House arrest for role in $14M fraud scheme 0
(CHRIS ROUSSAKIS/QMI Agency Files)
An Iranian man who took part in defrauding taxpayers of $14 million from the Business Development Bank of Canada has been sentenced to two years of house arrest for his role in the scam that employed a bribed banker.
Victor Abedi, 45, was ordered to repay $50,000 and serve 24-months of community arrest by an Ontario Court of Justice on Aug. 27 after pleading guilty to four offences "relating to his involvement in a large scale, very well organized fraud."
Court heard the sophisticated fraud was organized by a long-time friend of Abedi, Varuj Mehrabian, who also plead guilty in an agreed statement of facts.
Court heard Mehrabian and others recruited individuals to set up sham companies which were then used to apply for large loans from the bank.
Among those recruited was Paul Kirchner, a senior account executive with the bank, whose job it was to review and conduct due diligence on the companies submitting loan applications. He would then provide his recommendation to the bank as to whether a loan should be approved.
"Kirchner knowingly approved numerous fraudulent loans, many in the range of a half a million dollars," court was told, adding he received for his role $10,000, a "few" suits and a trip to Las Vegas.
Kirchner pleaded guilty and was sentenced to two and a half years in jail for his role in the fraud.
"I was advised that he was very co-operative and was scared," Judge Howard Borenstein said. "He agreed to participate in this large conspiracy when approached by Mehrabian for very little."
Borenstein said the scam involved accountants and others to create a paper trail of phoney invoices and documentation for the scheme. Sham companies were created to act as loan applicants or suppliers of equipment to be purchased with the loans.
The loss as a result of Abedi's involvement was approximately $850,000, of which about $50,000 went to Abedi, court heard.
"Abedi became the sole director of this new corporation," Borenstein said. "He allowed Mehrabian to use the corporation and its bank account, as his own. "
Court heard Abedi signed cheques disbursing funds totalling $600,000.
"At that point, he knew there was something fraudulent going on but chose not to question Mehrabian," said Borenstein. "He chose to remain willfully blind to the fraud and permitted Mehrabian to continue using this corporation for the next two years."
Court heard Abedi was remorseful when arrested by police.
"The toll that the stress has taken on him since his arrest is obvious," court heard. "He has been very depressed. His marriage is ending. He is ashamed and obviously remorseful."
Part of the bank's mandate is to provide loans to qualified Canadian businesses where those loans fit their lending criteria. The loans applied for in this case were large and for use to purchase equipment for capital projects.