705
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LABYRINTH PARTNERS LTD. and ATHENA ADVISORY LTD., Applicants
AND:
IBERBANCO LTD., CARL KUUR, JIBRIL GALADIMA HAMIDU, SEKER IBU, SEKERBANK IBU, SEKER BANK, and SEKER INTERNATIONAL,
Respondents
BEFORE: Parghi J.
COUNSEL: Caroline Abela and Hashim Sohail, for the Applicants
David A. Brooker and Daria Krysik, for the Respondents Iberbanco Ltd., Carl Kuur, and Jibril Galadima Hamidu
No one appearing for the Respondent Seker IBU also operating as Sekerbank IBU, Seker Bank, and Seker International
HEARD: January 28, 2026
ENDORSEMENT
1Labyrinth Partners Ltd. and Athena Advisory Ltd. bring an application seeking the following:
a. an order for various relief against Seker IBU, also falsely operating as Sekerbank IBU, Seker Bank, and Seker International (“Seker”), including an order that Seker pay to the applicants USD $1,122,833.28, representing funds that the applicants say Seker fraudulently misappropriated from them;
b. an order requiring Iberbanco Ltd. (“Iberbanco”) to disclose various documents and information to the applicants;
c. an order requiring Iberbanco to pay to the applicants the following amounts:
i. USD $32,498 in bank fees charged by Iberbanco to the applicants;
ii. USD $35,951.97, which is the amount held in Seker’s account at Iberbanco, which Iberbanco claims to hold to the credit of Seker and to which Iberbanco claims no entitlement; and
iii. USD $371,850.83, which is the amount left of the funds in the Seker account held by JNFX (a non-party in the United Kingdom), and to which Iberbanco claims an entitlement.
2In the alternative to the relief sought in subparagraph (1)(c)(iii), the applicants seek an order that Iberbanco pay or cause to be paid USD $371,850.83 into court.
3For the reasons below, I grant the relief sought against Seker in paragraph (1)(a), the disclosure order against Iberbanco sought in paragraph (1)(b), and the payment orders against Iberbanco described in paragraphs (1)(c)(i), (1)(c)(ii), and (2). In my view, given Iberbanco’s claim to some portion of the USD $371,850.83, and recognizing the early stage of these proceedings, it is appropriate that that sum be paid into court pending a resolution on the merits.
Background and procedural history
4Based on the record, I am satisfied that the applicants fell victim to a fraudulent scheme whereby their funds were diverted through Iberbanco, a registered Canadian money service business, to a pretender “bank,” Seker. The applicants sought to open bank accounts with Seker. In turn, Seker provided them with fraudulent account details. The account details were not for the applicants’ new accounts with Seker, but rather for Seker’s existing account with Iberbanco. The applicants’ clients, in reliance on the fraudulent account details, transferred funds intended for the applicants into the Seker account.
5Based on the materials before me, after the fraud described above occurred, the following took place:
a. On October 22, 2025, Iberbanco was put on notice of the applicants’ concerns about potential fraud on. Iberbanco acknowledged the concerns.
b. On October 29, 2025, the applicants contacted Iberbanco to retrieve the funds. Iberbanco said it was investigating the concerns of potential fraud. It requested various information, which the applicants provided.
c. On or after October 31, 2025, Iberbanco allowed Seker to withdraw at least
€349,995.96 from its account at Iberbanco. This is so despite having been put on notice of the potential fraud at least nine days earlier.
d. From then until November 19, 2025, Iberbanco told the applicants and their counsel that it was investigating the issues. Iberbanco is unable to provide a specific date on which it started this investigation.
e. Iberbanco permitted Seker to convert and transfer much of the remaining money to cryptocurrency platforms. During this time frame, Iberbanco represented that the funds were frozen. It also charged banking fees to the applicants.
6On November 24, 2025, the applicants commenced these proceedings, after which Iberbanco, unbeknownst to the applicants, began attempting to recover some of the money at issue in the United Kingdom, taking the position that it is owed that money by Seker.
7On November 26, 2025, two days after this application was commenced, a case conference was held before Papageorgiou J. to consider the applicants’ urgent request for an interim disclosure order. At the case conference, Iberbanco’s compliance officer, a non-lawyer, said that Iberbanco needed time to complete its investigation. She advised that approximately USD $1.15 million remained in Seker’s account at Iberbanco and that Iberbanco made no claim over those funds. (In fact, Iberbanco had already begun attempting to recover some of the funds held in the United Kingdom, as noted above.) The applicants understood that the funds were frozen. (In fact, unbeknownst to them, various funds had been able to leave the Seker account, as discussed below.)
8Papageorgiou J. granted the disclosure order and imposed a December 12, 2025 deadline for the disclosure. She also granted a Mareva order in respect of the funds at issue.
9On December 12, 2025, a further case conference was held, at which Iberbanco, now represented by counsel, sought additional time to review the materials that had been discovered in its investigation prior to disclosing the ordered information.
10Dow J. granted an extension of the order to January 8, 2026 and scheduled a case conference for that date.
11On January 8, 2026, a case conference was held before Chalmers J. Iberbanco had not yet provided disclosure. At the case conference, Iberbanco asked that Papageorgiou J.’s disclosure order be set aside because it was made at a case conference without the benefit of a full record. Iberbanco stated that its investigation was complete and the disclosure could be produced immediately, but that it was concerned about complying with its obligations as a financial institution if it had to produce the materials. It also incorrectly stated, as it had before Papageorgiou J., that it asserted no interest in the funds.
12Chalmers J. declined to set aside the disclosure order, instead requiring that the disclosure be provided “forthwith”. He held that there was no prejudice to Iberbanco from complying with the order and that Iberbanco could not be “criticized for complying with a court order.”
13Iberbanco now states the following:
a. That USD $371,850.83 remain in the Seker account held by JNFX; these funds are frozen, and Iberbanco is owed some portion of them because it advanced its own funds to complete Seker’s outgoing cryptocurrency transactions;
b. That various funds are frozen in the Iberbanco pooled account at JNFX (€248,279,
USD $13,709.30, and GBP £3,403.66); and
c. That USD $35,951.97 remain in Seker’s account at Iberbanco, and Iberbanco holds these funds to the credit of Seker and claims no entitlement to them.
14Seker, for its part, has been largely incommunicado: it filed no notice of appearance, attended no case conferences or cross-examinations, and did not communicate with the applicants after October 30, 2025.
15Against this backdrop, I now consider the applicants’ various requests for relief.
The relief sought from Seker
16I am satisfied based on the record before me that the applicants have made out the test for civil fraud as against Seker (Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, at para. 21), with the result that they are entitled to the relief they seek from Seker.
17I am persuaded that Seker posed as a legitimate Turkish bank of the same name so that it could fraudulently divert funds intended to be paid to the applicants by the applicants’ own clients. Seker did this by providing the applicants with electronic banking information that purported to be for bank accounts that the applicants had newly opened at Seker, but in fact pertained to accounts held by Seker at Iberbanco. When the applicants identified the fraud and tried to withdraw the money from the accounts, Seker resisted their efforts. The details of the various interactions between Seker and the applicants, set forth in the applicants’ affidavit materials, are uncontested before me and I will not repeat them here.
18The first element of the test for civil fraud is a false representation made by the alleged fraudster. The record is clear that Seker falsely represented to the applicants that it was a legitimate bank and that the banking information it provided to the applicants pertained to the applicants’ bank accounts at Seker. No such bank accounts actually existed. The banking information was fraudulent and directed the funds not to an account held by the applicants, but into accounts controlled by Seker and Iberbanco.
19The second element of civil fraud is that the alleged fraudster knew or was reckless as to the falsity of the representation. I am satisfied based on the record before me that Seker knew its representations were false. It was not a licensed bank. It had no legal authority to hold customer deposits. It held itself out as a proper bank – one with the same name as an actual, licensed bank – and as having authority to hold the applicants’ deposits.
20The third element is that the false representation caused the applicants to act. It is clear from the record that the applicants relied on Seker’s representations to instruct their clients to transmit funds to the accounts in question.
21The fourth element is that there have been a resulting loss. The record indicates that the applicants suffered a loss of USD $1,122,833.27 as a direct result of their reliance on Seker’s false representations.
22I am accordingly satisfied that Seker engaged in civil fraud.
23The relief sought against Seker is granted. This includes an order that Seker pay the applicants USD $1,122,833.28 and any interest accrued thereon; that Seker direct and cause to be paid to the applicants that amount including from any remaining balance or amounts from the funds, standing to the credit of any account, virtual account, internal ledger, or
cryptocurrency wallet held at JNFX, any cryptocurrency platform, and any Iberbanco crypto account; and that Seker not dissipate any such assets directly or indirectly. The order shall go in the form provided by counsel, with the addition that Seker is to pay the applicants $5000 in costs.
The relief sought from Iberbanco Order for payment of funds
24The applicants are entitled to a return of the USD $32,498 in bank fees that Iberbanco charged to them. These fees were charged over a period of ten months, during a period in which Iberbanco was allowing Seker to convert and transfer the applicants’ funds out of Seker’s Iberbanco account and into cryptocurrency platforms, and during which time Iberbanco represented that the funds were frozen. I order Iberbanco to pay this amount to the applicants, together with any interest accrued thereon.
25The applicants are entitled to a return of the USD $35,951.97 of their own funds that Iberbanco is holding in the Seker account to the credit of Seker. Iberbanco does not dispute that it holds these funds. I order Iberbanco to pay this amount to the applicants, together with any interest accrued thereon.
26I next turn to consider the applicants’ request for an order requiring Iberbanco to pay USD
$371,850.83, representing what remains in the Seker account at JNFX.
27Both the applicants and Iberbanco claim an entitlement to these funds. The applicants say the money belongs to them. Iberbanco claims an entitlement to some of these funds on the basis that it advanced some of its own money to carry out Seker’s outgoing cryptocurrency transactions.
28In my view, given this issue, and in light of the current stage of the proceedings, it would not be appropriate to order Iberbanco to pay these funds directly to the applicants at this time. A more appropriate remedy would be to safeguard the funds by having them held in court, pending resolution of this issue on its merits, pursuant to rule 45.02 of the Rules of Civil Procedure, R.R.O 1990, Reg. 194, which provides that “where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just.”
29Under this rule, I may order a specific fund to be paid into court before trial where a right is claimed to a specific, identifiable fund; there is a serious issue to be tried regarding a party’s claim to that fund; and the balance of convenience favours granting the relief sought (Sadie Moranis Realty Corp. v. 1667038 Ontario Inc., 2012 ONCA 475, at para. 18, citing News Canada Marketing Inc. v. TD Evergreen, [2000] O.J. No. 3705, at para. 14).
30These requirements are met here.
31First, the applicants make a proprietary claim to specific identifiable funds consisting of the monies traceable to the Seker account or the Iberbanco pooled account and any other monies subject to reconciliation in those accounts. The applicants have identified the
quantum of funds held in the Seker account at JNFX (USD $371,850.83). They have identified the funds they have in the Iberbanco pooled account at JNFX(€248,279.70; USD
$13,709.30; GBP £3,403.66).
32Second, there is a serious issue to be tried regarding their entitlement to those monies. In my view, there is a strong prima facie case that the funds originated from the applicants’ clients, were intended to be paid to the applicants for their professional services rendered, and were transmitted into the Seker account instead. This diversion of the funds occurred through the use of banking information that Seker falsely presented to the applicants as the applicants’ own. Iberbanco was an intermediary payment processor; it gave no consideration for the funds and represented to Papageorgiou J. and Chalmers J. that it advanced no proprietary claim in these funds.
33Finally, the balance of convenience favours granting the orders for payment. Paying the funds into court would preserve them pending adjudication on the merits and would protect against their further dissipation.
34The applicants are accordingly entitled to have paid into court the USD $371,850.83 held in the Seker account at JNFX. I order Iberbanco to pay these funds into court or cause them to be paid into court, together with any interest accrued thereon.
35The applicants are also entitled to have paid into court any further funds that Iberbanco says are subject to reconciliation, adjustment, or operational delay in any account, sub-account, pooled account, or ledger relating to the applicants’ funds of USD $1,122,833.28, which amount I have ordered Seker to pay to the applicants.
36This order shall go in the form proposed by applicants’ counsel.
Disclosure order
37Iberbanco insists it has complied with Papageorgiou J.’s order for production. This claim stretches credulity. Various documents ordered to be produced by Papageorgiou J. have not been produced. I will not recite the list here; it is contained in appendices B and C to the applicants’ proposed form of order against Iberbanco.
38In respect of the documentary evidence provided by Iberbanco to date, I note the following:
a. The documents that purport to be account statements do not look like typical account statements. They do not appear to be system-generated statements; they are Excel spreadsheets with no source data and with commentary and “work product” inserted by Iberbanco.
b. Many source documents do not appear to have been produced at all, including in relation to the JNFX pooled account and the Seker JFX sub-account. Documents regarding the outgoing cryptocurrency transfers – which transfers Iberbanco relies on to say that the funds are owed to it – are nowhere to be found.
c. Some of the documents have the JNFX logo cut and pasted onto them.
d. Iberbanco’s own records show that after it received notice of the potential fraud on October 22, 2025, it transferred at least USD $122,860.59 of funds from the applicants to Seker. On or after October 31, 2025, it allowed Seker to withdraw at least €349,995.96 from its account. Yet Iberbanco has not produced statements after October 31, 2025.
e. Iberbanco provides no documents to support its claim that it froze the Seker account.
f. It provides no documents that would suggest it asked the cryptocurrency platforms receiving the converted funds to return or freeze the funds.
g. It has produced only one email (which lacks a time stamp) regarding its communications with JNFX.
39Pressed by me to clarify the status of documentary disclosure, Iberbanco’s counsel makes three submissions, none of which assist him.
40First, he states, Iberbanco has produced what it can. That claim is difficult to accept given the state of the documentary disclosure, and in any event it is not supported by evidence.
41Second, counsel says, Iberbanco will continue to produce more as matters unfold and in response to its answers to undertakings. To the extent that the undertakings call for the same information ordered to be produced by Papageorgiou J. over two months ago, that fact is of no assistance. Iberbanco was ordered to have produced various documents by Papageorgiou J. and it has failed to do. The clock does not start running anew by virtue of the undertakings.
42It bears repeating that an order of this court is not a recommendation. It is legally binding obligation. I am concerned that Iberbanco does not appreciate the seriousness of the order or of its own continued, and unexplained, failure to comply with it.
43Finally, Iberbanco takes the position that it is prohibited by law from disclosing some of the information it has been ordered to disclose. As noted above, it raised this argument before Chalmers J. at the January 8, 2026 case conference, and Chalmers J. rejected it. Not until it delivered its factum in this proceeding, the day before the hearing, did Iberbanco particularize its position, by asserting that disclosing the Suspicious Transaction Report that it prepared and submitted to FINTRAC in respect of these transactions, or disclosing any “STR-related information,” would violate its obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17.
44Iberbanco’s position is wrong at law, and, regrettably, would appear to be an effort to obfuscate.
45The Act contains no prohibition on disclosure like the one loosely invoked by Iberbanco. Section 55(1) of the Act, to which Iberbanco’s factum likely intends to refer, imposes a general prohibition on information disclosure by FINTRAC itself, but not by reporting entities like Iberbanco. Section 8 of the Act, which does impose a (narrower) prohibition
on disclosure by reporting entities, applies only where a reporting entity discloses a Suspicious Transaction Report or its contents “with the intent to prejudice a criminal investigation”. In response to my questions, counsel for Iberbanco eventually conceded that section 55(1) does not apply to Iberbanco, and that section 8 would apply only if Iberbanco intended for the disclosure to prejudice a criminal investigation, which is not the case here. Pressed on this point, he could only suggest that the court ought to nonetheless “exercise an abundance of caution” in the face of the Act’s provisions.
46The Act does not establish any legal prohibition on the disclosure by Iberbanco of the information it has been ordered to disclose. Even if it did, it is difficult to imagine that any such statutory bar would automatically prevail over a court order. Iberbanco’s argument is without merit and I reject it entirely.
47Nor has Iberbanco made informed witnesses available to the applicants. Iberbanco’s director and controlling shareholder did not attend discovery. The witness Iberbanco did produce joined Iberbanco on December 10, 2025, after the events at issue took place. The witness had no direct knowledge of the events at issue and very limited knowledge about Iberbanco generally. The witness was unable to answer basic questions and largely offered hearsay evidence. Iberbanco’s compliance officer, who attended a case conference and made representations to Papageorgiou J., provided no evidence.
48In the result, the evidence Iberbanco has produced so far does not allow for a clear understanding of what has happened with the applicants’ funds. This is surprising: typically a financial services provider that has become ensnared in an alleged fraudster’s misdeeds seeks to cooperate with the fraud victim’s requests for information and to help them to “follow the money”.
49On top of it all, Iberbanco advances the suggestion, as surprising as it is spurious, that the applicants are themselves involved in the fraud. This claim, too, smacks of obfuscation.
50The applicants are entitled to disclosure from Iberbanco. Disclosure was ordered by Papageorgiou J. on November 26, 2025, on notice to Iberbanco. Disclosure has not been provided in accordance with the terms of the order. It is as simple as that. Because I am merely reiterating that Iberbanco has to comply with a pre-existing order, I need not revisit the merits of the disclosure issue in full. I simply note that the disclosure sought (and previously ordered) is relevant to the issues, and will assist the court in getting to the truth, because it will help the applicants follow the flow of money, trace the funds, understand the extent to which and to whom they have been dissipated, and recover them. It will clarify the parties involved in the alleged fraudulent scheme and will shed light on the details and mechanics of the scheme.
51This order shall go in the form proposed by applicants’ counsel.
Costs
52The applicants and Iberbanco are instructed to work together to attempt to resolve costs. If they are unable to resolve costs within 30 days, they may advise my judicial assistant and I will set a timetable for exchange of costs submissions.
Judge
Date: February 4, 2026