On May 26, 2016, the British Columbia Provincial Court dismissed Rashida Samji’s request for a stay of criminal fraud charges in R v. Samji. The British Columbia Securities Commission had previously levied an Administrative Monetary Penalty (“AMP”) of $33 million against Samji, in relation to what the British Columbia Securities Commission found was a $100 million Ponzi scheme perpetrated by Samji between 2003 and January 2012. Samji had earned the nickname the “Magic Lady” for the large profits she claimed to generate for clients. Samji argued that the AMP was essentially a criminal penalty and the stigma that she has suffered as a result of media coverage amounted to criminal punishment. In light of the AMP, she argued that the Charter prevented double prosecution under both the Securities Act and Criminal Code.
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Court of Appeal upholds trial decision awarding HSBC judgments in fraud for over $10.3 million
In Turbo Logistics Canada Inc. v. HSBC Bank Canada, Baker & McKenzie’s litigation team was successful in upholding at the Ontario Court of Appeal, the trial decision awarding HSBC judgments in fraud for over $10.3 million dollars. At trial, Madam Justice Ruth Mesbur accepted the argument that “but for” the false statements made by the appellants, HSBC would never have made the loan and therefore the bank deserved damages equal to 100% of its loss on the loan. On appeal, the appellants argued that their rights under Canada’s Charter of Rights and Freedoms had been violated during the trial and that the trial should never have proceeded because an adjournment should have been granted.
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Bankrupt’s right to assert solicitor-client privilege is not absolute
In Wong v. Luu, the British Columbia Court of Appeal upheld an order requiring the production of a redacted trust ledger to the bankruptcy trustees for Luu Hung Viet Derrick (“Luu”) on the grounds that the trust ledger was not presumptively privileged and that production would not violate the bankrupt’s right to communicate in confidence with his lawyers.
In 2012, Luu had been adjudged bankrupt in Hong Kong and his bankruptcy trustees had been hunting for his assets when the trustees became aware of more than $3 million dollars paid into the trust account of Luu’s lawyers in British Columbia in 2013. This had not been disclosed by Luu. When the bankruptcy trustees sought information from Luu’s lawyers about the monies received, they refused to provide any information on grounds of legal privilege.
The trustees successfully sought an order from the British Columbia Supreme Court compelling Luu’s lawyers to produce accounting records of the amount of trust funds held for or at the direction of Luu, and records showing the receipt of any trust funds and any payments made from trust to Luu or anyone at Luu’s direction. Luu’s lawyers appealed the order requiring production of the trust ledger.
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Appeal by Ponzi-scheme participant meets with mixed success in R. v Fast-Carlson
Last year, we reported on the sentencing decision of Justice Danyliuk of the Saskatchewan Court of Queen’s Bench in R v Fast. In the lower court, the daughter of the main architect of the
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Ontario’s Highest Court affirms the concept of Investigative Receiverships, but with note of caution
In Akagi v. Synergy Group (2000) Inc. (“Akagi“), the Ontario Court of Appeal set aside a series of ex parte orders made by Toronto’s Commercial List Court granting broad investigative powers to a court-appointed receiver. The receiver had been empowered under section 101 of the Courts of Justice Act which gives the court powers to make such an order “where it appears to a judge of the court to be just or convenient to do so”. The Court of Appeal ruled in its decision released on May 22, 2015, that there are situations where it is appropriate to appoint a receiver to investigate the affairs of a debtor or to review certain transactions including even, in proper circumstances, the affairs of and transactions concerning related non-parties. However, the Court of Appeal ruled that the receivership in Akagi had morphed into an expansive investigation on behalf of non-parties which the Court found to be improper and misguided.
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Disgorgement Remedy: Recent Developments in the Province of Ontario
On May 5, 2014, Ontario’s Divisional Court dismissed the appeal of Otto Spork, Konstantinos Ekonomidis, and Natalie Spork from the decision of the Ontario Securities Commission (“OSC”) that they had breached Ontario’s securities law and engaged in conduct contrary to the public interest. Otto Spork, Konstantinos Ekonomidis, and Natalie Spork were ordered to disgorge $6.75 million, $325,000 and $165,000, respectively, out of a total $23 million that had been obtained from investors. Virtually all of the $23 million was lost.
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Guilty verdicts delivered in one of Canada’s largest ponzi schemes
In a previous post, we reported on a then-ongoing Calgary trial involving an alleged $300 million Ponzi scheme affecting as many as 2,000 people, many of them Canadian. The fraud represents one of the largest Ponzi schemes in Canadian history. The accused individuals had already been sanctioned by the U.S. Securities and Exchange Commission and the Alberta Securities Commission.
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Final Arguments nearing end in trial of one the largest alleged Ponzi schemes in Canadian history
A Calgary trial is nearing conclusion on criminal charges against Gary Allen Sorenson (“Sorenson”) and Milowe Brost (“Brost”) relating to an alleged $300 million Ponzi scheme that operated between 1999 to 2008 with money from thousands of investors across the United States and Canada. The alleged scheme was orchestrated utilizing the sale of promissory notes issued by Syndicated Gold Depository, Inc. (“SGD”), an entity formed in 1999 by Sorenson and Brost. The two men were arrested in 2009 for what police called “the largest Ponzi-type scheme” in Canadian history.
‘Magic Lady’ ordered to pay $43 million for running Ponzi scheme in British Columbia
A panel of the British Columbia Securities Commission has imposed an administrative penalty of $33 million against Rashida Samji for committing a $100 million fraud on at least 200 investors in its recent sanction decision. The scheme which the panel determined was a Ponzi scheme earned her the nickname the ‘magic lady’. The panel also ordered that Samji be permanently banned from participating in B.C.’s capital markets and ordered disgorgement of aproximately $10.8 million. This was the difference between the monies deposited by the investors pursuant to the fraud and the monies paid out to them.
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Imprisonment for Ponzi Schemes: How long is long enough?
Under section 380.1(1) and (1.1) of the Criminal Code, courts are required to consider the following non-exhaustive list of factors as being aggravating circumstances in the context of fraud:
- significant magnitude, complexity, duration or degree of planning of the fraud;
- an actual or potential adverse effect on the Canadian economy or financial system, or on investor confidence;
- large numbers of victims, particularly if the fraud had a significant impact due to the victims’ personal circumstances;
- failure to comply with applicable professional standards;
- concealment or destruction of documents related to the fraud; and
- whether the total value of fraud exceeds one million dollars.
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