Court File and Parties

Court File No.: CV-24-00727359-0000
Date: 2025-03-19
Court: Superior Court of Justice - Ontario

Plaintiffs:
Saeed Tabrizi, Afsar Javaheri, Mehdi Saidi-Yousefi, Afshin Nabifar, Solmaz Nikbakht, Nader Ramez, Sohail Tabrizi, Peyman Golizadeh, Abbas Khalili, Afsaneh Nabifar, Azadeh Nabifar, Elham Arya, Esfandiar Moubedi, Flor Akbari, Hassan Assadi, Hessam Majd, Hossein Saebi, Iman Nazaran, Kianoush Soudmand, Marian Rizk, Dr. Marian Rizk Dentistry Professional Corporation, Yousefi Nikbakht, Mehrdad Sinaei, Nader Rajabieh Shayan, Nader Valizadeh, Naghme Nemati, Nazila Fateh, Negin Aflatouni, Neiloufar Aminneia, Omid Nabifar, Pegah Sajadi, Maryam Nikbakht, Shahnaz Tabrizi, Simin Risman-Fourosh-Tabriz, Behzad Jahanbakhsh, Tradeia Holding Inc., Armita Karachi, Bobbak Almasi Zadeh, Habib Dini, Faranak Mohammadhkani, Saeid Nayeb Nazar, Nourbon Inc., and Nima Mahdavian

Defendants:
Vahid Farjami (a.k.a. Victor Farjami, a.k.a. Ahmad Vahid Farjami), Leila Naghavi Olyaei (a.k.a. Marjan Naghavi Olyaei), Travel Support Inc., Marvic Holding Inc., Trip Support Inc., Lendin Inc., T Support Inc., and Trip Investors Inc.

Before: Edward Akazaki

Counsel:

• For the Plaintiffs: David Milosevic, Annelise Do Rio, Craig Aitken, and Arad Moslehi
• For the Defendants: Howard Manis and Daniel Litsos

Heard: 2024-12-17 and 2025-02-28

Reasons for Decision

Overview

[1] Emotions run high in this standoff over the loss of millions lent to Trip Support, a failed “Book Now, Pay Later” (BNPL) business offering financing for airline ticket purchases. Three of the plaintiffs lent Trip Support Inc., operated by Vahid Farjami, capital for the venture and recruited numerous other lenders. The defendants do not dispute the loans, but they say the amount they owe is closer to $6 million than the $24 million the plaintiffs allege. The dust has settled in the aftermath of a Mareva injunction freezing the defendants’ assets and compelling disclosure of financial information. The plaintiffs moved for a contempt order for disobedience of the disclosure requirement of the injunction, and the defendants asked the court to set aside the original injunction because of inadequate disclosure to the court.

[2] Because so much money was “lost” – a word the plaintiffs equate with “stolen” – they allege Farjami engaged in a Ponzi scheme. A Ponzi scheme is an investment fraud in which perpetrators pay existing contributors out of funds received from newly recruits. In the 1920s, Charles Ponzi started an arbitrage business. He found the business became infinitely more profitable by dispensing with the need to buy legitimate commodities and started to collect money based on false promises of business profits. Many forms of the scheme abound, but it is intended to leave most participants wondering where their money went, with those occupying the pyramid apex having fled with the bulk of the contributions.

[3] The main protagonists in the piece are Mehdi Saidi-Yousefi and Vahid Farjami. They were neighbours operating businesses in a plaza. Mr. Saidi-Yousefi operated a dental office. Mr. Farjami owned a travel agency. In 2018, after gaining Mr. Saidi-Yousefi’s confidence, Mr. Farjami enticed him to invest in a BNPL business operated out of the travel agency. Travel customers would buy airline tickets without having to pay up front. The financing carried a 12% interest rate. The program was “risk-free,” in that defaulting customers would have their tickets cancelled, and the cancellation penalty would be covered by the customers’ deposits. Unlike Ponzi’s original business, Trip Support ostensibly leveraged the difference in interest charged to travelers and the interest paid to the plaintiff contributors. The record contained evidence of travel customers stranded by the Mareva, but it remains to be seen whether there was a legitimate and active pool of real purchasers.

[4] By the end of 2023, Mr. Saidi-Yousefi had paid into the Trip Support business as much as $1.5 million. Between 2018 and 2023, Saeed Tabrizi and Afshin Nabifar joined Mr. Saidi-Yousefi to form a trio of main investors. One or more of them recruited other investors and received “commissions” from Trip Support. The characterization of payments as commissions is disputed.

[5] The house came crashing down, when Mr. Farjami met with Mr. Saidi-Yousefi in August 2024 and told him, as retold by the latter, that the funds had all been “lost.” According to Mr. Farjami, Mr. Saidi-Yousefi became violent and threatened him with a kitchen knife. Mr. Saidi-Yousefi also allegedly demanded and received a Rolex watch from Mr. Farjami. There were several meetings of this nature that month, including some that were recorded and translated. In one of them, Mr. Saidi-Yousefi confronted Mr. Farjami about property the latter had bought. Mr. Farjami explained the property by stating that once the Trip Support business appeared to be tanking, he tried to recoup the funds by buying and flipping properties. Mr. Farjami and his wife made unexplained purchases of luxury goods during the period when the business was supposed to have been failing. The ex parte motion materials portrayed the real property acquisitions as attempts to steal the funds earmarked for the Trip Support business and the personal property as exportable to other countries.

[6] Whatever really transpired at those meetings, the three principal plaintiffs organized the investor group and started this lawsuit in September 2024. In a motion without notice for a Mareva injunction and Norwich order before Leiper J. on September 12, 2024, the plaintiffs described, and the court found, that the Trip Support business appeared to be a fraudulent scheme involving falsified documents, confidence-building, and recruitment of investors in return for risk-free gains.

[7] A Mareva injunction is intended to freeze the defendants’ assets to prevent dissipation. It is an extraordinary remedy. A Norwich order is a form of pre-action discovery from non-parties. In cases such as this one, plaintiffs typically seek such an order at the beginning of an action to obtain information to trace defalcations.

[8] Leiper J. granted the orders, subject to the requirement that the plaintiffs notify the defendants and bring the matter back to court once the asset freeze is in place. On September 23, 2024, the return motion came before me for extension. Following my extension of the original order, on consent, I heard representations by counsel for three issues arising from it. First, the defendants sought release of funds to pay for necessaries and for legal expenses. Second, the plaintiffs sought an order finding the defendants in contempt of court, for having failed to disclose certain assets pursuant to the disclosure portion of the order. Third, the defendants sought an order setting aside the Mareva order as having been obtained without full disclosure to Leiper J. in the without-notice hearing.

[9] I have already dealt with the release of funds to the defendants. What was left to determine were the plaintiffs’ motion for contempt and the defendants’ motion for setting aside the Mareva. At the hearing of the setting-aside motion, the defendants submitted that their motion included a request for the removal of certificates of pending litigation. I ruled that I could not entertain the request, because the defendants had not disclosed this relief in the notice of motion. I made that ruling, without prejudice to the issue being raised later, on a proper notice of motion.

[10] The motions before me here, therefore, are for (1) contempt against the defendants Farjami and Olyaei and (2) to set aside the Mareva. It is open for me to decide the motions independently. I can grant both, dismiss both, or grant one and dismiss the other.

[11] While it may seem illogical to hold a person in contempt for breaching an order that ought not have been made, the proper approach is an ex ante one – to examine the conduct of a party from the vantage of the order still being in force. A person who disobeys an injunction can be held in contempt of court, even if the order is then set aside. As McLachlin J. (as she then was) stated, “the ultimate invalidity of the order is no defence to the contempt citation”: Canada (Human Rights Commission) v. Taylor, [1990] 3 SCR 892. Also see Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 SCR 626, para 51, and Bell Media Inc. v. Marshall Macciacchera, 2024 FC 1292, para 75. The policy behind this approach is simple. The rule of law requires court orders to be respected. Allowing parties to ignore or disobey them in the hope of setting them aside later, either on a review such as this or on appeal, would result in anarchy. Civil society depends on compliance with court orders until they are properly stayed or set aside on judicial review or appeal.

[12] The record was clear, and their counsel admitted, that the defendants Vahid Farjami and Leila Olyaei, spouses, admitted their breaches of the disclosure requirements of the Mareva by omitting their ownership of properties in Spain. Moreover, they categorically denied ownership of assets outside Ontario, during their examinations under oath. There were other omissions of personal property acquisitions, but the failure to disclose the Spanish properties was clearly in breach of the order. I therefore find them in contempt, and the only question is the sentence, to be determined after a further hearing.

[13] The plaintiffs, too, made omissions in their disclosures. There was nothing quite as dramatic as the defendants’ amnesia about properties in Spain. It is also hard to tell exactly what impact the omitted in information would have had on the plaintiffs’ case that the defendants were operating a fraudulent scheme and that there was a risk of flight of capital. However, the undisclosed involvement of the three main plaintiffs and the repayment of some of the loans gave reason to consider whether Trip Support was simply a misconceived and ill-fated business. The breach of the duty of full and frank disclosure was significant enough for the court to protect the integrity of its process by setting the Mareva order aside.

[14] I will now turn to the detailed resolution of the two motions.

(1) Contempt Motion

[15] The Superior Court’s power to punish a person for contempt of court is a remnant of the common-law criminal power that survives the statutory codification of Canadian criminal law. The Criminal Code, RSC 1985, c C-46, s. 9, preserved that jurisdiction. There are two types of contempt of court, distinguished between criminal and civil contempt. The criminal form entails sanctions for disruption of court proceedings. In contrast, civil contempt is a method of enforcing court orders in disputes. See B.C.G.E.U. v. British Columbia (Attorney General), [1988] 2 SCR 214, para 33. Unlike criminal contempt, civil contempt entails intervention of the court to assist litigants’ enforcement of court orders. It has been called “a private wrong”: R. v. Clement, paras 42-43.

[16] In Carey v. Laiken, 2015 SCC 17, paras 32-35, the Supreme Court set out the three elements of civil contempt the moving party must prove beyond a reasonable doubt. The first is that the order must be clear and unequivocal. The second is the alleged contemnor’s actual knowledge of the order. Finally, there must be intentional disobedience.

[17] Counsel for the defendants conceded that Mr. Farjami and Ms. Olyaei had clearly breached the disclosure portion of the Mareva injunction by their failure to disclose property in Spain. The order required the defendants to provide a sworn statement “describing the nature, value, and location of their assets worldwide, whether in their own name or not and whether solely or jointly owned.”

[18] The plaintiff cited multiple infractions, including circumstantial evidence related to the purchase of luxury items. I agree with counsel for the defendants that there was some ambiguity in the evidence whether the order covered these items and whether the items remained in their possession. I remain unimpressed by the casual obfuscation contained in the responses Mr. Farjami and Ms. Olyaei gave under oath, but the proof falls short of proving disobedience of the order beyond a reasonable doubt.

[19] There can be no reasonable doubt, however, about the failure to disclose the Spanish property. During their examinations under oath, they both denied ownership of “any assets outside of Ontario” (Mr. Farjami) and “any property in Spain” (Ms. Olyaei). The plaintiffs’ lawyers obtained Spanish title abstracts proving the contrary. The excuse of forgetfulness during the tumult of a Mareva freezing order might animate the court’s discretion against a finding of contempt. However, both parties denied under oath facts their counsel later conceded in open court. The only submission counsel could offer in mitigation was that the plaintiffs contended there were two properties in Spain, whereas the evidence proved only that there were two wire transfers totalling about $1 million for the acquisition of a single property. Ambiguity in the face of a clear court order is playing with fire. There was a positive obligation to disclose the property. Both the intentional denial and the attempt at excuse demonstrated intent to disobey the disclosure order.

[20] Based on the evidence and the concession by their counsel acting as their agent, I find the evidence establishes beyond a reasonable doubt that the order for disclosure was clear and unequivocal, Mr. Farjami and Ms. Olyaei knew of it, and they intended to hide the property from the inquiry of plaintiffs’ counsel. Their acknowledgment of ownership of the Spanish property after the plaintiffs discovered cannot be equated with compliance with the disclosure order. Civil justice is not a game of cat and mouse. I therefore find them in contempt of court. Their sentence will be determined at a later hearing.

(2) Sufficiency of Disclosure Before Leiper J.

[21] Ironically, the cross-motion by the defendants also turns on similar principles of disclosure. The obligation of parties appearing on urgent ex parte hearings to make full and frank disclosure is codified in subrule 39.01(6). The breach of the rule is a sufficient ground for setting the original order aside. Jurisprudence has grown around this general duty to include disclosure of the arguments that could be raised by the absent party. The order can be set aside, even if the undisclosed evidence or arguments would not have led to a different outcome. Even selective exclusion of information can be fatal. See: Shaw Communications Inc. v. Young et al., 2021 ONSC 7918, para 17, Elsley v. Bordynuik, 2013 ONSC 1210, paras 56-58, O2 Electronics Inc. v. Sualim, 2014 ONSC 5050, paras 71-74.

[22] The overarching policy rationale for lifting an order whose grounds could remain valid is the integrity of the court’s process. The court makes orders on motions without notice to prevent injustice in urgent situations. In the case of Mareva injunctions, parties seek them to prevent the flight of capital that could occur if defendants receive formal notice and could be tempted to put assets beyond reach. It is an exception to the basic rule of common law justice that the other side be permitted an opportunity to be heard.

[23] The plaintiffs, who expressed strong convictions of their belief in the defendants’ fraudulent conduct, filed evidence before Leiper J. of a risk-free investment scheme for financing airline bookings. Based on this evidence, the judge concluded that the defendants set up companies to purchase various properties instead using the funds to finance travel bookings. She also considered evidence of falsified tickets and invoices and a vanishing “TSWallet” online account platform. The defendant Farjami, she observed, had admitted to the three principal plaintiffs that “the funds had all been lost.”

[24] The evidence for ex parte motions for Mareva injunctions is often one-sided, because victims of fraud have been kept in the dark about the use of their funds or other property until the moment of discovery. In such instances, the failure to provide a more complete picture might not be fatal to the continuation of an injunction, if the missing information simply consists of additional details of the fraud or other intentional tort: Maxol Wealth Investments Inc. v. Arash Missaghi, et al., 2024 ONSC 3179, para 29. The court must therefore assess whether the omitted information or arguments could have detracted from the strength of the ex parte motion.

[25] Mareva injunctions are exceptions to the general rule that the court will not attach the assets of a defendant until judgment. Because the purpose is to prevent dissipation or judgment-proofing, the moving party must prove a strong case but need not establish fraud or theft: Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology, para 16. The moving party’s incentive to demonstrate a case in fraud or theft arises from the urgency of persuading a judge to freeze the defendant’s assets. The calculus is simple. The court will not attach defendants’ property unless there is a significant risk of depleting assets or placing them beyond reach. The requirement of proof of risk of capital dissipation makes a Mareva order more likely in fraud cases, as opposed to other civil causes of action.

[26] A pitfall of parties moving for injunctive relief without notice is that their perspective can be narrowed by their fury over the loss caused by someone else. It could also appear more certain to provoke the court’s concern about capital flight or other forms of judgment-proofing, if the moving party can characterize the defendant as a fraudster or thief. Story details that could detract from the urgency to freeze assets could seem unimportant or inconvenient to the goal of obtaining the injunction. Parties moving for injunctions without notice must resist such urges and present a record that is as balanced and as complete as possible.

[27] In this case, the plaintiffs portrayed the defendants as having taken their money under false pretences and tried to hide their theft by pretending to have suffered business losses. The image of vanishing money tied into the anti-dissipation purpose of the Mareva. In the ensuing series of motions, the plaintiffs acknowledged significant omissions in their original affidavits. The main omissions were:

1. the extent to which the three principal plaintiffs recruited other investors, including the earning of commissions, over the course of several years
2. partial repayments to some plaintiffs exceeding $3 million – returns to be expected from a legitimate consumer financing enterprise
3. the source of the plaintiffs’ information that the outstanding balance owed was $24 million was not the plaintiffs
4. the defendant Farjami’s statements, during his admission of the financial losses, that he invested the money in real estate projects to recoup the losses for the plaintiffs
5. the coerced hand-over of a Rolex watch owned by Mr. Farjami to Mr. Saidi-Yousefi
6. disparity in knowledge between the main plaintiffs and the secondary ones, despite the mounting of a common front in the numerous affidavits adopting holus-bolus the main affidavits

[28] The defendants also allege Mr. Saidi-Yousefi pulled a kitchen knife on Mr. Farjami during one of the altercations. Mr. Saidi-Yousefi denies this occurred. I am unable to rely on allegations that are too reliant on competing verbal evidence. Parties should not be able to summon new facts that cannot be readily proven, for the purpose of demonstrating non-disclosure by the other side. The full transcripts of the recorded meetings, however, do depict Mr. Saidi-Yousefi as the dominant interlocutor and Mr. Farjami as the more submissive.

[29] The plaintiffs maintain that the admitted omissions can also be consistent with the typical features of a Ponzi scheme. I agree. The fact that some plaintiffs received returns from the Trip Support organization and other have been left out of the flow of funds is consistent with a crude form of pyramid fraud in which participants closer to the apex make money by recruiting contributors at the base. Unfortunately, confirmation bias is strong from the perspective of those who have suffered loss. Many legitimate businesses operate in a pyramid formation. Many for-profit enterprises employ arbitrage. Here, the profit was represented to be in the differential between interest revenues collected from ticket purchasers and the interest cost of remittances to the plaintiffs. Creating wealth by collecting value from new entrants is not inherently unlawful. It is the infusion of falsehood, namely the misrepresentation of the existence of a real investment or business, that renders Ponzi schemes and other types of group frauds unlawful.

[30] The pertinent difference here in the characterization of the relations between the plaintiffs and the defendants is how the money was lost. Since the plaintiffs provided loans, including those secured by promissory notes, one basic issue is whether the claim is proprietary or debt enforcement. If the defendants lost much of the money contributed by the plaintiffs because Trip Support was a failed and misconceived business, the defendants remain liable on the debts. In contrast, capital investment in a failed business causes investor equity to vanish. The difference in the basis of legal liability matters to the Mareva because money lost in a failed business is different from the preventing a defendant from putting assets beyond execution. Money vanishing in a failed business cannot be dissipated because it is no longer in the hands of the recipient. Stolen money can be traced and must be frozen to prevent the defendants from placing it beyond reach. This difference lies at the heart of the rationale for an order freezing assets.

[31] In the motion before Leiper J., the plaintiffs asserted contributions or loans exceeding $24 million. The figure of $25 million appeared in the opening paragraph of her decision, signifying the importance of the amount to her ruling. The defendants now disclosed that the amount owed is closer to $6 million. The plaintiffs’ responded by saying the source of the $24 million figure was an online portal from TS wallet. This source evidence is different from the plaintiffs’ knowledge. They should know how much each lent Trip Support. In responding to the defendants’ assertion of $6 million, they could have produced documentation showing how much they funded Trip Support and how much they received back. In paragraph 49 of Mr. Saidi-Yousefi’s affidavit, he stated that he relied on the portal information even though the plaintiffs could have compiled transaction records for each plaintiff. He said there was no intention to conceal information. Yet the plaintiffs have still not provided their detailed accounting of losses. The non-disclosure of the information held by each and every plaintiff is a material omission.

[32] The evidentiary gap in the amount the plaintiffs lost in the enterprise denoted a lack of clarity whether the defendants were engaged in a failed business or a fraudulent scheme. At the very least, the details of what each plaintiff lent Trip Support – coming from their knowledge and documentation – would have been important for any judge reviewing the motion materials. The judge may still have found a strong case against the defendants. However, if the amount of the liability was $6 million or some figure much less than $24 million, the judge could have considered the certificates of pending litigation on the properties listed in paragraph 4 of her decision adequate to prevent dissipation, instead of ordering a blanket worldwide freezing of assets. In other words, if a CPL was enough, the judge had the discretion not to grant the Mareva injunction. This logic is a compelling reason to find the non-disclosure could have influenced the outcome of Leiper J.’s decision.

[33] In further responses to the motion to set aside the ex parte order, the secondary plaintiffs have filed a set of pro forma affidavits saying they were unaware of the prior dealings of “Yousefi, Tabrizi, and/or Nabifar” and asked the court not to allow that non-disclosure to prejudice their right to maintain the injunction. I have sympathy for their position. However, they all deposed affidavits adopting the evidence of the three main plaintiffs and asked the court to rely on a common front to paint a pattern of victimization. They incurred the jeopardy to the continuation of the order if it later came out that the three had left significant gaps in the evidence. This is not a class proceeding brought by representative plaintiffs. Every plaintiff has a separate claim and had an obligation to provide evidence of their knowledge and evidence of what they did not know.

[34] This approach to affidavit evidence may not be as egregious as the defendants’ lies under oath about the Spanish assets. However, if there are to be serious consequences to Mr. Farjami and Ms. Olyaei for their informal relationship with the truth in judicial proceedings, it is only fair that the plaintiffs’ evidence be held to similar scrutiny. Affidavits restating others’ evidence occupies a fine line between admissible evidence and inadmissible hearsay. Each affiant’s failure to provide his or her own individual evidence of loss – in the interest of expedience – risks offending the full disclosure rule. It would have been preferable for each of the secondary affiants to state precisely their individual transactions with the defendants.

[35] The evidence, including the plaintiffs’ admissions of selected disclosure, established on a balance of probabilities that the plaintiffs breached the duty of full and frank disclosure under subrule 39.01(6). The consequence of this breach is that the Mareva injunction portion of the orders of Leiper J. shall be vacated.

Costs and Sentencing Hearing

[36] Having regard to the results in the two motions, I encourage the parties to agree upon an appropriate disposition. If they are unable to resolve the costs, counsel are invited to contact my judicial assistant to establish a schedule for exchange of submissions and costs outlines.

[37] Counsel for the plaintiffs shall canvass dates with defence counsel and with my judicial assistant for the scheduling of an in-person hearing of the sentencing of the contempt findings. Mr. Farjami and Ms. Olyaei shall be required to be in attendance.

[38] Finally, I direct counsel to prepare draft orders reflecting the above dispositions for my review and signature.

Edward Akazaki
Date: March 19, 2025