Court File and Parties

Court File No.: CV-11-00009210-00CL Date: 2024-05-30 Ontario - Superior Court of Justice – Commercial List

Re: CAJA PARAGUAYA DE JUBILIACIONES Y PENSIONES DEL PERSONAL DE ITAIPU BINACIONAL, Plaintiff And: EDUARDO GARCIA OBREGON et al., Defendants

Before: Peter J. Osborne J.

Counsel: J. King, Counsel for the Plaintiff Matthew Epp, Counsel for Land Genesis Development Corp. Eduardo Garcia Obregon and Patricia Garcia, self-represented

Heard: April 26 and May 6, 2024

Endorsement

[1] This Motion by the Plaintiff for an order directing Land Genesis Development Corp. (“Land Genesis”) to pay to the order of the Plaintiff the sum of $394,212, in partial satisfaction of the judgment for fraud that the Plaintiff has already obtained against the Defendants (including for greater certainty the Defendant, Genesis (LA) Corp.), first came before me on April 26, 2024.

[2] I adjourned the motion to the hearing date scheduled on May 6, 2024, in order that the Defendants, Eduardo and Patricia Garcia (the “Garcias”), were on notice.

[3] At the hearing of the motion, the Garcias were present in court on their own behalf. A court reporter was also present. The hearing proceeded via Zoom.

[4] Defined terms in this Endorsement have the meaning given to them in the motion materials unless otherwise stated.

[5] The Plaintiff relies upon the Affidavit of Michael Pereira sworn April 25, 2024 and the Supplemental Affidavit of Mr. Pereira sworn April 29, 2024.

[6] The non-party, Land Genesis, which holds the funds in question, asserts no beneficial ownership to the funds and does not oppose the relief sought by the Plaintiff, but in the circumstances, quite reasonably, requires an order before it will release the funds to any party.

[7] The Garcias have filed, or at least uploaded to CaseLines, an affidavit of Mr. Eduardo Garcia sworn May 5, 2024, to which are appended (voluminous) exhibits. They have also uploaded correspondence, not as an exhibit to an affidavit or otherwise properly as part of a record, but rather as a stand-alone document. That correspondence consists of a letter addressed to the Court dated May 5, 2024 from a Mr. Eufracio Gelves (“Gelves”).

[8] The Garcias and the other Defendants, including the company that they control and which is referred to above, Genesis (LA) Corp., were found liable to the Plaintiff in fraud pursuant to the judgment of Dunphy, J. in 2018 for sums in excess of $20 million. That judgment was upheld on appeal. Since that time, the Plaintiff has been trying to collect on the judgment, without success.

[9] Land Genesis currently holds the sum of $394,212 in funds in the name of Genesis (LA), pursuant to 23 subscription agreements, all of which were executed by Ms. Patricia Garcia as President and authorized representative of Genesis (LA). The Genesis Limited Partnership #4 is (or was) a widely held real estate syndicate formed to acquire and develop a property in Alberta.

[10] Genesis Limited Partnership #4 currently holds 943 partnership units, of which 45 units are held jointly by Genesis (LA) and Genesis Limited Partnership #4. The Subscription Agreement for these units expressly provides, as candidly acknowledged by the Garcias in their submissions, that these units cannot be held by a non-resident of Canada.

[11] Their submission is also, however, to the effect that these units are beneficially held by non-residents of Canada living in Central and South America and, as further described below, the non-resident requirement is precisely the reason for legal title to the units being held in the name of their company, Genesis (LA).

[12] The Plaintiff submits that no beneficial owners have ever come forward to Land Genesis to claim the units or proceeds related thereto, and that there is no evidence that anyone is entitled to the units or any proceeds, other than Genesis (LA), which is now a judgment debtor controlled by the Garcias.

[13] Accordingly, they seek an order directing Land Genesis to pay the funds over to the Plaintiff as against the outstanding and unsatisfied judgment.

[14] The Affiant Michael Pereira is the Manager, Financial Analysis, of Land Genesis. In his first affidavit at paragraph 5, he states that Land Genesis has never had any information as to the identity of any beneficial owners and has never been contacted by anyone except the Garcias and the Plaintiff regarding the investment.

[15] In his Supplemental Affidavit, Mr. Pereira states at paragraph 8 that no investor has ever sought information about, or come forward regarding this investment and that Land Genesis is prepared to redeem the investment on the same terms of redemption offers made to all limited partners.

[16] The Garcias submit that the funds in question should not be released to the Plaintiff, but rather should be held by Land Genesis or paid out to parties who, they claim, are the beneficial owners of the funds since they are (or were) the beneficial owners of the limited partnership units.

[17] In his Affidavit sworn May 5, 2024, Mr. Eduardo Garcia states that the funds for the limited partnership investment came from small investors in Central and South America who remain the beneficial owners of the units or the corresponding proceeds. Mr. Garcia’s affidavit includes as exhibits correspondence from counsel in Toronto dating from December 2007 and January 2008 apparently sent to Land Genesis regarding requests of a number of investors residing in Argentina.

[18] Mr. Garcia also submits correspondence to the Ontario Securities Commission from August 2008, said to have been delivered to the OSC from the Garcias’ company, Genesis (LA), advising the OSC of the names of the individual investors.

[19] Other materials are attached as Exhibits also, and they include correspondence dated March 25, 2013 from Ricketts Harris LLP to Mr. Garcia, apparently listing the names of 18 investors located in Latin America. That correspondence is signed by Mr. Gary Luftspring, an Ontario lawyer, and states that Mr. Luftspring acts for an individual by the name of Mr. Luis Arguello, who in turn represents certain Latin American investors listed in the letter.

[20] I pause to observe that, in that same correspondence of March 25, 2013, Mr. Luftspring takes the position that it had recently come to his attention that the investments may not be each client’s name and that “you” (i.e., the Garcias) may be holding the investments in trust through their company, Genesis LA, and that if such is the case, “this is completely improper”. The letter demands the transfer of the investments to each individual client’s name. There is nothing in the record, however, as to any further correspondence or follow-up in the 10 years since that letter was sent.

[21] In his Affidavit, Mr. Garcia states that he reached out to Mr. Luftspring via email on May 4, 2024 advising him of this motion, reminding him of the March 25, 2013 correspondence, and asking whether he was “still interested in receiving these funds”. That email was provided to counsel for the Plaintiff and has been uploaded separately to CaseLines, although it is not appended to any affidavit.

[22] As Mr. Garcia states in his Affidavit, Mr. Luftspring did not respond. Ms. King, counsel to the Plaintiff, advises today as an officer of the Court that she has spoken with Mr. Luftspring who has confirmed that he has no brief in this matter. In any event, he has not appeared, nor has he filed any materials on behalf of any client. The Court subsequently received correspondence from Mr. Luftspring as described below.

[23] Finally, Mr. Garcia attaches to his affidavit as exhibits correspondence seemingly between Land Genesis and certain investors or Argentinian counsel for investors (see Exhibits 7, 8 and 9).

[24] The correspondence from Mr. Gelves referred to above, and also delivered directly to the Court rather than filed as an affidavit from Mr. Gelves (or even appended as an exhibit to another affidavit), purports to state that he is the agent or financial advisor of “the Recchimurzo ladies”. I pause to observe that the correspondence itself does not have any physical address, email address, telephone number, or any contact or identifying information whatsoever in respect of Mr. Gelves. He states that his company is based in Florida and has a presence in several countries. Nor does the latter define the parties for whom he says he acts as “agent or financial advisor”, being the Recchimurzo ladies, other than to state that they reside in Venezuela.

[25] The letter goes on to state that Mr. Gelves just learned of this motion one business day prior to the hearing, and that he could not attend “due to an unavoidable personal commitment”. The letter states that the Recchimurzo ladies acquired two certificates issued by the limited partnership in respect of 11 limited partnership units. It purports to set out code numbers for their certificates, and asks that the funds that are the subject of this motion be deposited into Court. The letter states that Mr. Gelves could not attend in Court today, although aware of the hearing, due to an unavoidable personal commitment he had already made.

[26] Also uploaded to CaseLines is a copy of what appears to be a certificate said to be issued by the Florida Department of Financial Services to Mr. Gelves purporting to certify that, as of an Issue Date of September 26, 2016, he was an insurance agent holding a Resident Insurance License in Florida. The document has what appears to be an image of a business card of Mr. Gelves, together with an email address and a telephone number but no physical address.

[27] The Plaintiff submits that the subscription agreement for the Land Genesis limited partnership units was clear that they could not be held by non-residents of Canada, and that, as admitted by the Garcias, the purported investors are all non-residents. Moreover, the Plaintiff submits that none of the purported investors has come forward at any time over the last 10 years to claim the funds or even to make any inquiry about them. The Plaintiff submits that it has never had any inquiry from Mr. Gelves, he has not participated in the proceedings to date, and the Plaintiff has concerns regarding the veracity of the contents of the letter purportedly from him.

[28] In the absence of any clear evidence that the funds are in fact beneficially owned by parties other than the Garcias (through their company, which is also a judgment debtor), they seek the order for the payment of the funds to the benefit of the Plaintiff in partial satisfaction of the judgment.

[29] In his supplementary affidavit, Mr. Pereira of Genesis (LA) confirms that the limited partnership units cannot be held by a non-resident of Canada, as a condition of the Subscription Agreement. He further states in paragraph 8 that “no investor has ever sought information about or come forward regarding this investment”.

[30] The Garcias submit vigourously that the “Recchimurzo ladies” are a group of investors who invested $110,000 in the aggregate in respect of 11 limited partnership units. They are described in some of the correspondence and materials attached as exhibits to Mr. Garcia’s affidavit as Maria J., Carla, Maria F. and Nunzio Recchimurzo of Venezuela.

[31] Exhibit 3 consists of correspondence from the Canada Revenue Agency to Genesis (LA) dated August 20, 2010 and February 28, 2011 seeking, among other things, certain information about these limited partnership units, attached to which is a spreadsheet to which Mr. Garcia drew my attention during submissions (see CaseLines B-1-3148), which, he submitted, reflected the investments of the Recchimurzo ladies. It also reflected, according to his submission, the fact that his company, Genesis (LA), had repaid to them in 2008, the sum of $20,309.68 in interest. All of this supported his submission, he said, that the limited partnership units were beneficially owned by parties other than his company.

[32] The challenge for me is that the Plaintiff and Land Genesis both submit, (and this submission is supported by the affidavit evidence filed by the Plaintiff consisting of the affidavits of Mr. Pereira who is from Land Genesis), that there have been no inquiries, and there has been no correspondence from or on behalf of the purported beneficial owners, in over 10 years.

[33] However, that evidence is at odds with certain of the Exhibits to the affidavit of Mr. Garcia, which purports to include various correspondence about those very matters, some of it apparently sent not only to Land Genesis, but purportedly to Mr. Pereira directly. In response to my inquiries, counsel for Land Genesis advised candidly and forthrightly that he had no information from his client as to whether it had in fact received this correspondence or otherwise to explain the apparent discrepancy.

[34] Moreover, and given the reference to the spreadsheet by Mr. Garcia referred to above, I cannot determine on the basis of the record as it now sits what proportion or quantum of the funds held by Land Genesis might be the subject of a claim by some of these alleged other investors, even if their claims are legitimate. The amounts to which clients of Mr. Gelves would be entitled (if they were entitled to anything - and to be very clear I make no determination in that regard) - are in the aggregate certainly less than 100% of the funds now held by Land Genesis, and it is not clear whether those clients have received some repayment of capital as well as interest, and ultimately, what amounts may be owing to them, if any.

[35] In all the circumstances, I cannot make a determination on the disposition of this motion on the basis of the record as it sits now. Whether Mr. Gelves, on behalf of beneficial investors, and/or any beneficial investors directly, wish to file responding materials and, if the Plaintiff wishes, be cross-examined on those materials, remains to be seen. I do observe that the letter from Mr. Gelves, which may be tested at a later date, states that he had learned of the motion only one business day prior to the hearing.

[36] I also think it is fair to give Land Genesis an opportunity to consider the evidence now filed by Mr. Garcia as to inquiries apparently made by and on behalf of investors over the last number of years, and to respond as it may wish.

[37] In my view, fairness requires that the parties be given these opportunities. Accordingly, I adjourn this motion to a date to be fixed by the Commercial List office.

[38] For completeness, I add that, subsequent to the hearing of the motion, the Garcias, without invitation or leave, wrote directly to my judicial assistant to provide correspondence addressed to the Court dated May 8, 2024. Counsel for the Plaintiff quite reasonably responded to the effect that it was improper for the Garcias to write directly to the Court.

[39] In addition, my judicial assistant received an electronic mail message from Mr. Luftspring dated May 8, 2024, copied to counsel and to the parties, advising that he has not had any contact from his former clients in 11 years, and has no current instructions or retainer to act.

[40] I note these materials for completeness, but I placed no reliance on them (or on the other materials uploaded to CaseLines in advance of the hearing, but not attached to any affidavit) in reaching my decision.

[41] I remind the parties, and particularly the Garcias, that if they wish to have any materials before the Court on the return of this motion, such materials must be properly filed, in the form of affidavits, and delivered sufficiently far in advance of any scheduled hearing such that the affiant(s) may be cross-examined at the request of another party.

Osborne J. Date: May 30, 2024