BRITISH COLUMBIA

Rashida Samji, Arvin Patel Ponzi Scheme Lawsuit Names Vancity, Coast Capital

09/11/2013 06:15 EDT | Updated 11/11/2013 05:12 EST
CP
VANCOUVER - A class-action lawsuit will proceed in B.C. Supreme Court against a former notary public and several major financial institutions over an alleged ponzi scheme that bilked investors out of tens of millions of dollars.

Among the defendants named are Rashida Samji, Arvin Patel, Royal Bank of Canada, Toronto-Dominion Bank, Coast Capital Savings Credit Union, Vancouver City Savings and Worldsource Financial Management Inc.

Plaintiffs Lawrence Brian Jer, Jun Jer and Janette Scott are alleging breach of trust, knowing assistance in breach of trust, fraud and negligence.

The allegations have yet to be proven, but a court document states the plaintiffs invested money into a private opportunity that was promoted by Samji but didn't actually exist, and the minimum investments ranged between $50,000 and $100,000.

"These class members' prospects for recovery of their losses rest largely on the claims against the financial institutions," said Justice Laura Gerow, in her ruling posted online.

"I agree with the plaintiffs that these claims will not be addressed in the individual actions and are appropriate claims for resolution in the class proceeding."

She said bankruptcy proceedings against Samji, an investigation by the British Columbia Securities Commission investigation, a criminal probe by the RCMP and a disciplinary hearing by the Society of Notaries Public of BC do not provide a "means of adjudicating the claim."

The plaintiffs allege, based on bankruptcy proceedings against Samji, that there were about 203 investments into the scheme, and many of those were made jointly.

The court document states about 50 other lawsuits have been launched by investors, and the plaintiffs say about 96 investors have not commenced legal action for about $22.7 million. It states about 10 per cent of those losses were for less than $50,000.

Not all the defendants responded to requests for comment, but Sheira Hallam, a spokeswoman for Coast Capital Savings, said Gerow's ruling was not a judgment on the merits of the case but a decision that the class-action lawsuit is the best way to resolve the issue.

"We will be guided by that process," she said "We'll let the courts guide us there."

Paul Bennett, legal counsel for the plaintiffs, said he believe the class claims are in the range of $30 to $40 million.

"We're pleased that the case has been certified, and we'll pursue to try and recover a secure relief for the benefit of the class members," he said, noting a trial date has been set for May 2014.

He said his clients are residents of Metro Vancouver and for most of the investors, the money represented their savings.

According to the court document, Samji promoted the Mark Anthony Investment, which had no affiliation to the Mark Anthony Group, an importer and distributor of premium beer, fine wine and specialty beverages.

The B.C. Securities Commission announced in an April 4, 2012 news release the money was to be used as collateral for a winery in Kelowna.

But the court document states Samji deposited the funds she received, not into a trust account, but into her general or personal account, or an account under the name of Samji Holdings.

The money was then used for the benefit of Samji, her notary company or her holding company and used to make payments to investors without their knowledge or authorization, states the document.

Samji, her notary company or holdings company maintained accounts at each of the financial institutions.

"Between April 2010 and January 2012, when the scheme was exposed, approximately $34 million flowed through Samji Holdings' account with TD," states the document.

Meantime, Patel, who was a financial adviser at Coast Capital and a mutual-fund representative for Worldsource, recommended the scheme to the Jers and other Coast Capital employees, the court document says.

The Society of Notaries Public of B.C. suspended Samji on Feb. 7, 2012 and obtained a court order appointing a custodian over Samji's practice on Feb. 8.

She subsequently submitted her resignation on March 6, 2012.

In April 2012, the B.C. Securities Commission announced Patel had been given a permanent ban from B.C. markets for his role in the scheme.

Also on HuffPost

The Top 10 Tax Havens