Good morning. We’re looking into the life, death and $100-million in fraud of Toronto businessman Arash Missaghi – more on that below, along with Ukraine’s risky incursion into Russia and Kamala Harris’s battleground bets. But first:
Today’s headlines
- The WHO has declared that the fast-surging mpox outbreak in Africa is a global public-health emergency
- Sources say the federal government is planning to wind down the low-wage stream of its Temporary Foreign Worker Program
- New Gaza ceasefire talks begin in Qatar with international mediators to diffuse tensions in the region and release hostages
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Police outside the office where Arash Missaghi was shot.Arlyn McAdorey/The Canadian Press
Crime
The undoing of Arash Missaghi
For nearly a quarter century, serial fraudster Arash Missaghi seemed immune from any real consequence. Despite being the target of major police investigations (at least three) and cycling through lawyers (at least five) whose work for Missaghi got them disciplined or disbarred, the Toronto businessman carried out countless mortgage scams netting him upwards of $100-million. Dozens of lawsuits went nowhere. Criminal cases collapsed. Missaghi simply moved on to the next scheme.
That ended earlier this summer, when one of his victims, Alan Kats, killed Missaghi and mortgage broker associate Samira Yousefi before turning the gun on himself. In 2022, Kats and his wife, Alisa Pogorelovsky, invested more than $1.3-million in mortgages with Missaghi and Yousefi, much of it scraped together from their relatives. At the start of this year, the couple asked for a progress report. In an interview with my colleague Mariya Postelnyak, who’s been reporting on this story since the shooting, Pogorelovsky said they got back a few small payouts and a lot of runaround from Missaghi’s lawyers. Then they hired their own attorney.
“That lawyer discovered that there were no mortgages on the properties securing their investments,” Postelnyak told me. Their savings were gone; their family home followed. Kats left behind a suicide note.
A formula for fraud
Over the course of their investigation so far, Postelnyak and Globe reporter Colin Freeze have examined motion records, court records and legal documents to untangle Missaghi’s prolific criminal career. It leaned on a well-honed playbook: First, Missaghi would get an associate or shell company to buy a property below market value. Then he’d tap a friendly appraiser to inflate its price. Next, he’d entice victims to invest in “syndicated mortgages” – individual loans packaged together – that were secured against the properties.
This allowed Missaghi to artificially jack up the value of the initial mortgage and absorb the property’s equity. After that, he’d deliberately default on that inflated mortgage and sell off the property to another arm’s-length company, wiping clean all the security that investors believed they had. And then? “It’s rinse and repeat,” Peter Smiley, a lawyer representing several of Missaghi’s victims, told The Globe.
Lawyer Peter Smiley outside a Toronto courthouse.Cole Burston/The Globe and Mail
Yet Crown attorneys seemed unable to make cases against Missaghi stick. A 2006 investigation into one of Ontario’s largest cargo theft rings ended in his acquittal. In 2017, after a series of frauds bilked people of $6-million, Missaghi took a plea deal and cut a $32,500 cheque. Toronto police later charged him with $17-million worth of mortgage fraud involving homes in the wealthy Bridle Path area. But on the eve of the trial in 2021, and for vague reasons, the Crown withdrew its case.
One expert in Canada’s criminal justice system told Freeze that prosecutors might not have the persistence to tackle complex fraud cases. “Crowns don’t want to take risks,” said Christian Leuprecht, director of the Institute of Intergovernmental Relations in the School of Policy Studies at Queen’s University. “They want to win. If they don’t win, it looks bad on them.”
A cycle of enablers
No matter how many legal advisers Missaghi burned through – the Law Society of Ontario disciplined five for their roles in his schemes – he was always able to find another lawyer to work with him. Sometimes, to retain those lawyers, Missaghi resorted to subtle intimidation. Other times, his threats weren’t subtle at all. “People who disobey me end up missing,” he texted Rasik Mehta, who’d answered Missaghi’s job-wanted ad fresh out of law school, then lost his licence in 2019.
In their latest report on the serial fraudster, Postelnyak and Freeze explore the Law Society’s role in these kinds of cases. One expert told The Globe he couldn’t recall another instance where a single bad actor resulted in the punishment of so many lawyers – but those red flags have to be reconciled with the right to counsel. “The Law Society can’t just tell lawyers ‘You can’t work with this person ever,’” Postelnyak told me. “But I think it needs to do a better job warning lawyers about bad-actor clients and warning the public about fraudsters, so unsuspecting victims don’t get caught up.” What exactly does that look like? The Law Society is still figuring it out.
The Shot
‘Russia brought war to others, and now it is coming home.’
Ukrainian servicemen at the Russian border in the Sumy region.Evgeniy Maloletka/The Associated Press
The Ukrainian military claims to have captured as much as 1,000 square kilometres of Russian territory over the past week – a risky offensive across the border that charts a new and perilous phase of the war, The Globe’s Mark MacKinnon writes. Read more here.
The Wrap
What else we’re following
At home: After a Globe and Mail investigation found that provincial use of private nursing agencies had skyrocketed, Newfoundland now says it will revamp its travel nurse program.
Abroad: Kamala Harris’s campaign launched its largest advertising effort so far in seven battleground states, including Republican-leaning North Carolina and toss-up Pennsylvania.
Over the moon: Auston Matthews, newly minted captain of the Toronto Maple Leafs, said he “got chills” when he put on a jersey with the C on his chest. Good luck to this man!
Under the wheel: Let’s be honest – summer is both road-trip and road-kill season. But a new pilot project in Ontario’s Georgian Bay area is working to safeguard the critters that are so crucial to our ecosystem.