Her Majesty the Queen v. Amir Samoodi

COURT FILE NO.: CR-22-10000031

DATE: 20220808

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

Respondent

– and –

AMIR SAMOODI

Applicant

COUNSEL:

Ben Lerer, for the Crown

Alan Gold and Ellen Williams, for Amir Samoodi

HEARD: June 21, 2022

ENDORSEMENT ON CERTIORARI APPLICATION

P.J. Monahan J.

[1] On February 23, 2022, following a preliminary inquiry, Amir Samoodi was committed to stand trial on charges of fraud over $5000, possessing proceeds of crime over $5000, and money laundering. He brings an application for certiorari, seeking an order quashing his committal.

[2] For the reasons that follow, I would dismiss Mr. Samoodi’s application for certiorari and confirm his committal for trial.

Summary of the Facts

a. The Alleged Fraudulent Scheme

[3] The narrative of the fraud was introduced at the preliminary inquiry primarily by way of written statements on behalf of six complainants, together with a compendium of supporting documents submitted under s. 540 (7) of the Criminal Code. The complainants all reside outside Canada.

[4] It is alleged that the scheme began in or about February 2017. Complainants received telephone calls and emails from “FM Wealth Management” which was described as a wealth management company located in the Cayman Islands. FM’s website advertised that it had satellite offices in Canada and Argentina. The Canadian address was listed on the website as “FM Management Inc. (Canada), 120 Harrison Garden Unit 1610, Toronto, Canada M2N 0H1”, with a contact telephone number of “647-749-5319”.

[5] The callers invited the complainants to purchase securities through FM Wealth Management. The callers said they had obtained a contract to sell shares in Eco Plant Corporation (“Eco Plant”), which was described as an American private company about to go public. They said it was headquartered in Michigan or Nevada, USA, was in the business of capturing carbon dioxide from the atmosphere, had several test plants successfully operating in South America, and had the backing of the Mexican government. They offered shares for sale at $4 a share, with the possibility of purchasing more through “share warrants” that accompanied shares purchased at this early stage. They said that the shares would be worth between $8 and $40 once the company went public.

[6] The complainants bought shares in Eco Plant by transferring money to Ontario bank accounts in the name of “FM Management Inc.”, F M Management Inc.”, or Eco Plant.

[7] Complainants received emails purporting to be from Eco Plant, welcoming them as an investor and saying that their share purchase had been registered with the company. Complainants also received copies of “share certificates” made out to them from Eco Plant in Nevada.

[8] FM representatives called again and said that an individual or company was interested in acquiring Eco Plant. However, this buyer would only purchase large bundles of shares (i.e. 15,000 or 50,000 shares at a time). They said that the investor would pay a high price for the bundles. As a result, some complainants chose to purchase further shares in Eco Plant and transferred more funds.

[9] Complainants were then told that the Mexican government had intervened to stop the sale. However, another private investor had been approved to facilitate the buyout. According to the callers, this new buyer was interested in purchasing all of their shares, including any they could obtain by exercising their “warrants”. Some complainants chose to purchase further shares in Eco Plant through their warrants and transferred funds again as directed.

[10] When some of the complainants asked to be paid out, they were told by callers that they needed to prepay a “withholding tax” on the gains resulting from the buyout before the proceeds could be sent to them. One complainant chose to pay these “withholding taxes” and transferred funds once again.

[11] As soon as a complainant refused to continue paying into the scheme (either to purchase shares, warrants, or taxes), they were unable to make further contact with the callers, FM Wealth Management, or Eco Plant. None of the complainants received a payout from the scheme.

[12] Mapping the complainants’ accounts over time reveals that the callers were simultaneously soliciting investments from those who continued to buy in to the scheme, while being unreachable (i.e. disconnecting their phone line or email address) to those who stopped paying in.

b. The Companies and Flow of Funds

[13] Investigation by the Toronto Police Service subsequently revealed that Mr. Samoodi and two of his friends, namely, Amir Firooz and Fariborz Firouz,[^1] were owners of the Toronto companies which received the complainants’ funds. In particular:

i. Eco Plant was incorporated in Toronto on February 15, 2017, with its registered address at 208 Dunview Avenue, Toronto, Ontario. Amir Samoodi was its only registered administrator, lived at the same address, and owned 100% of the corporation’s shares. Mr. Samoodi registered the company for accounts at TD bank shortly after February 15, 2017. After Mr. Samoodi opened the accounts, five of the known complainants transferred US$238,135 into them. By September 2017, the accounts had been emptied and closed.

ii. FM Management Inc. was incorporated in Ontario on February 10, 2017, with its registered address at 1207-18 Kenaston Gardens in Toronto. Amir Firooz was its only registered administrator, owned 100% of the company, and lived at the same address. Mr. Firooz opened bank accounts in the name of FM Management Inc. at TD bank and RBC Bank beginning on April 21, 2017. Mr. Firooz was the only person listed on the bank’s registration documents. After Mr. Firooz opened the accounts, five of the known complainants transferred US$108,298 into the accounts. By January 2018, the accounts have been closed.

iii. F M Management Inc. was incorporated in Ontario on April 4, 2018, with its registered address at 1207-18 Kenaston Gardens in Toronto. Fariborz Firouz was its only registered administrator, owned 100% of its shares, and lived at the same address. Mr. Firouz opened bank accounts in the name of F M Management at (among other places) BMO, beginning on June 29, 2018. After Mr. Firouz opened the BMO account, one of the known complainants transferred US$10,000 in one transaction into the account

[14] Mr. Firouz also testified that in or around June 2018, RBC Bank raised questions about a wire transfer into one of the F M Management Inc. accounts. Mr. Firouz brought these issues to the attention of Mr. Samoodi. After discussing the matter, Mr. Samoodi asked Mr. Firouz to close the account because it was delaying their business.

[15] Mr. Fariborz Firouz, who has pled guilty to one count of possession of property obtained by crime, testified at the preliminary inquiry. He said that Mr. Samoodi was a longtime friend who had approached him in 2018 about opening an importing and exporting business in Toronto. Mr. Samoodi wanted Mr. Firouz to incorporate the business and play an administrative role in exchange for a fee. Mr. Samoodi provided him with the name F M Management Inc., and asked him to open US dollar bank accounts in its name. Deposits started flowing into the accounts and Mr. Samoodi would instruct him where to send the deposited funds. Mr. Samoodi would sometimes contact him in advance of a deposit and advise him to expect the funds.

[16] Bank records introduced at the preliminary inquiry showed that once the complainants’ funds were deposited into Mr. Samoodi’s accounts, they were quickly dissipated in wire transfers to, among other places, the United States, Cyprus and India. Smaller amounts were withdrawn in cash, bank drafts, or paid to the bank as fees and interest.

The Decision on Committal

[17] The preliminary inquiry judge committed Mr. Samoodi on all counts. She held that a jury could reasonably conclude as follows:

i. the monies were obtained by the callers through deceit, because when complainants attempted to redeem their shares they could not do so;

ii. Mr. Samoodi had knowledge of the fraudulent scheme, because of his involvement with Eco Plant, F M Management Inc., and the complainants’ funds;

iii. there was a real and substantial link between the offenses and Canada, because investment funds were transferred directly to Canadian bank accounts of Ontario companies controlled by Mr. Samoodi, and banked in Canada; and

iv. Mr. Samoodi had possessed and intended to convert the proceeds by ordering wire transfers to at least six other entities in Cyprus, India, the United States, and possibly elsewhere.

The Standard of Review

[18] There is no dispute that the scope of review on a certiorari application to quash a committal for trial is narrow. A preliminary inquiry judge’s determination of sufficiency is entitled to considerable deference, such that this court does not re-weigh the evidence or make its own determination of whether the accused should stand trial. Rather, the only question for this court is whether there was an evidentiary basis for the conclusion that a reasonable jury, properly instructed, could find Mr. Samoodi guilty of the offenses alleged.[^2] Moreover, where portions of the evidence are circumstantial, the preliminary inquiry judge (and this court) answers this question considering only those reasonable inferences that favour the Crown.[^3]

Issues

[19] Mr. Samoodi argues that there was a complete absence of evidence which could give rise to a reasonable inference of his guilt on any of the offenses charged. In particular, he argues that:

i. this court has no jurisdiction over the alleged fraud because there was no evidence showing a real and substantial link between the offence and Canada;

ii. there was no evidence upon which a jury could conclude that a fraud occurred;

iii. there was no evidence upon which a jury could conclude that Mr. Samoodi had any knowledge of any fraud; and

iv. there was no evidence of the specific intent component required for the offence of money laundering.

Territorial Jurisdiction

[20] Mr. Samoodi argues that the preliminary inquiry judge erred in concluding that this Court has jurisdiction over the alleged fraud since there is no evidence showing a real and substantial link between this offence and Canada. He argues that on the facts alleged, the fraud was perpetrated by criminals located abroad, to complainants located abroad. The money spent a mere two weeks in Canada before being dispersed to third parties abroad. Mr. Samoodi relies upon the decision of this court in R. v. Drakes,[^4] in which it was held that the mere transfer into Canada of funds derived from a fraud committed elsewhere does not constitute a sufficient connection to give this country jurisdiction to prosecute such an offence.

[21] The leading case on the issue of jurisdiction over transnational offenses is R. v. Libman.[^5] In Libman, the accused operated a telephone sales solicitation room (or “boiler room”) in Toronto, where sales personnel telephoned United States residents and attempted to persuade them to purchase shares in two companies purported to be engaged in gold mining in Costa Rica. Through the misrepresentations of the sales personnel, various US residents agreed to purchase shares in the companies, which were in actuality virtually worthless. The money was sent to Libman’s associates in Central America, who then paid a portion of the proceeds to Libman.

[22] It was argued that Canada lacked jurisdiction to prosecute these frauds since the gist of the offence, which is the deprivation of the victims, occurred outside of Canada. La Forest J. rejected this approach as unduly formalistic since it would allow criminals operating on an international scale to go free by “the simple manipulation of a technicality of the law’s own making.”[^6] La Forest J. held that all that is necessary to make an offence subject to the jurisdiction of Canadian courts is that a significant portion of the activities constituting the offence take place in Canada. In determining this issue, it is necessary to take into account all relevant facts that take place in Canada that may legitimately give this country an interest in prosecuting the offence.

[23] In Libman, a key consideration was that “the fruits of the transaction were obtained in Canada as contemplated by the scheme. Their delivery here was not accidental or irrelevant.”[^7] In Justice La Forest’s view, even though the delivery of the funds to Canada may not in strictness have constituted part of the offence, it was an integral part of the scheme. As such, there was a “real and substantial link” between the offence and Canada sufficient to give this country jurisdiction to prosecute the offence.

[24] This approach was recently reaffirmed and applied by the Court of Appeal in R. v. Barra.[^8] The accused, a foreign national residing in the USA, was the CEO of an American company which owned a subsidiary in Canada. While in the USA, he conspired to bribe Indian officials to obtain a contract between Air India and the Canadian subsidiary. Neither the decision to make the bribe, the funds paid, or the bribe itself originated or was made within Canada.

[25] The Court of Appeal held that Ontario had territorial jurisdiction over the offence, notwithstanding the fact that all of the prohibited conduct took place abroad. The Court held that the offence had a substantial link to Canada because it involved a Canadian company obtaining a contract with Air India through the unlawful means of paying bribes. The substantial benefits that were projected to flow from the contract were going to be obtained in Canada. These “in Canada” facts, even if not in strictness part of the offence, give this country a legitimate interest in prosecuting the offence and therefore satisfied the “real and substantial link” test in Libman .

[26] Applying this test to the facts of the present case, I find that the preliminary inquiry judge correctly found that there were sufficient links between the alleged frauds and Canada to give this country jurisdiction to prosecute these offenses. These links include the following:

a. the callers’ website displayed a Toronto address and telephone number, which happened to be nearby to a former residential address of Amir Firooz;

b. businesses matching the name of the calling firm (FM Wealth Management) and investment vehicle (Eco Plant Corporation) were incorporated in Ontario beginning in February 2017, just prior to the calls commencing;

c. Mr. Samoodi, Mr. Firooz and Mr. Firouz, the alleged participants in the fraud, are all citizens or residents of Canada. It is alleged that, as part of the fraudulent scheme, they opened bank accounts in Toronto in the names of their Ontario corporations;

d. the complainants were directed to pay money into these Ontario corporate bank accounts, and did so. Thus, as in Libman, the “fruits of the transaction were obtained in Canada as contemplated by the scheme.”

e. the “fruits of the transaction” were then either withdrawn from these corporate accounts, paid to the bank in fees, or transferred to others around the world by Mr. Samoodi, Mr. Firooz or Mr. Firouz;

f. the administrators of all of the Ontario companies involved in the alleged fraud are Canadian residents or citizens living in Toronto. They and/or their testimony would not be readily available to a foreign jurisdiction.

[27] It is apparent that the connections to Canada in the present case are far more substantial than was the case in Barra, where the accused was a foreign national whose participation in the alleged conspiracy took place outside of Canada. Here, Mr. Samoodi is a Canadian citizen living in Toronto and his alleged participation in the scheme took place in Canada. Moreover, as was the case in Barra, the fruits of this alleged fraud were obtained in Canada as contemplated by the scheme, Canadian companies were the ones receiving the fraud’s benefits, and a large portion of the evidence was obtained in Canada. It is obvious that Canada has a legitimate interest in protecting the public against multinational frauds which seek to shelter or launder proceeds in this country. As La Forest J. noted in Libman, Canadian law would be lame indeed if it is strictures could be avoided by the simple artifice of locating certain of the fraud’s operatives outside of Canada.[^9]

[28] Mr. Samoodi’s argument that this Court lacks jurisdiction over the offenses focuses on the physical location of the callers and victims, or on irrelevant details such as how long the funds remained in the corporate bank accounts before being transferred elsewhere. In my view, this approach to determining jurisdiction was clearly rejected by Libman and would be inconsistent with Barra.

[29] Nor would recognizing Canadian jurisdiction to prosecute the alleged fraud in this case be contrary to this Court’s decision in R. v. Drakes. Drakes involved a “Nigerian letter scam”, in which there was no evidence that any of the perpetrator, the complainant, or the sending/receiving accounts were located in Canada. Instead, the factor connecting the case in Canada was that the accused was Canadian, had opened the receiving account in Antigua, and had eventually transferred the complainant’s funds here. Key to the decision declining jurisdiction over the offence was that the only connection between the alleged fraud and Canada was that the money eventually made its way here. In short, unlike in the present case, the transfer of the funds to Canada was not an integral part of the scheme. Nor were the numerous other substantial connections to Canada in relation to Mr. Samoodi present in Drakes.

[30] I therefore affirm the decision of the preliminary inquiry judge that this Court has jurisdiction over the alleged fraud in this case.

The Actus Reus of Fraud

[31] Mr. Samoodi argues that there was no evidence upon which a jury could conclude that a fraud actually occurred. He points to the absence of evidence that the complainants’ share certificates are false, and argues that they may in fact be shareholders of Eco Plant Corporation. On this basis, he argues that there is no evidence upon which a reasonable jury properly instructed could conclude that the actus reus of fraud has been established.

[32] Regardless of whether or not the share certificates are false, determining whether a fraud occurred in this case turns on whether there is evidence showing that the participants in the alleged scheme engaged in dishonest acts (which can be established by proof of deceit, falsehood or “other fraudulent means”), and thereby put the complainants’ pecuniary interests at risk.[^10]

[33] In this case, there was ample evidence at the preliminary inquiry setting out specific representations made by the callers, together with evidence upon which a jury could conclude that they were false. This included the following:

i. the callers claimed that FM Wealth Management was an established wealth management business located in the Cayman Islands, investing their clients’ funds in public and private securities, and holding those securities on behalf of their clients. The evidence at the preliminary inquiry showed that there were at least two FM Management companies, both incorporated in Canada. Neither of these companies were established businesses. Instead, they operated out of Mr. Firooz and Mr. Firouz’s shared condominium and had been incorporated weeks before receiving the complainants’ funds. Once the complainants’ funds were in the hands of the Canadian FM Management companies, they were transferred to various third parties which bore no clear relation to the purpose for which the complainant sent the funds (i.e. purchasing securities in Eco Plant Corporation, or to government authorities to pay withholding taxes.)

ii. The complainants were told that Eco Plant Corporation was an established company located in Nevada. It held patents over the capture of atmospheric carbon dioxide, and owned test plants in South America. It would soon go public, at which time its shares would increase in value. Although there was evidence of a Nevada company with a similar name incorporated in 2015, the callers were not facilitating a bona fide investment in this or any other company. The funds paid by the complainants were transferred to various third parties which bear no clear relation to Eco Plant or to an actual carbon capture business;

iii. Complainants were told that Eco Plant was about to go public in 2017, and the value of their shares would increase at that time. Alternatively, they were advised that a third-party investor was seeking to purchase large bundles of Eco Plant shares. After the sale of the shares was complete, complainants were told they had to pay a “withholding tax” on the gains realized prior to disbursement. Yet the evidence reasonably supports the inference that there was no possibility of the company “going public” or being acquired by a private investor. In fact, despite being in regular contact with the complainants at the time they purchased Eco Plant shares, Eco Plant could not be reached by the complainants when they sought to sell their shares or ask questions about them.

[34] These misrepresentations, combined with the complainants’ apparent loss of their investments, ground a reasonable inference of both deceit and deprivation, which are the constituent elements of the actus reus of fraud.

Mens Rea for Fraud

[35] Mr. Samoodi argues that there was no evidence to suggest that he had knowledge of (or was willfully blind) to the fraud. He argues that even if the evidence is taken at its strongest, at most it can support an inference that he had his suspicions as to the source of the funds. Mere suspicion of “something wrong” is insufficient to establish the mens rea for this offence.

[36] As noted earlier, at the preliminary inquiry stage the issue is whether the evidence can support a reasonable inference that Mr. Samoodi had knowledge of the fraudulent scheme. It is not necessary for the Crown to prove such knowledge on a balance of probabilities or beyond a reasonable doubt.

[37] In this case, I agree with the preliminary inquiry judge that a properly instructed jury could reasonably conclude that Mr. Samoodi either had knowledge or at least was willfully blind to the alleged fraud. This inference arises from the following facts:

i. Mr. Samoodi intended to set up and/or operate companies matching the name of the soliciting company and the investment vehicle, namely, FM Wealth Management and Eco Plant Corporation;

ii. Mr. Samoodi was expecting the complainants’ funds. The funds flowed directly into Eco Plant Corporation’s bank accounts, over which Mr. Samoodi had control. He received hundreds of thousands of dollars and immediately transferred them to third parties. He also instructed Mr. Firouz to receive and send proceeds of the fraud, sometimes alerting Mr. Firouz to a deposit before it was made;

iii. there was also evidence supporting an inference that Mr. Samoodi wished to avoid bank scrutiny into his operations. First, he closed Eco Plant Corporation’s USD bank account soon after receiving the complainants’ funds (4.5 months after opening it). Second, he asked Mr. Firouz to close one of F M’s accounts when the bank asked for documentation supporting a wire transfer.

[38] I agree with the preliminary inquiry judge that as a matter of logic and common sense, these facts can support a reasonable inference that Mr. Samoodi had knowledge of the fraudulent scheme.

[39] It also necessarily follows that these facts can support a reasonable inference that Mr. Samoodi had knowledge that the proceeds of the transactions had been illegally obtained, thus establishing the mens rea for the offence of possession of proceeds of crime.

Mens Rea for Money Laundering

[40] Mr. Samoodi argues that there was no evidence that he intended to conceal or convert the proceeds of the fraud, which is a necessary element of the mens rea for money laundering.

[41] While the preliminary inquiry judge focused on the intention to convert the proceeds, I agree with the Crown that there was also evidence supporting a reasonable inference that Mr. Samoodi intended to conceal the proceeds by quickly depleting his accounts and sending funds to various entities abroad.

[42] In particular, Eco Plant Corporation’s bank records showed that in the 4.5 month period between April 28, 2017 and September 7, 2017, Mr. Samoodi (through Eco Plant) received and then disposed of approximately US$800,528, including US$238,135 originating from the complainants. Approximately US$728,000 of this amount was transferred out of Mr. Samoodi’s accounts via 15 wire payments to various individuals and businesses outside of Canada.

[43] I agree with the Crown that an intention to conceal these proceeds can reasonably be inferred from: (i) the transfer of funds out of an account that the complainants could identify and into accounts they could not; (ii) the transfer of funds from within Canada to abroad; (iii) the short time period over which the money flowed into and then out of Eco Plant’s account; (iv) the closing of the bank account that complainants could identify; and (v) the co-mingling of funds received from complainants with other complainants and other sources, making it difficult to determine what happened to any one complainant’s money.

[44] In addition to the wire transfers above, Mr. Samoodi withdrew US$2220 from Eco Plant’s account. He paid another $1424 to the bank in interest and fees, and withdrew US$69,000 in the form of a bank draft made out to “Capital Time Pieces.” It would be open to a reasonably instructed jury to conclude that these all constituted “conversions” of proceeds from a chose-in-action (a bank credit) into something else (personal property in the case of cash or a timepiece, or a different chose-in-action in the case of bank fees, interest or bank drafts.)

[45] The purpose of s. 462.31 of the Criminal Code is to broadly deter profiting from crime or participating in illegal activity. As a result, it prohibits individuals from “converting” (changing or transforming) funds they know are proceeds of crime even where there is no intent to conceal them.[^11] The term has been interpreted to include a mere deposit or withdrawal of cash from a bank,[^12] or the withdrawal of a bill of exchange (i.e. a bank draft).[^13] The same can be said of using bank deposits to pay for services (i.e. paying bank fees and interest).

[46] In these circumstances, it is reasonable to infer that Mr. Samoodi was the one who carried out these transactions and intended to convert the proceeds.

Conclusion

[47] Mr. Samoodi’s application for certiorari is dismissed and I hereby confirm his committal for trial in this Court.

P. J. Monahan J.

Released: August 8, 2022

[^1]: I note that Firooz and Firouz are brothers. [^2]: R. v. Russell, 2001 SCC 53, at paras 19, 48. [^3]: R. v. Sazant, 2004 SCC 77, at paras 14, 18. [^4]: R. v. Drakes, 2005 CanLII 23683 (ON SC), [2005] O. J. 2863 ("Drakes"). [^5]: 1985 CanLII 51 (SCC), [1985] 2 SCR 178 ("Libman"). [^6]: Libman at para 72. [^7]: Libman, at para 71. [^8]: 2021 ONCA 568 ("Barra"). [^9]: Libman, at paragraph 72. [^10]: R. v. Theroux, 1993 CanLII 134 (SCC), [1993] 2 SCR 5, at para 13. [^11]: R. v. Daoust, 2004 SCC 6, at para 63. [^12]: R. v. Trac, 2013 ONCA 246, at para 84. [^13]: R. v. Hobeika, 2017 ONSC 6475, at paras 74 to 75