 4, 2014.

88The Crown submits that the court need not find that Mr. Abdel was involved in the fraud committed on Air Palace to convict him of the offences charged. While it is highly suspicious that a person who was in desperate need of funds inexplicably received the $350,000 he required to pay off his creditors, there is no direct evidence that he was involved in sending the emails to Air Palace and Rotor Maxx. However, even if Mr. Abdel did not know exactly how the money was obtained, he knew it was not money he was legitimately entitled to have. The court can infer Mr. Abdel’s guilty knowledge of the illicit nature of the funds. The Crown argues that Mr. Abdel had to know the money was coming, in order to be at the bank hours after it arrived from South Korea to withdraw the funds on December 4, 2014. Mr. Abdel’s actions showed he was highly motivated to get the money out of the TD Canada Trust right away. Further, he did not want BMO to hold his funds and bought the further drafts the same day.

89As an aide memoir the Crown set out a chart, supported by the trial evidence, demonstrating the movement of the funds.

Mississauga Taxi BMO CAD 0002 1959-448 Open Jan 28, 2013 Mississauga Taxi BMO USD 2950 4607-090 Open Nov 14, 2014

Missif Transfer $88,600.00 USD from AMBK Holding USD account to CAD account on Jan 26, 2015

POSITION OF THE DEFENCE

90Abdel submits that there is no evidence that he was in any way responsible for any of the duplicitous emails which caused Air Palace to direct its money into Account No. 503444 held by 7311141 Canada Inc., at the TD branch at 7060 McLaughlin Road, Mississauga.

91Abdel argues that the Crown must prove beyond a reasonable doubt that Abdel knew that the $348,751.57 had been obtained by the commission of an indictable offence.

92Abdel argues further that not having proved that he possessed the requisite knowledge the Crown must rely on the doctrine of wilful blindness.

93Mr. Elridi testified that he was the sole owner of 7311141 Canada Inc., but Abdel was entitled to deal with that account and withdraw money from it. As a result, Abdel was entitled to withdraw the $350,000.00 from the account and make out a draft payable to Air Globe Taxi and Limousine.

94Abdel had no idea this money had been obtained by the commission of an indictable offence.

95Mr. Kanaan’s credibility is undermined, according to Abdel, because he was originally charged with the same two offences only to have the charges withdrawn after a preliminary hearing and providing the Crown with a statutory declaration.

96Mr. Kanaan then came to this trial and told a story which beggars credulity. He said that Mr. Abdel owed him $335,000.00 because Mr. Kanaan had loaned Mr. Abdel that amount of money over the course of eight or perhaps more than eight months, ending in October of 2014. Mr. Kanaan said he had financed those loans through borrowings he had made from other persons, whom he had repaid with the money Mr. Abdel had paid him on December 4, 2014. Mr. Kanaan had directed Mr. Abdel to make the repayment in two sums, namely a draft payable to Mr. Kanaan’s company, 2313258 Ontario Inc., (which operated as “Mississauga Taxi”) in the amount of $235,000.00 and another draft, this one for $100,000.00 payable to one Mohammad Ballout. Mr. Kanaan said he had provided to Mr. Abdel his company’s bank account number at Bank of Montreal as well as Mr. Ballout’s bank account number at the same bank. The two Bank of Montreal drafts are found at Exhibit 4, Tab 2, pages 41 and 42. Mr. Kanaan said that he intended to repay some of his creditors through Mr. Ballout’s bank account and the $100,000.00 he had had Mr. Abdel pay him but he apparently subsequently had regrets about taking the money this way and arranged for the $100,000.00 to be transferred from Mr. Ballout to 2313258 Ontario Limited.

97With respect to the recorded conversation with Elridi, Abdel submits that nothing said in that conversation fixes him with knowledge that the funds were illicit.

ANALYSIS AND CONCLUSION:

HACKED EMAILS BETWEEN ROTOR MAXX AND AIR PALACE

98The evidence called at trial establishes without any doubt that the $348,751.57 in funds deposited into the TD Canada Trust account on December 3, 2014 were illicit funds. The testimony of Mark Kelly, on behalf of Rotor Maxx, and Kang Ho Lee, on behalf of Air Palace, supported by the documentary evidence at Exhibit 2, clearly establish that the emails had been hacked.

99The proper email for Air Palace was SUNJINGROUP.COM, with a G not SUNJINQROUP.COM with a Q. The proper email for Rotor Maxx was ROTORMAXX.COM not ROTORMAXX.BIZ. The funds were supposed to be paid pursuant to a negotiated contract between Rotor Maxx and Air Palace for helicopter repair services. The evidence is clear that the email communications between Rotor Maxx and Air Palace were hacked and intercepted such that the payment by Air Palace was diverted to a TD Canada Trust account held by 7311141 Canada Inc.

100I agree with the Crown’s position that there was no legitimate reason for Air Palace’s payment to Rotor Maxx to be deposited into the TD Canada Trust account held by 7311141 Canada Inc. Air Palace was paying Rotor Maxx for services required on a helicopter. This was an ongoing relationship. They had no business in Mississauga and no business with a taxi company. Kang Ho Lee, the CFO of Air Palace, testified that the emails which purported to be from Air Palace’s former CEO, Daniel Koh, were not from an email that belonged to their company. Mark Kelly, CFO of Rotor Maxx thought it was dealing with Air Palace and vice versa. Their email domain at the time was RotorMaxx.com and the false emails were being sent to Air Palace on RotorMaxx.biz. Mark Kelly testified that Rotor Maxx had no business with any TD Canada Trust bank or any company known as 7311141 Canada Inc. As the Crown rightfully points out, neither Mr. Kelly nor Mr. Lee had heard of any of the various businesses operating at 1115 Crestlawn in Mississauga. Nor had they heard of Mississauga Taxi or Mr. Kanaan. They intended to deal with each other.

Timing of Transactions Once Funds Deposited in TD Account of 7311141 Canada Inc.

101The following time-line is important to note:

December 2, 2014 - Air Palace initiates the wire transfer December 3, 2014 - the funds are deposited into the TD Canada Trust account December 4, 2014 - 11:04 a.m. Abdel purchases $350,000.00 bank draft made out to Air Globe Taxi and Limousine. At the time just prior to the deposit and the bank draft being purchased there was $9,000 in the account December 4, 2014 - Abdel then deposits the TD Canada Trust bank draft into his BMO account

102The evidence of Angelo Cristello, Ranjit Rai, Amanpal Dhesy and David Skea, in conjunction with the documentary evidence filed as exhibits at the trial confirm the timeline relating to the various transactions.

Abdel’s Explanation for the Funds

103Exhibit 9 is the transcription of the recorded conversation between Elridi and Abdel. The following exchanges are relevant:

Khaled: I wanted to ask you a few things Fattah: What Khaled: I went to TD and got the bank statement 00:28 Fattah: OK Khaled: I found on 3 Dec 2014 amount of $348000 was credited to the account Fattah: OK Khaled: What is that for Abdelfattah Fattah: It was for business Khaled: What business exactly? 00:45 Fattah: Was for business, someone got some goods and we paid them back Khaled: Yes, but where is this transfer coming from Fattah: It was from China. Khaled: From China? Fattah: Yes Khaled: And how did you pay it back? It is showing that it was withdrawn as bank draft Fattah: Yes, withdrawn as bank draft then I gave it to someone and we got the goods and commission from it, so we can pay for the equipment lease Khaled: DO you have documents that support that abdelfattah as my accountant needs to see the document so he would understand what was it for Fattah: OK, I’ll find it for you Khaled: No, don’t find it, bring it urgently Fattah: OK, I’ll do, but please note that this is on the company 01 not 02 Khaled: I don’t understand you! Fattah: This account was for 01 Alfa trading not 02, 02 is Alfa auto supplies and it is the one you have Khaled: abdelfattah, that is the only bank account I know of for the company except this one Fattah: No there is another account for Alfa auto supplies that you have Khaled: Which one is that Fattah: The one I gave you in the box Khaled: Abldefattah take it easy on me, you are saying the amount $348000 was it for people buying goods from us? Fattah: People buying goods through us and we got our commission, so I would get the commission to pay for the equipment lease and pay it off for atlas tire…National Leasing and RCAP Khaled: What was the goods Abdelfattah? Fattah: Goods spare parts Khaled: Spare Parts? Fattah: Yes, Spare Parts and scrap metal and things like that Khaled: Ok Abdelfattah, there are other big amounts, one for $35000, what was this for Fattah: it is other good to, and for commission Khaled: This is also for China? Fattah: No it was local Khaled: OK Abdelfattah

104Mr. Kanaan testified that he paid out money to the drivers and was expecting reimbursement from Mr. Abdel, however Mr. Abdel continually told him to be patient and wait. Because Mr. Kanaan saw Mr. Abdel owned property he trusted him and believed he would be repaid. In addition, Mr. Kanaan paid for auto parts and paid other invoices for Mr. Abdel. Mr. Kanaan testified that he borrowed from friends to the total of over $300,000 over time.

105Eventually, Mr. Kanaan demanded to be repaid. In mid-2014, approximately August, Mr. Abdel advised Mr. Kanaan that he would sell some land that he owned in Egypt to repay him. Mr. Kanaan testified that Mr. Abdel also had lots of parts and goods in his garage, at an unspecified time, which he sold to get revenue to buy more parts. Mr. Kanaan raised the issue of repayment more frequently until it became a daily request, resulting in conflict between the two of them. Ultimately, Mr. Abdel repaid Mr. Kanaan in December 2014.

106The testimony of Mr. Kanaan as to the timing of the various payments and the communications and contact he had with Abdel are critical and support the Crown’s position that Abdel moved quickly to convert the funds for his own purposes knowing the funds did not belong to him.

107Mr. Kanaan testified that when Mr. Abdel repaid him the $335,000 in December 2014 he told Mr. Kanaan that he had sold his land in Egypt and the money was the proceeds from that sale. Mr. Kanaan further testified that his company did not ship auto parts. He had not seen the draft in Exhibit 4, Tab 2, page 39 for $350,000 before but he may have seen a receipt showing that amount. He had no knowledge that the funds had come from Air Palace in Korea and had not heard of that company. He acknowledged having been charged in relation to receiving these funds from Mr. Abdel but noted that his charges were ultimately withdrawn in court.

108I agree with the Crown that Abdel misled both Elridi and Kanaan about the origins of these funds. Abdel told two different stories about the origins of the funds, neither of which were true. Abdel was in debt. He was being pressured to pay these debts. He had no lawful authority to these funds. Abdel converted these funds for his own use and had no right to do so.

KNOWLEDGE

109I am satisfied that Abdel actually knew he had no colour of right to the funds. It is of no moment whether he was, in fact, responsible for the hacking of the emails between Rotor Maxx and Air Palace. At the very least Abdel was wilfully blind as to the nature of the funds.

110The fault in wilful blindness lies in deliberately failing to inquire when he knows there is a reason for an inquiry.

111I must consider Abdel’s state of mind and the facts he was aware of. The test is not what someone else would have believed or done or even what a reasonable person would have believed or done. In all of the circumstances known to him did Abdel have an honest belief that the funds could be used by him legally?

112Of course mere negligence or even recklessness is not enough. Wilful blindness is a higher standard than either negligence or recklessness. The person must be aware of the need to make an inquiry but decides not to because they do not wish to know the truth and prefer to remain ignorant.

113The following factors support a finding of wilful blindness:

• the $348,751.57 deposit was completely out of the usual amounts of transactions and activity on this account and for the businesses Abdel engaged in
• it was out of the norm for the level of business engaged in as a limousine and taxi service with a garage servicing vehicles
• the businesses were not doing well
• Abdel was desperate for money
• Alhudhairy was owed money
• Kanaan was owed money
• Abdel was encouraging Elridi to declare bankruptcy because the business was heavily in debt
• When the $348,751.57 funds suddenly appeared in an account accessible by Abdel, he made no inquiries of anyone, especially the bank

114There is no dispute as to the definition of wilful blindness. The law is well developed on what it means. Wilful blindness imputes knowledge to an accused where suspicion is aroused to the point where they see the need for further inquiries but deliberately choose not to do so. Sansregret v. The Queen and R. v. Jorgensen.

115Did the accused shut his eyes because he knew or strongly suspected that looking would fix him with knowledge? The answer to this question is yes.

116The Exhibit 9 recording comes about because Elridi, in reviewing the bank records in February 2015, was surprised by the large deposit and called Abdel to explain it. Elridi’s reaction to this large deposit would be expected, especially for a business looking at possible bankruptcy. The explanation provided by Abdel makes no sense. The Crown rightfully asks the following questions related to Abdel’s explanation:

• if this was a commission then the amount of the sale of the parts had to be exponentially larger than the $350,000.00
• if the business was engaged in the shipment of auto parts, it is illogical that they needed Mississauga Taxi to be involved
• if the business was engaged in the shipment of auto parts, it is illogical their website could not take the orders
• if the business had local parts suppliers of their own garage, as testified to by Ms. Ramadan and Mr. Alhudhairy, it makes no sense to now be involved in supplying parts on a large scale to entities in China.

117I do not accept either explanation provided by Abdel as to the origin of the funds. The fact that Abdel provided two different and misleading explanations for the funds is a factor that supports the Crown’s position that Abdel actually knew that the funds were illicit or at the very least was wilfully blind. From what Abdel knew and the information he was aware of it would have been abundantly clear to him to ask where did these funds come from.

Abdel’s Financial Difficulty

118I agree with the Crown’s assertion that it cannot be maintained that Mr. Abdel was not in financial difficulty. As the Crown points out, it is clear from the Air Globe records in Exhibit 4, at pages 37 and 43 where the December statement is located, that there was little money in the BMO account, other than the $350,000. The columns on page 43 show that approximately $351,000 was deposited and withdrawn that month. The January statement on page 54 shows even less money – now around $250. The TD Canada Trust records also support the position that Mr. Abdel was in financial difficulty. This account, at Exhibit 2, sets out the $350,000.00 transaction. The ledger at pages 13-16, showing all of the transactions on the entire history of the account, shows that this was an unusual transaction. Ms. Ramadan received calls from a collection agency due to amounts owing and Mr. Alhudhairy had to surrender the Chrysler 300 when Mr. Abdel left the country.

CONCLUSION

119Abdel had no authority or colour of right to possess, use, convert to his own use, or otherwise deal with the subject funds. The money did not belong to him. The money did not belong to any corporation he had an ownership interest or signing authority for.

120The evidence is clear that these funds belonged to Air Palace and were destined to an account identified by Rotor Maxx for payment of a negotiated contract in relation to helicopter repairs.

121How it ended up in the TD account through the email hacking is still a mystery, however, it is not a mystery that needs to be solved in order to determine whether the Crown has proven these charges beyond a reasonable doubt.

122I am satisfied that the evidence as a whole establishes the guilt of Abdel beyond a reasonable doubt. Even if Abdel did not know how the funds ended up in the TD account, he actually knew or was at least wilfully blind that these funds were illicit funds. He made no inquiries of how the funds came to be there. Surely with the volume of business conducted in his business and the desperate financial circumstances of the business, finding the large amount of money in an account he had access to would have resulted in an inquiry as to its origins. Providing two false and misleading explanations for its origins to two different people raises a reasonable inference that Abdel was hiding how he came upon the funds.

123Further, once he realized that he could access the funds, rather than make any inquiries, he immediately engaged in numerous transactions to immediately disperse the funds out of the reach of the legitimate owners of the funds.

124I am satisfied beyond a reasonable doubt that the Crown has proven both counts and as such there will be findings of guilt.

Fragomeni J.