MTCC #710 wins judgment

Citation:           MTCC No. 710 v. Khan
Court File No:  CV-12-9586-00CL
Date:                 29 September 2012

On 29 September 2012, in Superior Court, Justice Brown found that the evidence overwhelmingly established that Khan orchestrated a massive fraud against MTCC #710 (a condominium apartment building at 236 Albion Road) by using Channel and other related companies to invoice MTCC #710 for work which was never performed.

MTCC #710 was awarded a total of $1,332,943.78 in damages and $105,876.19 in costs. Manzoor Khan and his half-a-dozen companies did not defend the action.

Will the plaintiff collect?
How much will the plaintiff collect on their $105,876.19 investment?

Nothing.

I am sure Manzoor became what the Chinese call "a naked man." All of his assets were stashed overseas or put in his relatives' names.

The set up
MTCC #710 hired Best Consultants in December 2006 to prepare specifications for exterior wall work. On May 1, 2007, Channel, a company
of which Khan was the principal, was the exclusive property manager for MTCC #710.

In the spring of 2007 MTCC #710 borrowed $5.5 million to fund certain repairs to the condominium.

The contracts are signed
Channel completed the contract documents, called for tenders and decided which companies would provide quotations or bids. Four tenders were received, including one from Canali with a low bid of $1,207,110.00 with a contingency of $181,066.50.

MTCC #710 entered into an 18 June 2007 contract with Canali to do the work. With subsequent change orders the final value of the Canali Contract was $1,312,259.00. The condominium’s consulting engineer, Best Consultants, paid Canali (a Khan controlled company) in excess of $1,269,893.00 to perform work on the outer walls.

The Administrator’s inquiries with Wall Savers disclosed an almost identical contract of the same date with Wall Savers for the same work with a contract value of $659,980.06 and a contingency of $98,997.01.

Wall Savers, not Canali, performed the actual work. Wall Savers thought that MTCC #710 was paying it and they were not aware of Canali.

Khan profited to the tune of $586,500.00, representing the difference between the amounts paid to Canali and those paid to Wall Savers.

Canali invoiced the condo a further $911,837.00 for work which was never done, but for which Canali received payment.

The condo corporation pleaded that the net overcharge by Canali of $1,251,500.00 constituted breaches of contract, trust, statutory duty, fiduciary duty, conversion, fraud and conspiracy.  MTCC #710 alleged that Khan “was the mastermind of this massive fraud” and was personally liable as such.

The condo alleged that another of Khan’s companies, PMP, submitted a fraudulent invoice to it for $12,600, plus GST, notionally to supply stone to level a temporary parking area, but such work was never performed by PMP. Khan authorized the payment of this fraudulent invoice and other payments to PMP.

The condo also alleged that Khan authorized the payment of a fraudulent invoice submitted by another one of his companies, Mountview, in the amount of $35,723.60 for the disposal of concrete, work that was never performed.

Finally, the condo claimed that Khan authorized the payment of $107,298.00 to Lakewood, another company that he owned for work the latter never performed.

How the companies were linked
Khan was a first director of Canali, resigning in April 2008. Khan owned the condominium unit whose address PMP designated as its registered office. Khan was a director and officer of Mountview along with Rohin Sarwari and the address for the registered office of Lakeview was the same as that for Mountview.

The board made it easy
The $5.5 million that MTCC #710 borrowed in the spring of 2007 was deposited at Khan’s direction into Channel’s bank account.

Hamed Baloutch was a member of the condominium’s board from November 2006 until February 2009.  He deposed that the Board relied on Khan’s advice regarding payments to be made to service providers and contracts for MTCC #710:
“If Channel or Khan had approved a payment and gave the Board a cheque to sign, the Board members would sign the cheque.” Said Duale, a Board member from November 2006 until June 2010, gave evidence to the same effect.

Baloutch recalled signing the Canali Contract, but he was not aware that Khan was affiliated with Canali: “Khan did not disclose that fact to the Board and the Board did not consent to same. If I had known that Khan was affiliated with Canali, I would not have agreed to hire Canali.” Duale, the other director, deposed to the same effect

A bribe is offered
Hamed Baloutch, a former MTCC 710 director, deposed that in July 2011 Khan met with him and presented a letter dated May 1, 2007 which Khan had signed.

The letter stated that Khan owned 100% of Channel and that he was “indirectly affiliated” with Canali, PMP, Reliance and Lakewood – “the owners of these businesses are either my family member or my relative”. Khan asked Baloutch to sign the letter on behalf of MTCC #710 in return for a cash payment; Baloutch refused.

Administrator smells a rat
This Court appointed Jim Bezemer as administrator of MTCC #710 on June 7, 2010. Bezemer deposed that as a result of inspections he conducted in mid-June 2010, he discovered that repair work covered by two contracts with Structural Contracting (2007 and 2008 contracts) and Canali (2007 contract) was not complete and further repairs were required.

As a result of his inquiries, he terminated Channel’s management contract on 24 September 2010.

As a result of irregularities Jim Bezemer discovered during his review of the repair contracts, he obtained a court order dated 05 January 2011 from Justice Randy Echlin appointing him as inspector pursuant to section 130 of the Condominium Act.

On 08 February 2011, Bezemer discovered the falsified Wall Savers contract. This lawsuit was commenced on 29 April 2011, some 10 months following the administrator’s appointment.

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