According to Statistics Canada, 84% of Canadians aged 15 and over, or just under 24 million people, reported making at least one financial donation to a charitable or non-profit organization when the last survey on gift giving was conducted in 2010. With over $10 billion in yearly donations, it is unsurprising that there are those that seek to take advantage of Canadians’ spirit of giving. In a recent sentencing decision, R v Raza, 2016 BCSC 1030, the British Columbia Supreme Court sentenced two brothers, Fareed Raza and Saheem Raza, to over four (4) years for their roles in orchestrating a charitable donation scheme.
Continue Reading Court rules “culpability is not a finite” in charitable donation scheme
Courts give the green light for fraud-based class actions in Canadian insolvency proceedings
Both of Canada’s primary insolvency statutes, the Bankruptcy and Insolvency Act (“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”) provide for an automatic stay of all legal proceedings when an insolvent debtor files for or seeks insolvency protection. The purpose of the stay is to provide breathing space to a debtor attempting to restructure its business so as to avoid “death by a thousand cuts” and also to ensure similarly situated creditors are treated equally. While it is an integral part of Canada’s insolvency regime, the stay of proceedings is not inviolable and there have been a number of noteworthy cases where Canadian courts have considered whether to lift the statutory stay and permit proposed class actions to proceed where the plaintiff has alleged fraud.
Continue Reading Courts give the green light for fraud-based class actions in Canadian insolvency proceedings
2016 Baker & McKenzie Global Data Breach Notification Guide
Global data breach notification requirements pose critical issues for legal departments, senior managers, and boards of companies in all industry sectors worldwide. The current environment creates a perfect storm with more data security threats, more
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“Magic Lady” fails in Constitutional Challenge
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.
Continue Reading “Magic Lady” fails in Constitutional Challenge
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.
Continue Reading Court of Appeal upholds trial decision awarding HSBC judgments in fraud for over $10.3 million
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.
Continue Reading Bankrupt’s right to assert solicitor-client privilege is not absolute
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
Continue Reading Appeal by Ponzi-scheme participant meets with mixed success in R. v Fast-Carlson
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.
Continue Reading Ontario’s Highest Court affirms the concept of Investigative Receiverships, but with note of caution
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.
Continue Reading Disgorgement Remedy: Recent Developments in the Province of Ontario
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.
Continue Reading Guilty verdicts delivered in one of Canada’s largest ponzi schemes