Toronto police officers investigate after three adults died in the lobby of an office space in Toronto on June 17. A triple shooting left Arash Missaghi and an associate, Samira Yousefi, dead. Alan Kats took his own life, according to his widow.Arlyn McAdorey/The Canadian Press
A businessman shot dead in an altercation with a former client on Monday victimized hundreds of people through myriad enterprises that sparked three major police operations, netted at least $100-million and triggered dozens of lawsuits, according to interviews and court records.
For all that, Arash Missaghi seemed immune from consequence. His voluminous court records show no convictions, no jail time and no successful lawsuits against him in Canada, while providing few – if any – indications why criminal charges against him were withdrawn on multiple occasions.
His streak of impunity ended on Monday afternoon when one of his alleged victims, Alan Kats, penned a suicide note before confronting Mr. Missaghi at his Toronto office. A subsequent triple shooting left Mr. Missaghi and an associate, Samira Yousefi, dead. Mr. Kats took his own life, according to his widow.
Victims of fatal Toronto shooting blamed for alleged mortgage fraud
The tragedy has drawn new attention to Mr. Missaghi’s checkered career and the question of how, despite countless legal challenges, he was able to bring the justice system to heel. Mr. Missaghi had his own explanation.
“I shake the system and change it and evolve people so everyone and every lawyer across the nation follows the new pattern,” he wrote in a 2018 e-mail message that was reproduced in a legal judgment.
His first known criminal charge came in June of 2000, when he was arrested in relation to an import-export company accused of scamming businesses out of property and other assets worth $3-million. That same year, records show Mr. Missaghi declared bankruptcy and never removed the status from his name.
“He appears to have found that that was a very advantageous situation for him because he had this network of family and associates in whose names he could put the assets and properties that he controlled and essentially be immune,” said lawyer Peter Smiley, who is representing several clients suing Mr. Missaghi for mortgage fraud and estimated that victims’ losses exceed $100-million.
Over the next 18 years, Mr. Missaghi faced several multiyear fraud investigations by police forces in different jurisdictions. But the charges never stuck.
In 2006, police charged him in relation to Project Tic Toc, a joint operation that unravelled one of Ontario’s largest cargo theft rings, but failed to convict Mr. Missaghi.
In October, 2015, Ontario Provincial Police in Temiskaming Shores, a city in Northern Ontario, charged him with being a member of a criminal organization, and seven counts of fraud over $5,000 following a three-year investigation, according to court records. Officials at the Ontario Court of Justice in Haileybury told The Globe and Mail this week the charges were withdrawn by the Crown, without the officials providing a rationale.
A 2018 probe in Mississauga never got off the ground. “From our records it shows that a complainant filed a fraud report against Arash Missaghi,” said Peel Regional Police spokesperson Constable Tyler Bell-Morena told The Globe this week. But he said the complainant withdrew the allegations and no charges were laid.
In February of that same year, the Toronto Police Service charged Mr. Missaghi and three others with fraud and conspiracy-related offences. The takedown – dubbed Project Bridle Path – was touted as a five-year investigation of mortgage fraud valued at $17-million. But on the eve of trial, the case was suddenly withdrawn by the Crown for unexplained reasons.
During the penultimate hearing in the case, on July 5, 2021, Justice John McMahon chided Mr. Missaghi and several of his co-accused for foot dragging so much on retaining lawyers that they were putting their rights to a fair trial at risk. “I’m sort of running out of patience, gentlemen, I’ll be honest with you " the judge said in an audio file obtained by The Globe.
But during a July 15 follow-up hearing, the Crown withdrew all charges.
There is no explanation for the withdrawal in public records. Contacted by phone this week, Crown attorney Mitchell Flagg said he could not speak about the prosecution.
In an e-mailed statement, Keesha Seaton, a spokesperson for the Ontario Ministry of the Attorney General, told The Globe “the Crown carefully considered all the relevant circumstances of the case, as well as the applicable law and the anticipated evidence, and determined there was no longer a public interest in proceeding.”
Police declined to act upon numerous other complaints against Mr. Missaghi, according to multiple other victims, leaving them to seek justice through the civil courts.
“You’re functionally deputizing the victims of frauds to pursue an extremely sophisticated multimillionaire fraudster through the court system who is paying some of the best and most expensive lawyers in Toronto to defend him with the money that he stole from you,” Mr. Smiley said.
Mr. Missaghi had a formula for defrauding his victims, according to Mr. Smiley. A quintessential Missaghi scheme began with an associate or shell company acquiring a property for under market prices. Next, he worked with a friendly appraiser to overvalue the property – often far beyond its actual value – arming his associates with everything they needed to present the properties as lucrative investments to unsuspecting victims.
Mr. Missaghi and his associates would convince victims to invest in syndicated mortgages secured against these properties. Once that was done, Mr. Missaghi could artificially inflate the value of the first mortgage, absorbing the property’s equity before deliberately defaulting on the inflated first mortgage. “He can then carry out power of sale and sell it to another non-related arm’s-length company that wipes off all the subsequent security,” Mr. Smiley said.
When the frauds unravelled, a lengthy legal battle would ensue in bankruptcy courts involving both Mr. Missaghi’s victims and associates, all asserting their claim to lost funds.
Once all this is done – “it’s rinse and repeat,” Mr. Smiley said.
He made it all work with ample doses of intimidation. “Stealing from a person like me is like stealing from Al Capone ...” Mr. Missaghi said in a 2018 text message filed in a civil case. “I don’t allow it to happen. And when it happens I can’t allow for it to be taken. ... There will be no mercy and no holding back.”
Much of that strong-arming was directed at lawyers, four of whom have been disciplined or disbarred for working with him.
“People who disobey me end up missing,” said one of his text messages filed as part of a Law Society of Ontario tribunal.
In the wake of this week’s shooting, fraud victims have been left to wonder why the authorities were never able to stop Mr. Missaghi.
Alisa Pogorelovsky, Mr. Kats’s widow, said that police, courts and regulatory bodies all dropped the ball in their case, allowing Mr. Missaghi to defraud $1.37-million from the couple. “If he’d gone to jail, this never would have happened,” she said. “Police know about these people and cannot do anything. Nobody can.”
Mr. Smiley would like to see police and regulatory bodies, such as the Law Society of Ontario and the Financial Services Regulatory Authority of Ontario, devote more resources to complex fraud investigations. As well, successful fraud litigants should be entitled to punitive damages that couldn’t be avoided through a defendant’s bankruptcy.
“There are a lot of people and institutions to blame,” he said.
With a report from Stephanie Chambers