CITATION: R. v. Kazman, 2017 ONSC 5300  
COURT FILE NO.: CR-15-4269  
DATE: 20170908  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
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BETWEEN:  
HER MAJESTY THE QUEEN  
and –  
) Tara Brun and Michael Coristine, for the Crown  
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Marshall Kazman, Self-Represented  
MARSHALL KAZMAN  
and –  
GAD LEVY  
Gad Levy, Self-Represented  
and –  
Armand Levy, Self-Represented  
ARMAND LEVY  
and –  
ALI VAEZ TEHRANI  
and –  
Taro Inoue, for Ali Vaez Tehrani  
MADJID VAEZ TEHRANI  
and –  
Alice Barton, for Madjid Vaez Tehrani  
Aaron Harnett and Christine Cole, for Alireza  
Salehi  
ALIREZA SALEHI  
and –  
Jeff Chapnick, for Ekaterina Chapkina  
EKATERINA CHAPKINA  
and –  
Walter Fox, Sayeh Hassan, and Nicholas Pham,  
for Kamyar Ghatan  
KAMYAR GHATAN  
Defendants  
HEARD: September 12-16, 19-23, 26-30,  
October 5, 11, 13, 14, 19-21, 26-28, 31,  
November 1-4, 7-10, 14-18, 28-30, December  
1,2, 5-9, 12-16, 19-22, 2016, January 3-6, 9-12,  
17-20, 23-27, 30, 31, March 21-23, 2017  
SPIES J.  
Page: 2  
TABLE OF CONTENTS  
Introduction ..................................................................................................................................................7  
The Defendants.............................................................................................................................................9  
Overview of the Crown’s Case....................................................................................................................14  
Overview of the Defences...........................................................................................................................17  
Duties of the Court Where an Accused is Self-Represented ......................................................................20  
The Issues....................................................................................................................................................21  
The Crown’s Similar Fact Application..........................................................................................................22  
Evidence of Prior Discreditable Conduct and Reputation ..........................................................................22  
General Assessment of Credibility and Reliability of the Witnesses ..........................................................24  
General Comment...............................................................................................................................24  
WD ......................................................................................................................................................24  
The Crown Witnesses..........................................................................................................................25  
The Defendants...................................................................................................................................25  
The Defence Witnesses.......................................................................................................................31  
Preliminary Findings of Fact........................................................................................................................31  
Findings with Respect to the Canada Small Business Financing Program (CSBFP).............................31  
Findings with Respect to the SBL Loan Process ..................................................................................32  
Findings with Respect to the Accuracy of the Coort Analysis.............................................................37  
Findings with Respect to the Lack of Evidence of Payments by the Various Construction Companies  
for Leasehold Improvements, Equipment, Fixtures and Furniture.....................................................39  
Findings with Respect to the Relationship between the Defendants.................................................40  
Findings with Respect to M&M 155 Holdings Inc...............................................................................42  
Findings with Respect to Property Ownership ...................................................................................45  
Findings with Respect to the Invoices from the Disputed Construction Companies for Leasehold  
Improvements, Furniture, Fixtures and Equipment ...........................................................................45  
Findings with Respect to the Faxes with the Heading “HP LASERJET FAX 123456789” .....................46  
Findings with Respect to the Bank Reliance Evidence........................................................................48  
Common Findings of Fact with Respect to the 16 SBLs in Issue.........................................................48  
The 16 SBLs .................................................................................................................................................51  
Page: 3  
Energy Lighting and Furnishings Inc. (ELFI) BNS Count #1 ............................................................51  
Energy Lighting Inc. (ELI) TD Count # 2..........................................................................................64  
Light House Contracting Inc. (LHC) BOM Count # 3......................................................................73  
Light Source Contracting Inc. (LSC) RBC Count # 4........................................................................82  
Qua Design Inc. (QUA) BNS Count # 1...........................................................................................90  
Roxy Design Inc. (Roxy) - CIBC Count # 5 .......................................................................................110  
Contempo Design Inc. (Contempo) RBC Count # 4 .....................................................................118  
Contemporary Design Inc. (CDI) BNS Count # 1..........................................................................133  
Alta Design Corp. (Alta) CIBC Count # 5 ......................................................................................145  
Modernito Design Inc. (Modernito) BOM Count # 3 ..................................................................161  
Kube Home Décor Corp. (KUBE) CIBC Count # 5.........................................................................170  
Meez Corp.........................................................................................................................................170  
Comod Corp. (Comod) ......................................................................................................................175  
Kube Home Décor Corp. (Kube)........................................................................................................178  
Homelife Forest Hill Realty Inc. (Homelife) BNS Count # 1.........................................................193  
Exclusive Accessories Inc. (Exclusive) RBC Count # 4..................................................................220  
World of Accessories Ltd. (World) BNS Count # 1.......................................................................233  
Uzeem Corp. (Uzeem) BNS Count # 1 .........................................................................................262  
Bluerock Construction Inc. (Bluerock) CIBC Count # 5................................................................273  
Additional Findings of Fact........................................................................................................................289  
Finding as to Who Prepared All of the Business Plans for the 16 SBLs.............................................289  
Findings of Fact with Respect to Who Altered Certain Documents Provided to the Banks.............290  
Findings with Respect to Mr. Levy’s Subcontracting Defence..........................................................292  
Findings with Respect to Payments to Mr. Tehrani’s Companies purporting to be for Furniture for  
Mr. Levy’s Companies.......................................................................................................................294  
Findings with Respect to the Disputed Construction Companies.....................................................295  
Findings with Respect to Whether the Purported Suppliers of Leasehold Improvements, Fixtures,  
Furniture and Equipment were Sham Corporations.........................................................................307  
The Applicable Law ...................................................................................................................................308  
Circumstantial Evidence....................................................................................................................308  
The Elements of the Offence of Fraud s. 380(1)(a) Counts 1-5 .....................................................309  
Page: 4  
The Elements of “Laundering Proceeds of Crime" s. 462.31(1) - Count 6........................................310  
Willful Blindness................................................................................................................................310  
Elements of the “Criminal Organization” Offence in s. 467.12 of the Criminal Code – Count 7......310  
Conclusions with respect to Marshall Kazman .........................................................................................311  
Count # 1...........................................................................................................................................311  
Count # 2...........................................................................................................................................313  
Count # 3...........................................................................................................................................314  
Count # 4...........................................................................................................................................314  
Count # 5...........................................................................................................................................315  
Count # 6 Laundering Proceeds of Crime .........................................................................................317  
Conclusions with respect to Gad Levy ......................................................................................................318  
Count # 1...........................................................................................................................................318  
Count # 2...........................................................................................................................................320  
Count # 3...........................................................................................................................................320  
Count # 4...........................................................................................................................................321  
Count # 5...........................................................................................................................................321  
Count # 6 Laundering Proceeds of Crime .........................................................................................324  
Conclusions with respect to Ali Vaez Tehrani (Ali Tehrani) ......................................................................324  
Count # 1...........................................................................................................................................324  
Count # 4...........................................................................................................................................324  
Count # 5...........................................................................................................................................325  
Conclusions with respect to Madjid Vaez Tehrani....................................................................................325  
Count # 1...........................................................................................................................................325  
Count # 5...........................................................................................................................................325  
Conclusions with respect to Ekaterina Chapkina......................................................................................327  
Count # 1...........................................................................................................................................327  
Count # 4...........................................................................................................................................327  
Count # 7...........................................................................................................................................327  
Conclusions with respect to Kamyar Ghatan............................................................................................327  
Count # 1...........................................................................................................................................327  
Page: 5  
Count # 7...........................................................................................................................................327  
Conclusions with respect to All Defendants Count # 7 Criminal Organization...................................327  
Disposition ................................................................................................................................................330  
Appendix “A”.................................................................................................................................................1  
Ruling on What Use Can be made of the LSUC’s Findings Revoking Mr. Kazman’s Licence to Practice Law1  
Appendix “B”.................................................................................................................................................1  
Summary of Ownership of the Corporations Associated to Mr. Kazman, Mr. Levy,....................................1  
Mr. A. Levy and Ms. Cohen and Related Properties .....................................................................................1  
Corporations Owned in Whole or in Part by Mr. Kazman ....................................................................1  
Corporations Owned in Whole or in Part by Mr. Levy..........................................................................4  
Corporations Owned in Whole or in Part by Mr. A. Levy......................................................................6  
Corporations Owned in Whole or in Part by Ms. Cohen aka Sade .......................................................6  
Appendix “C”.................................................................................................................................................1  
Reasons for Decision for Acquitting Armand Levy of all Charges.................................................................1  
Appendix “D” ................................................................................................................................................1  
Use of Handwriting Evidence........................................................................................................................1  
Appendix “E.................................................................................................................................................1  
Disputed Construction Companies ...............................................................................................................1  
Appendix “F.................................................................................................................................................1  
Ruling on Crown’s Count to Count Similar Fact Application.........................................................................1  
Appendix “G” ................................................................................................................................................1  
Evidence of Prior Discreditable Conduct and Reputation ............................................................................1  
Evidence of Edwin Cheng......................................................................................................................1  
Evidence of David Richards...................................................................................................................2  
Evidence of Deborah Bendavid.............................................................................................................4  
Evidence of Armando Benlezrah...........................................................................................................6  
Appendix “H” ................................................................................................................................................1  
General Findings of Credibility and Reliability of the Crown Witnesses.......................................................1  
Appendix “I”..................................................................................................................................................1  
General Findings of Fact with Respect to the Credibility and Reliability of the Witnesses Called by Mr.  
Kazman, Mr. Levy and Mr. A. Tehrani...........................................................................................................1  
Page: 6  
The Witnesses Called by Mr. Kazman...................................................................................................1  
The Witnesses Called by Mr. Levy- Shelley Johnstone .........................................................................4  
The Witness called by Mr. A. Tehrani-Deborah Bendavid....................................................................4  
Appendix “J”..................................................................................................................................................1  
Extracts From the Canada Small Business Financing Regulations SOR/99-141 ...........................................1  
Appendix “K”.................................................................................................................................................1  
Definition of “Arm’s Length” in the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ......................................1  
Appendix “L” .................................................................................................................................................1  
General Findings with Respect to 1048 Eglinton Avenue West (1048 Eglinton)..........................................1  
Appendix “M” ...............................................................................................................................................1  
General Findings with Respect to 559-563 Eglinton Avenue West (559 Eglinton).......................................1  
Appendix “N” ................................................................................................................................................1  
General Findings with Respect to 1040 Eglinton Avenue West, Toronto (1040 Eglinton) ...........................1  
Appendix “O” ................................................................................................................................................1  
Ruling on Admissibility of the Affidavits sworn by Mr. Kazman and Mr. Levy .............................................1  
in the RBC v. Contempo Litigation ................................................................................................................1  
Appendix “P”.................................................................................................................................................1  
The Bochner Condo.......................................................................................................................................1  
Appendix “Q” ................................................................................................................................................1  
The Law with respect to Causation-Reliance................................................................................................1  
Appendix “R”.................................................................................................................................................1  
The Law with respect to Willful Blindness....................................................................................................1  
Appendix “S.................................................................................................................................................1  
The Law With Respect to the Criminal Organization Offence ......................................................................1  
R. v. Lindsay, [2005] O.J. No. 2870 (Ont. S.C.J.), aff’d 2009 ONCA 532, 97 O.R. (3d) 567, leave to  
appeal refused [2009] S.C.C.A. No. 540................................................................................................4  
R. v. Sharifi, [2011] O.J. No. 3985, 2011 CarswellOnt 9044 (S.C.J.), esp. at paras. 27-39.....................4  
R. v. Battista, 2011 ONSC 4771 (CanLII), [2011] O.J. No. 6637, at paras. 9-31 .....................................5  
Page: 7  
REASONS FOR JUDGMENT  
Introduction  
[1] The Government of Canada established the Canada Small Business Financing Program  
(“CSBFP”) in January 1961. The CSBFP is administered by Industry Canada and its main  
objective is to encourage lenders to make loans to small businesses that they might not otherwise  
make, due to the borrower’s lack of experience, insufficient security and/or the fact that the  
business is just starting up. The goal is to promote the expansion, modernization and  
improvement of small businesses throughout the country and thus spur on the economy and  
increase jobs.  
[2]  
Applicants apply for a small business loan (“SBL” or “loan”) directly with participating  
banks. The loans can finance, among other things, up to 90% of the costs of purchasing leasehold  
improvements and fixtures and purchasing new equipment and furniture for the business. SBL  
proceeds cannot be used to finance inventory.  
[3]  
Industry Canada is not involved in the application process or in a bank’s decision of  
whether to grant a SBL and does not deal directly with the borrowers. The lenders make all the  
decisions in approving a SBL and in advancing the loan funds. Industry Canada acts, in effect, as  
an insurer for the SBL if a lender complies with all of the requirements of the CSBFP. In that  
event, if a SBL goes into default, Industry Canada will reimburse the lender up to 85% of the  
monies advanced.  
[4]  
In early 2009, the RCMP received a complaint from the Royal Bank of Canada (RBC) in  
relation to a suspected fraudulent SBL. The RCMP commenced an investigation that was  
ultimately expanded to more than 16 different SBLs across the five major banks: RBC, Bank of  
Montreal (BOM), Bank of Nova Scotia (BNS), Canadian Imperial Bank of Commerce (CIBC)  
and the Toronto Dominion Bank/Canada Trust (TD). The focus of this trial is on 16 SBLs that  
were approved during the period of June 2007 to March 2010. Although there is no agreement on  
specific dates, the evidence is clear that all of these loans went into default within 12 to 18  
months of the intended 60-month term.  
[5]  
All of the defendants are charged with committing the offence of fraud exceeding $5,000  
for the benefit of, or at the direction of, or in association with a criminal organization contrary to  
s. 467.12 of the Criminal Code (count 7). The defendants Marshall Kazman and Gad Levy1 are  
also charged with laundering the proceeds of the fraud contrary to s. 462.31(1) of the Code  
(count 6).  
1 Gad H. Levy is also known as Haim G. Levy. To avoid confusion I will refer to Gad Levy as Mr. Levy and  
Armand Levy as Mr. A. Levy.  
 
Page: 8  
[6]  
Mr. Kazman and Mr. Levy are also each charged with five counts of fraud over $5,000 of  
the banks; BNS, TD, BOM, RBC, and CIBC, and Industry Canada, contrary to s. 380(1)(a) of  
the Criminal Code (counts 1-5).  
[7]  
The defendant Ali Vaez Tehrani is charged with three counts of fraud over $5,000 of the  
BNS, RBC, and CIBC (counts 1, 4 and 5). His brother, the defendant Madjid Vaez Tehrani2  
(“Mr. Tehrani”) is charged with two counts of fraud over $5,000 of the BNS and CIBC (counts 1  
and 5). The defendant Ekaterina Chapkina is charged with two counts of fraud over $5,000 of the  
BNS and CIBC (counts 1 and 4), and the defendant Kamyar Ghatan is charged with one count of  
fraud over $5,000 of the BNS (count 1).  
[8]  
This is a complex case, both factually and legally. It took five months for the introduction  
of the evidence that featured many thousands of documents submitted on disc, more than 40  
witnesses and substantial written closing submissions as well as oral submissions to bring this  
Court to the point where the difficult task of determining whether or not the Crown has proven  
any of the charges beyond a reasonable doubt could begin.  
[9]  
The theory of the Crown is that the defendants, Mr. Kazman, Mr. Levy and former co-  
accused Miriam Cohen, commandeered a criminal organization of three or more persons whose  
primary function was to fraudulently obtain SBLs through the CSBFP from all of the major  
banks and use most or all of the funds for the benefit of the organization and themselves.  
Specifically, the Crown alleges that fraudulent documentation was provided to the banks, which  
caused the SBLs to be approved, that the leasehold improvements and purchase of equipment  
that the defendants represented to the banks were either not done or purchased and that the SBL  
proceeds that were not used for the new businesses were laundered among the defendants.  
[10] The Crown asserts that the success of the criminal organization depended on a keen  
familiarity with both the CSBFP and the inner-workings of the banks - something the Crown  
asserts Mr. Kazman and Mr. Levy had long-since acquired through their various business  
dealings and a partnership that began in the late 1990s. The position of the Crown is that this was  
a sophisticated scheme that required planning, co-ordination, organization, operating capital, and  
co-operation. To that end, the Crown asserts that Mr. Kazman, Mr. Levy, and Ms. Cohen relied  
heavily on co-accused Mr. Tehrani, Mr. A. Tehrani, Ms. Chapkina, Mr. Ghatan, and former co-  
accused Mr. Salehi,3 as well as several unindicted co-conspirators who, through various  
corporations, all obtained one or more SBLs for the benefit of the organization. Armand Levy,  
2 To avoid confusion I will refer to Madjid Vaez Tehrani as Mr. Tehrani and Ali Vaez Tehrani as Mr. A. Tehrani.  
3
I understand that Ms. Cohen resolved her charges before the preliminary inquiry and Mr. Salehi did so before  
another judge early on in the trial. Naturally, I have no knowledge of any details concerning their resolutions. The  
SBLs that they obtained are, however, still relevant to various counts in the indictment.  
Page: 9  
the brother of Mr. Levy, was not a SBL borrower but the theory of the Crown is that he assisted  
in the criminal organization by laundering the proceeds of the fraud.  
[11] During the period from June 2007 to March 2010, it is the position of the Crown that this  
organization fraudulently obtained at least 16 SBLs totaling approximately $2.8 million. Ms.  
Cohen obtained four of these loans through companies that she owned, namely Energy Lighting  
and Furnishings Inc. (ELFI), Energy Lighting Inc. (ELI), Light House Contracting Inc. (LHC)  
and Light Source Contracting Inc. (LSC), collectively referred to as the “Cohen SBLs”.  
Corporations owned by one of the defendants obtained the remaining 12 SBLs. Former co-  
accused Alireza Salehi obtained three SBLs: Roxy Design Inc. (Roxy), Contemporary Design  
Inc. (CDI) and Modernito Design Inc. (Modernito); Mr. A. Tehrani also obtained three: Qua  
Design Inc. (Qua), Contempo Design Inc. (Contempo) and Alta Design Corp. (Alta); and Mr.  
Tehrani obtained four, two of which are covered by the indictment: Meez Ltd. and Kube Home  
Décor Corp. (Kube). Mr. Tehrani also obtained SBLs for Meez Corp. and Comod Corp.  
(Comod) that are outside the scope of the Crown’s case but have some relevance to the matters  
in issue. Ms. Chapkina obtained two SBLs: World of Accessories Ltd. (World) and Exclusive  
Accessories Inc. (Exclusive); and Mr. Ghatan obtained one for Homelife Forest Hill Realty Inc.  
(Homelife). Mr. Levy obtained the last SBL in issue for his company Bluerock Construction Inc.  
(Bluerock).  
[12] Mr. Kazman and Mr. Levy were first charged in June 2011 along with Ms. Cohen. Those  
charges related to what I have described as the Cohen SBLs. The charges were expanded in  
October 2012 when the other defendants were charged and 13 more SBLs were added to the  
indictment. This was later reduced to the 16 SBLs involving the five major banks, which are  
before me.  
[13] On April 10, 2015, after a lengthy Preliminary Inquiry that had not been completed, the  
Attorney General of Ontario preferred an indictment against the defendants.  
The Defendants  
[14] Marshall Stephen Kazman was called to the bar in the early 1980’s and practiced law for  
22 years, first with his father, and then as a sole practitioner. He described himself as a “jack of  
all trades,” doing a lot of civil litigation, real estate, corporate/commercial and some criminal law  
at the provincial court level.  
[15] In September 2006, the Law Society of Upper Canada (“LSUC”) revoked Mr. Kazman’s  
licence to practice law. The Appeal Panel of the LSUC and the Divisional Court upheld this  
decision. Mr. Kazman was able to continue practicing while the case was under appeal but he  
could not issue cheques without permission from the LSUC. In Appendix A, I set out my  
ruling on how the reasons for this revocation can be used in my determination of the charges  
against Mr. Kazman.  
 
Page: 10  
[16] After Mr. Kazman lost his licence he continued as a paralegal under the business name  
Dufferin Paralegal Ltd. (Dufferin Paralegal). Paralegals were not licenced at the time by the  
LSUC.  
[17] While Mr. Kazman was practicing law he started a business called Spiritual Awakenings,  
which took small groups of people on adventure tours. One of the trips he described was to Peru.  
Mr. Kazman also described a family property in Caledon that he owned at the material time that  
had a nice spring. He used different companies over a number of years including Blue Glass  
Water Company (Blue Glass) to sell carbonated spring water in blue bottles to high-end  
restaurants using the water from that spring. Mr. Kazman admitted owning one construction  
company and was also a signing officer at the bank for a number of other corporations that were  
purported to be legitimate construction companies and involved in several of the SBLs in issue.  
It was also Mr. Kazman’s evidence that Mr. Levy was actually the controlling mind and  
beneficial owner of these corporations, which Mr. Levy disputes. It is the Crown’s position that  
these were Mr. Kazman’s companies and that they were sham corporations. I refer to these  
corporations as the Disputed Construction Companiesand the particulars of these companies,  
from the documents entered as exhibits, are set out in Appendix E. Their ownership and  
control is one of the central factual issues that I must determine.  
[18] Mr. Kazman met Mr. Levy around the late 1990’s through Mr. Levy’s then accountant  
Victor Almalah. After Mr. Kazman acted for Mr. Levy on a civil litigation matter, they and their  
spouses became good friends. Mr. Kazman also met Mr. Levy’s brothers Armand and Dov Levy.  
Mr. Levy has a large family and had many clients and he referred a lot of legal work to Mr.  
Kazman. A lot of Mr. Almalah’s and Mr. Levy’s clients had obtained SBLs and Mr. Kazman  
defended them on their guarantees. Mr. Kazman denied knowing much about how SBLs worked  
and he was not an applicant for any of the 16 SBLs before me although I did hear evidence about  
a SBL he obtained for his paralegal business, Dufferin Paralegal. The companies that Mr.  
Kazman admitted to owning in whole or in part are set out in Appendix B. I have also set out  
the companies associated to Ms. Cohen in that Appendix. With respect to the companies in  
Appendix B, in cases where Mr. Kazman testified that he had other partners, I will refer to the  
corporation as “owned” by him for ease of reference, recognizing that he was only a part owner.  
[19] Mr. Kazman was married to Maxine Henry. He reported to the Canada Revenue Agency  
(CRA) that he was married for the 2005 tax year and then that he was separated for the years  
2006 to 2010 inclusive.  
[20] Mr. Levy was born in Morocco and came to Canada around 1982 and finished high  
school here. He then started working for a cousin in a clothing business and then for his brother-  
in-law in a furniture business. Mr. Levy quickly became successful with his own clothing store,  
Jigolos, and he bought his first property; 617 College Street in Toronto, where he continued to  
operate that store. Mr. Levy incorporated a number of other companies and had two clothing  
stores on Bloor Street in rented premises.  
Page: 11  
[21] Although Mr. Levy denied he was a specialist for obtaining SBLs, signs for one of his  
companies, Fairbank Financial & Accounting Ltd. (Fairbank), suggest otherwise. His sign for  
that company described this business, in part, as “Consulting, Investments, Mortgages, Business  
Finance Specialists, Business Plan Specialists”. Mr. Levy also testified that he had a number of  
construction companies. His first company was MDC Modern Design Concept Inc. (MDC  
Modern), which was incorporated in April 2001. He incorporated a number of different  
construction companies after this as well as other types of corporations. Appendix Bsets out  
all of the corporations Mr. Levy admits to owning, in whole or in part, that were referred to in  
this proceeding.  
[22] Mr. Levy also introduced Mr. Kazman to Avi Luska, who later became a partner of Mr.  
Kazman’s in certain properties that they purchased together. Their first big project was 493-495  
Queen Street West, which they renovated with loft apartments on the second floor. According to  
Mr. Kazman, they sold the building for a nice profit and then bought 677 Queen Street West  
(677 Queen) and then 2897 Dundas Street (2897 Dundas) with a third partner, Ari Yakobson.  
[23] In the late 1990s or early 2000s, while he was still in practice, Mr. Kazman met Ms.  
Cohen and her father, Jack Sade. They were carrying on a lighting business called Save Energy  
Lighting (Save Energy) in the same plaza on Cocksfield Avenue, Toronto, where Mr. Kazman  
had his law office. They came to him and asked him to prepare some will and power of attorney  
documents. Mr. Kazman developed a business relationship with Ms. Cohen and her father and  
did other legal work for them including corporate litigation. Eventually Ms. Cohen became his  
business partner in certain property purchases. As well, Mr. Kazman testified that Ms. Cohen and  
her father loaned him money from time to time. They became good friends and Mr. Kazman  
admitted that he developed an intimate relationship with Ms. Cohen that probably began prior to  
the SBLs in issue, although Mr. Kazman then changed his evidence to say only that it could have  
begun prior to the SBLs. No further details of this relationship are in evidence.  
[24] Mr. Kazman also introduced Ms. Cohen to Mr. Levy. Mr. Levy admitted this and said  
that it was perhaps two to three years before he prepared a Business Plan for Ms. Cohen for her  
first SBL in June 2007. Mr. Levy testified that he used to see her all the time after that and that  
Mr. Kazman told him that they were partners in properties. Mr. Levy, however, downplayed his  
relationship with Ms. Cohen.  
[25] Mr. Kazman and Mr. Levy became partners in certain properties that were purchased,  
starting in 2007 with the purchase of 1040 Eglinton Avenue West, Toronto (1040 Eglinton),  
although they do not agree on which properties and over what time period they were partners. I  
have also set out in Appendix B” the particulars of properties that were referred to in evidence  
where the ownership is not in dispute. In that Appendix, I also include particulars of the  
properties where ownership is disputed between Mr. Kazman and Mr. Levy as it may be relevant  
to their knowledge of the purported renovations done at these properties using SBL proceeds.  
However, who in fact owned each property and when is not otherwise important. As I explained  
to Messrs. Kazman and Levy multiple times, the reasons for their falling out and whether or not  
Page: 12  
one of them had been taken advantage of by the other, and issues of that sort, were collateral to  
the issues in this proceeding.  
[26] Mr. Kazman and Mr. Levy had a falling out sometime in 2010, likely around the time of  
the Uzeem SBL in early 2010.With respect to the SBL Mr. Levy obtained for Bluerock in March  
2010, Mr. Kazman alleges that the two leases Mr. Levy provided to the CIBC for this SBL were  
frauds, that no renovations were done or equipment supplied and that this entire SBL was a  
fraud. There is no doubt that their relationship had broken down by this point.  
[27] Mr. A. Levy did not obtain a SBL and the bulk of the evidence that I heard about his  
involvement in the alleged criminal organization was about some SBL proceeds that he received  
from companies associated with Mr. Levy, which Mr. Levy testified were personal loans to his  
brother or his companies. There was also evidence of certain payments Mr. A. Levy or his  
companies made to Mr. Levy and his companies and in some cases other companies that Mr.  
Levy testified were loans from his brother.  
[28] At the end of the Crown’s case, Mr. A. Levy brought motion for a directed verdict which  
I dismissed; see R. v. Kazman, 2016 ONSC 8194.  
[29]  
Mr. A. Levy elected not to testify. At the end of the trial the Crown simply relied only on  
their earlier submissions in defence of the motion for a directed verdict in support of their case  
against Mr. A. Levy. I determined at the end of the oral submissions that the Crown had not  
proven the allegations against Mr. A. Levy beyond a reasonable doubt and directed his acquittal  
on counts 1 and 7, with reasons to follow, which are set out in Appendix C.  
[30] Mr. Tehrani and his brother, Mr. A. Tehrani, were born in Iran. Mr. A. Tehrani is the  
older of the two and they have four brothers. While in their teens, Mr. Tehrani and Mr. A.  
Tehrani were sent by their parents to Italy to study jewellery; the family business. They decided  
not to go back home and came to Canada with an older brother in 1984 as immigrants in the  
investor category. As required, they opened a jewellery manufacturing facility immediately upon  
arrival. Both Mr. A. Tehrani and Mr. Tehrani worked in the business for five to six years.  
[31] After leaving this family business, Mr. A. Tehrani opened a jewellery design office for  
himself. Although Mr. A. Tehrani did not mention this, he and Mr. Tehrani operated a fine food  
business together for about four years until the business was sold. After Mr. A. Tehrani got  
married and had children, he decided to spend more time with his family and so he started  
working for The Brick and then for Leon’s, where he worked for almost ten years while he  
learned the furniture business.  
[32] After leaving Iran, Mr. Tehrani also worked in the family jewellery manufacturing  
business for a few years and, after he got married, he began to work as an employee for a  
jewellery store. After the fine food business he operated with his brother, he and his wife and her  
sister opened a home décor, furniture and accessories store called Bizarre Shoppe Ltd. (Bizarre)  
in 1989, which they operated in premises Mr. Tehrani leased on the first floor and basement of  
Page: 13  
654 College Street, Toronto (654 College). Mr. A. Tehrani testified that he spent a lot of his free  
time at Bizarre learning the ins and outs of operating a store from his brother.  
[33]  
In 2002 or so Mr. Tehrani started importing vintage Vespa scooters. Jigolos was  
operating nearby and Mr. Tehrani met Mr. Levy at Bizarre as Mr. Levy was passionate about  
motorcycles. This is how Mr. A. Tehrani and Mr. Salehi also met Mr. Levy. Mr. Tehrani  
operated Bizarre until 2005 or 2006. In the meantime, his wife's sister had become a dental  
hygienist and he had two young children so his wife was staying at home more. As a result Mr.  
Tehrani decided to open a new business.  
[34] Mr. Tehrani and his partner, Reza Moghaddam, incorporated Meez Ltd. in November  
2005. By agreement dated December 1, 2005, the Bizarre lease was formally assigned to Meez  
Ltd. Although Mr. Tehrani did not give details, apparently Mr. Moghaddam decided to go back  
to Iran at some point and Mr. Tehrani then brought Mr. Salehi in as a partner. He did not know  
Mr. Salehi, who at the time was selling a Subway restaurant, which he had been operating on  
College Street. An employee who was working for both of them introduced them to each other.  
[35] Mr. Tehrani testified that he entered into an agreement with Mr. Salehi dated May 18,  
2006 and executed May 26, 2006, which confirmed that Mr. Salehi had agreed on an “initial  
investment fee of $35,000”. Mr. Salehi was to work full-time for the business for a period of  
three months and make a decision by August 31, 2006 whether to enter into a business  
partnership agreement with Meez Ltd. If an agreement was not reached by then the money  
invested by Mr. Salehi in the amount of $35,000 was to be considered an unsecured loan that Mr.  
Tehrani took full responsibility to repay. Notes at the bottom of the agreement set out the  
payments by Mr. Salehi of $10,000 from TD and $25,000 from CIBC reflecting his investment.4  
[36] Mr. A. Tehrani testified that he wanted to be a partner with Mr. Tehrani in Meez Ltd. as  
well but, according to Mr. Tehrani, Mr. Salehi did not agree. He did not want two brothers  
against him.  
[37] At the end of the Crown’s case Mr. A. Tehrani brought a motion for a directed verdict  
which I dismissed with reasons to follow.  
[38] Although Mr. Salehi is no longer a defendant, the SBLs he obtained are relevant to the  
Crown’s case in at least two respects. First of all, the evidence of how Mr. Kazman and/or Mr.  
4
Ms. Barton produced copies of three drafts and a cheque but only the draft payable to Meez Ltd. dated May 26,  
2006 matches these payments. The others do not: a $20,000 cheque payable to Mr. Tehrani dated August 23, 2006, a  
$10,000 RBC draft payable to Mr. Tehrani dated August 24, 2006 and a CIBC draft also payable to Mr. Tehrani  
dated August 24, 2006 for $29,000. Mr. Tehrani could not explain why he received $59,000 from Mr. Salehi  
between August 23 and August 24, 2006 - two payments on the same day from two different banks and $20,000  
paid the day before; all to him personally. The evidence surrounding Mr. Tehrani’s and Mr. Salehi’s relationship as  
partners was confusing but I have not found it to be relevant to the issues that I have had to determine.  
Page: 14  
Levy may have participated in Mr. Salehi’s SBLs is relevant to the charges against them.  
Secondly, the evidence related to Mr. Salehi’s SBLs may shed light on other renovations  
purported to have been made to the same premises.  
[39] Ms. Chapkina immigrated to Canada at the age of 24 in November of 1999 from what  
was then the U.S.S.R., now known as the Russian Federation. She has a university degree in  
humanities, which is considered above a Canadian Bachelor’s degree but somewhat below a  
Canadian Master’s degree. Ms. Chapkina worked part-time in a paralegal office and for an  
immigration lawyer. In September of 2006, Mr. Kazman, who was then working as a paralegal  
through Dufferin Paralegal, hired Ms. Chapkina. She worked initially as a legal  
assistant/receptionist but, over time, Ms. Chapkina became more involved in operating Blue  
Glass for Mr. Kazman. Ms. Chapkina testified that when she was arrested she immediately  
resigned and mailed the keys to Mr. Kazman’s office back to him and that she had no further  
contact with him or Mr. Levy until trial.  
[40] At the time that Mr. Ghatan obtained a SBL for Homelife Realty, he was a successful real  
estate agent. He had received several merit awards from Homelife Realty for his sales and was  
also a member of their Diamond Club based on his gross sales commissions. He wanted to open  
a brokerage using the SBL funds.  
Overview of the Crown’s Case  
[41] The Crown’s case began with the evidence of Cpl. Thompson, a 24-year veteran with the  
Financial Crimes Division of the RCMP who explained the course of her investigation. She is the  
officer-in-charge of this case and was the main investigating officer. In addition to outlining the  
theory of the Crown’s case against the defendants, Cpl. Thompson testified about her  
attendances at certain of the premises in issue and the pictures that she took, although these  
attendances were some time after the SBLs in issue.  
[42] Most of Cpl. Thompson’s evidence was for the purpose of giving the defendants notice of  
the Crown’s theory of the case through the use of charts summarizing information from various  
sources and describing the flow of funds that were then elaborated on by Paul Coort, a Forensic  
Accountant retained by the RCMP to assist with the investigation. Mr. Coort prepared an  
analysis of the records of more than 90 different bank accounts that were either provided  
voluntarily or in response to court production orders. Through his written report and viva voce  
evidence, facilitated by the charts first introduced through Cpl. Thompson, Mr. Coort explained,  
to the extent he could, the source and flow of funds with respect to the 16 SBLs and various  
corporations associated with Ms. Cohen, the defendants and Mr. Salehi; (the “Coort Analysis”).  
[43] Much of the Crown’s case is documentary. As part of the investigation, the RCMP  
obtained the SBL file from the bank in question for each of the 16 borrowing companies as well  
as a few other SBLs and bank records for more than 90 accounts alleged to be involved in  
circulating the loan proceeds. These bank records were introduced into evidence as business  
records through Cpl. Thompson and in reliance on affidavits sworn by bank representatives  
 
Page: 15  
pursuant to s. 29(1) of the Canada Evidence Act, R.S.C. 1970, c. E-10 (CEA). In addition,  
various bank representatives were called to permit cross-examination by the defendants. The  
bank account statements, cheques and drafts withdrawn from a particular account at the bank  
were admitted into evidence as authentic and as proof, in the absence of evidence to the contrary,  
of the entry and the transactions therein recorded; i.e., truth of the contents. Who in fact signed  
the cheques was not proven based only on the proof of the authenticity of the cheque but that did  
not become an issue once the defendants testified.  
[44] Cheques and drafts from other banks, which represented deposits made into a particular  
account, were not technically covered by s. 29(1) of the CEA but they were accepted by the bank  
that received the deposits and on that basis I considered those deposits proven.  
[45] I made certain rulings as to how the rest of the bank records could be used. The most  
important one was related to the fact that some of the SBL files contain typed notes summarizing  
conversations between bank employees with the borrower and other third parties, notes referring  
to site visits conducted by a representative of the bank, observations made and, in some cases,  
the details of conversations between the bank representative and a particular defendant. I ruled  
that since the contents of the notes as to what various representatives of the bank observed and/or  
said or were purportedly told by a particular defendant is hearsay, that if any party wanted to rely  
on this information the bank employee in question would have to be called as a witness, subject  
to there being an applicable hearsay exception. The only exception agreed to was that I would  
consider a note that stated that a site visit had occurred as fact. To the extent the bank files  
contain statements that bank employees suspected fraud on the part of any defendant or were  
investigating fraud, or comments of that nature, they have been ignored.  
[46] Other documents in the SBL files such as Business Plans, copies of Guaranteed  
Investment Certificates (GICs), Notices of Assessment (NOAs) from the CRA and leases that  
purport to be between the borrower and third parties were proven to be true copies of the  
originals in the banksloan file and were also proven to be authentic pursuant to s. 29(1) of the  
CEA. However, who filled in or prepared the document, where applicable who signed the  
document and who provided the document to the bank was not proven by admission of the bank  
records.  
[47] The RCMP also obtained certified copies of various government records including the  
photos and signatures of the defendants, Ms. Cohen and Mr. Salehi from the Ministry of  
Transportation (Driver’s Licence File), Corporate Profiles of the various corporations from the  
Ontario Ministry of Government Services records from the CRA, and Parcel Register Abstracts  
(Abstract) from the Land Registry Office for the various properties in issue. These were admitted  
pursuant to s. 24 of the CEA.  
[48] From the Driver’s Licence Files I have a known signature from each of the defendants,  
Ms. Cohen and Mr. Salehi; the Known Signatures. Although in most cases the signing of  
documents was admitted, where necessary I have been able to make findings as to who signed  
particular documents or cheques by comparing the signature on the document in question with  
Page: 16  
the Known Signature. There was no dispute that as a matter of law, as the trier of fact, I am able  
to make such comparisons and draw factual conclusions. I have set out in Appendix Da brief  
summary of the law on this issue that I applied.  
[49]  
With respect to the CRA files, I also made a number of rulings. Some of the CRA files  
contain information about audits conducted by CRA employees and in some cases this includes  
observations made by that employee of a particular business and/or discussions with a particular  
defendant. As this information is hearsay I did not rely upon it. No one from the CRA was called  
as a witness.  
[50] The Crown also called Lorenzo De Franco, a long-time employee with Industry Canada,  
working exclusively with the CSBFP, who explained the process of obtaining a SBL from the  
perspective of Industry Canada, including the completion by the borrower of the Loan  
Registration Form. He also identified the documents sent out or received by Industry Canada and  
in particular the Loan Registration Acknowledgment and the Claim for Loss Calculation forms  
that related to those of the 16 SBLs where the bank made a claim to Industry Canada. An issue  
arose as to the accuracy of the loss calculation set out in those forms but it is not necessary for  
me to determine those issues at this time. It is clear, however, that to the extent that assets  
purportedly purchased by SBL proceeds were appraised, the appraisers called by the Crown gave  
the assets they did see nominal values which resulted in the banks, in all cases, deciding to  
abandon those assets.  
[51] The Crown, Mr. Kazman and Mr. Levy called a number of bank representatives who, in  
some cases, provided further evidence identifying bank records but also spoke to the SBL  
process at their bank and provided what I will describe as the “Bank Reliance Evidence” as it  
relates to the evidence from the banks as to what information provided by a defendant was relied  
upon in approving the SBL.  
[52] In addition, the Crown called various witnesses who testified to the issue of whether or  
not certain leasehold improvements were made to some of the properties in issue and/or whether  
or not furniture, fixtures and equipment was supplied. These witnesses included third party  
landlords and other tenants who are not involved in these allegations and others who had  
firsthand knowledge of the properties before the SBL in issue was obtained.  
[53] The Crown asserts that Mr. Kazman, Mr. Levy and Ms. Cohen used the vast majority of  
the SBL proceeds to purchase properties and renovate those properties, as well as make  
payments for mortgages, outstanding loans, legal bills, luxury vehicles, and various other  
personal expenses. It is the position of the Crown that the Coort Analysis reveals millions of  
dollars being circulated among various companies associated with the defendants with very little  
in the way of operating businesses. It is the position of the Crown that the sheer volume of funds  
being randomly circulated back and forth between many of Mr. Kazman's, Mr. Levy's, and Ms.  
Cohen’s sham corporations proves to be the most incriminating evidence in an overwhelming  
case for them.  
Page: 17  
Overview of the Defences  
[54] This is a case colloquially known as one of “cut throat” defences. Each of the defendants,  
save for Mr. A. Levy, testified on their own behalf and all of the defendants blamed Mr. Levy for  
any fraud perpetrated on the banks. Mr. Levy on the other hand, testified that he was the victim.  
[55] Mr. Kazman’s position is that he knew nothing of the alleged fraud. His overarching  
defence is that he trusted Mr. Levy and was victimized by him just as the other defendants and  
others were. Mr. Kazman’s position is that there was no criminal organization. He asserts that  
Mr. Levy is a “control freak”, something even Mr. Levy admitted, and that Mr. Levy was a  
“master manipulator”; a business loan specialist, who facilitated and obtained business loans for  
people which included, preparing business plans, leasing out his premises when it was  
advantageous for him to do so, drafting the leases, and altering documents before they were  
provided to the banks. Mr. Kazman also relies in part on the fact that based on the Coort  
Analysis, Mr. Levy and his corporations received significantly more of the money from the  
various SBLs than any other defendant.  
[56] Mr. Kazman acknowledged being the signing officer at the bank for all but one of the  
Disputed Construction Companies, and the one who signed many of the cheques analyzed by Mr.  
Coort. He testified that Mr. Levy controlled all of the Disputed Construction Companies and  
directed him to receive all payments and how to make cheques payable and controlled all of the  
money that flowed through these accounts. Mr. Kazman maintains that he did so only to make a  
fee (2 to 10% or a flat fee) based on the total amount of money going through the accounts and  
that he had no knowledge of any fraud or any reason to suspect a fraud. Mr. Kazman emphasized  
that at that time he trusted Mr. Levy, who had assured him that everything was aboveboard. Mr.  
Kazman maintains that given how he was paid, he only paid attention to the total deposits and  
that he had no way of knowing the source of the funds or any reason to suspect there was any  
fraud in the use of the SBL proceeds.  
[57] In summary, it is Mr. Kazman’s position about cheques payable to him and his  
companies that they were either loans or payment of the percentage or flat fee that Mr. Levy paid  
him for administering the various bank accounts. In terms of cheques he signed in favour of Mr.  
Levy and his companies, from one of his companies, he typically said this was in repayment of a  
loan given to him by Mr. Levy. As for all of the other cheques he signed on behalf of the  
Disputed Construction Companies, Mr. Kazman testified that he did so at the direction of Mr.  
Levy and had no reason to suspect any fraud. On its face it is not possible to determine the  
veracity of this evidence but I will consider the issue again after I have reviewed the evidence for  
the 16 SBLs.  
[58] Mr. Kazman also submits that there is no evidence that he had any “…keen familiarity  
with CSBFPs and the inner workings of banks…” as alleged, or ever represented himself as a  
SBL specialist. The only evidence is that in his capacity as a lawyer/paralegal he assisted a  
number of clients who were sued as a result of SBLs. Similarly, he asserts there is no evidence  
that he was involved in the preparation of business plans, the completion of any of the SBL  
 
Page: 18  
application documentation, or the creation or alteration of the GICs and NOAs submitted to the  
banks or that he counseled or coached or advised any of the defendants to submit false  
documents to the bank. In fact, in some cases he asserts that there is no evidence that he even  
knew that there was a SBL.  
[59] Mr. Kazman produced a number of notes in his handwriting, which referred to loans from  
Ms. Cohen to him personally or a company he owned or owned with other partners and the  
repayment of loans. The details are not important. These notes are material only because they  
show that there were real loans between Mr. Kazman and Ms. Cohen and the informality of  
documentation to evidence those loans. Mr. Kazman also produced some typed Promissory  
Notes evidencing loans made by Ms. Cohen to him personally and in some cases to a corporation  
and Mr. Levy as well. As one example, on October 30, 2009, Mr. Kazman, Mr. Levy and Mr.  
Kazman on behalf of 846 Realty Corp. (846 Realty), signed a Promissory Note securing a  
$100,000 loan from Ms. Cohen. Mr. Kazman submitted that as a result there was legitimately  
money passing back and forth between them and that this had nothing to do with money  
laundering.  
[60] Mr. Kazman also testified that he had other sources of income in the relevant period. He  
received a demand loan for almost $701,000 from Mr. and Mrs. D’Imperio on August 15, 2006.  
He testified that he repaid $200,000 of that loan in April 2007.  
[61] Mr. Kazman argued that there was a failure on the part of the Crown to prove its case by  
failing to call Ms. Cohen and Mr. Salehi. I do not accept that submission. They could have been  
called by anyone. It was up to Crown counsel to decide whether or not to call either of these  
former defendants as witnesses. I must assess the evidence that I heard and not speculate about  
what I might have heard.  
[62] It is Mr. Kazman’s position that the first order of business is to determine whether the  
evidence discloses beyond a reasonable doubt whether the work and services were provided or  
not. He submits that if the Crown cannot establish that work and services and equipment were  
not supplied or completed beyond a reasonable doubt based on the admissible evidence then the  
charges in whole or in part must be dismissed. Mr. Kazman argues that in most of the cases the  
Crown has failed to establish beyond a reasonable doubt that the leasehold improvements and  
equipment were not supplied, that the businesses established were not bona fide, and that bona  
fide efforts were not made to operate these businesses.  
[63] In addition to the bank witnesses, Mr. Kazman called a couple of witnesses who spoke to  
discreet issues.  
[64] Mr. Levy’s position is that he knew nothing of the alleged frauds. He testified that he had  
nothing to do with the Cohen SBLs. As for the others, he admitted being the subcontractor to  
some of the Disputed Construction Companies, which he alleged were in the control of Mr.  
Kazman and that in that role one or more of his companies did the leasehold improvements and  
in other cases that one of his companies was the contractor used by the borrower for the supplier  
Page: 19  
of furniture, fixtures, and equipment. He denied preparing all of the Business Plans provided to  
the banks and denied the suggestion that he was the person who fraudulently altered any GICs or  
tax documents. He also testified that if one of his companies was involved in the leasing and/or  
renovation of a property that the lease was legitimate and the leasehold improvements were done  
and all equipment required by the borrower was provided. He ended with "I am the victim of  
everybody".  
[65] With respect to all of the cheques passing between him, Mr. Kazman and Ms. Cohen, Mr.  
Levy gave various explanations. Like Mr. Kazman, for the most part it was his position that  
various cheques were loans or repayments of loans but there were other explanations that he and  
Mr. Kazman gave. For example, Mr. Kazman testified that some cheques to him were for legal  
services provided or money due from the sale of his Blue Glass water. Mr. Levy testified that  
some of the payments he made were for lights purchased from Ms. Cohen and that some of the  
money received from Mr. Kazman was for construction work he did for him. In giving their  
evidence, for the most part, there was no documentation with respect to the payment and they  
relied primarily on what was stated on the RE line of the cheque when it was filled in. Mr. Levy  
in particular testified that if the cheque referenced "on account" and was for an even amount; i.e.,  
no cents, that it was for money loaned or paid back. Mr. Kazman did not give that evidence. I  
agree that it would make sense that either one was making or receiving a loan that it would be an  
even dollar amount. They both testified that if the cheque referenced an invoice number, it was  
for subcontracting or for a purchase of lights, furniture, or home décor accessories. In Mr.  
Kazman’s case however, he disputed the suggestion that Mr. Levy’s companies did any  
subcontracting for the companies that he admitted owning, but of course he did not admit to  
owning any of the Disputed Construction Companies.  
[66] With respect to some of the cheques received from the Disputed Construction  
Companies, Mr. Levy testified that the cheque could be for work that he did for Mr. Kazman’s  
company, i.e., one of the Disputed Construction Companies, as a subcontractor or payment for  
supplies purchased by Mr. Kazman. However, not all of these cheques refer to an invoice  
number. When Mr. Levy was asked why he would be paying money to Mr. Kazman pursuant to  
an invoice he very quickly came up with three properties owned by Mr. Kazman that he claimed  
to do subcontracting, namely two homes and one condo owned by Mr. Kazman..  
[67] Mr. A. Levy’s position was that the Crown did not prove its case against him. He  
routinely asked all of the witnesses who were called whether or not they knew him or had any  
business dealings with him. The only contact that I heard about was that on one occasion Mr. A.  
Levy went to pick up some furniture for his brother from Mr. Tehrani and he introduced Mr.  
Ghatan to his brother. When his brother, Mr. Levy, testified, he addressed the issues that I was  
concerned about when I dismissed Mr. A. Levy’s motion for a directed verdict. Although, as I  
will come to, I have significant concerns about the credibility and reliability of Mr. Levy’s  
evidence, his evidence about payments to and from Mr. A. Levy which he testified were for  
legitimate purposes was not contradicted unless I were to assume that Mr. A. Levy is somehow  
fixed with knowledge of the source of the funds, because he and Mr. Levy are brothers, which of  
Page: 20  
course cannot be the case absent some evidence to support that inference. As already stated, I  
have attached my reasons for acquitting Mr. A. Levy at Appendix C.  
[68] As for the other defendants, who took out one or more SBLs, they all took aim at Mr.  
Levy and took the position that they were victims of a fraud scheme orchestrated by him. They  
all professed to have trusted him and that they had no experience in SBLs, no knowledge of any  
altered documents that were provided to the bank, which they claimed must have been altered by  
Mr. Levy without their knowledge, no experience in construction, which is why they relied on  
Mr. Levy, who agreed to do their leasehold improvements, to determine what needed to be done  
and to provide them with equipment for their store. They all testified that to the best of their  
knowledge all of the leasehold improvements were done and all of the furniture, fixtures and  
equipment were supplied in accordance with the invoices provided to the banks. All of the  
defendants, save for Ms. Chapkina, professed to have dealt with Mr. Levy only, not Mr. Kazman.  
Ms. Chapkina testified that both Mr. Kazman and Mr. Levy used their construction companies  
for her renovations. All of the defendants testified to having no knowledge of any fraud, or any  
reason to suspect fraud. None called any other witnesses save for Mr. Inoue who called Deborah  
Bendavid who obtained a SBL that is not part of the indictment before me.  
[69] The defendants have no obligation to provide evidence but they did provide some  
documentation to support their positions. Mr. Tehrani seemed to be the most organized in that  
regard, followed closely by Mr. Ghatan. As for Mr. Kazman, he produced some documentation  
and was able to get some documents from Ms. Cohen. There was a lot of evidence about Mr.  
Levy’s documents and the Crown and the other defendants assert that he must have more  
documentation than what he produced and dispute his claim that the documents in storage were  
lost. Although his evidence on this issue changed, which is relevant to his credibility, I do not  
have enough evidence on this point to come to any conclusion, particularly as Mr. Levy had no  
onus to produce documents in support of his position.  
[70] To the extent that the defendants were not able to corroborate their evidence by  
documentation, I have not drawn an adverse inference. The Crown argues that once they were  
charged, common sense would dictate that one would preserve the documents that would  
confirm ones position but my concern is that undermines the fact that the onus is on the Crown  
to prove its case against the defendants.  
[71] Mr. A. Tehrani, Ms. Chapkina and Mr. Ghatan also argue there is no evidence of any  
kickbacks to them, that they lost their own money and had no motive to commit fraud. Mr. A.  
Tehrani adds that he had a steady job making good money at Leon’s, which he gave up to open  
his businesses.  
Duties of the Court Where an Accused is Self-Represented  
[72] I endeavoured to ensure trial fairness for Messrs. Kazman, Levy and A. Levy, who were  
self-represented. That involved providing a comprehensive memorandum explaining how the  
trial would proceed including the burden of proof and the information the defendants needed to  
 
Page: 21  
know with respect to what the Crown has to prove with respect to the various charges. This  
memorandum was supplemented with a number of other memoranda dealing with the various  
evidentiary and legal issues that arose and I continued to provide memoranda right until the  
commencement of the closing submissions.  
[73] In addition, I provided guidance and information to these defendants on the record as the  
case progressed as needed. I am grateful for the fact that these defendants were respectful of the  
Court and when they strayed into areas that were not relevant, accepted my rulings without  
further argument. I also thank Crown and Defence counsel who, in the true tradition of the bar,  
pointed out times when further advice on a particular issue would be beneficial to the self-  
represented defendants.  
[74] For all of these reasons I am satisfied that these defendants received the fairest trial  
possible in all of the circumstances.  
The Issues  
[75] There were no formal admissions made by any of the defendants. However, as everyone  
but Mr. A. Levy testified, issues of identity were admitted and, for the most part, the defendants  
acknowledged their signatures on various documents. Those defendants who took out one or  
more of the 16 SBLs in issue acknowledged that they had made those applications and that their  
corporations received the SBL funds.  
[76] Although again not formally admitted, no issues of accuracy were raised with respect to  
Mr. Coort’s report, although Mr. Levy argued that it misrepresented the facts because, for the  
most part, Mr. Coort only looked at bank account records for a specific period of time; not from  
the opening to the closing of the account. Mr. Levy also testified that he had bank accounts that  
Mr. Coort did not see but he never put that suggestion to Mr. Coort. I deal with this issue below  
as part of my preliminary findings of fact.  
[77] To the extent the Crown’s case depends on documents from the banks, government sites  
and Industry Canada, the authenticity of those documents was not disputed save for certain GICs,  
NOAs and T1 General income tax returns (“T1 General”), that were provided to the banks as  
part of a SBL application. The fact these documents were altered by someone before the bank in  
question received them is not contested but who altered the documents is in dispute.5 The  
defendants whose loans are implicated by these altered documents all point to Mr. Levy as the  
person who must have done the alterations in the course of preparing their business plan  
package. Mr. Levy vigorously disputes this. There are other factual misrepresentations in the  
5
There was no suggestion by anyone that the documents were altered by someone insider the bank and given the  
similarity of the alterations with respect to the documents provided to five different banks, there would have been no  
basis to make such an argument.  
 
Page: 22  
documents in the bank files that the defendants who obtained SBL loans prepared, filled in  
and/or signed that they downplay.  
[78] The Crown must prove beyond a reasonable doubt that the banks relied to their detriment  
on the forged documents and misrepresentations and that their economic interests were put at  
risk. The Crown did not call any witnesses from the banksunderwriting departments who  
actually approved the 16 SBLs in issue and relies instead on bank representatives who dealt with  
some of the defendants. The Defence submits that the Crown has not proven that the banks relied  
on these forged documents to their detriment. I will deal with this issue factually as I review each  
of those SBLs and then consider the law before making my findings.  
[79] For each of the 16 SBLs, there is an issue as to whether or not there were in fact any  
leasehold improvements done and furniture, fixtures and equipment supplied as the invoices  
provided to the banks would suggest, or at least whether or not all of the leasehold improvements  
were done and whether or not all of the furniture, fixtures and equipment was supplied. The  
defendants dispute this but have varying knowledge of what was apparently actually done for  
various reasons.  
[80] Although evidence of the default of the SBLs, appraisal of the remaining assets, bank  
losses and claims to Industry Canada was introduced, the Crown does not rely on actual losses as  
part of its case although that will be an issue on sentencing should there be any convictions. The  
Crown’s position is that it does not have to prove actual loss resulting from the fraud, which was  
not disputed.  
[81] In summary, based on the documentation, a lot of relevant facts are not in dispute. There  
are, however, a number of factual issues that will largely depend on an analysis of the documents  
and, more importantly, an assessment of the credibility and reliability of the witnesses who gave  
relevant evidence to those issues.  
The Crown’s Similar Fact Application  
[82] The Crown brought a “count-to-count” similar fact application that everyone agreed  
should be argued and decided at the end of the case. It related to all of the defendants with the  
exception of Mr. Ghatan. I have set out my reasons for ruling in favour of the Crown’s  
application in Appendix “F”. For reasons stated in this Appendix, I have concluded that the  
similar fact evidence is sufficiently similar as to render it admissible on a count-to-count basis, as  
evidence of mens rea, on identity issues and to rebut possible defences..  
Evidence of Prior Discreditable Conduct and Reputation  
[83] None of the defendants have a criminal record. The Crown did not argue that any of the  
defendants put their character in issue when they testified. However, as I advised the defendants,  
the rule, which prevents the Crown from leading evidence of bad character of a defendant, does  
not apply to any defendant leading evidence of bad character of a co-defendant. A defendant is  
entitled to cross-examine witnesses and lead evidence of the bad character of a co-defendant  
   
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without waiting for that co-defendant to put his or her character in issue so long as such evidence  
is logically relevant to the defence of the defendant. This evidence can only be used to help raise  
a reasonable doubt on behalf of the cross-examining defendant and cannot be used to help prove  
the guilt of the testifying co-defendant.  
[84] The Crown did submit that Mr. Tehrani was underreporting his income to the CRA and  
relied on his tax returns and that does appear to be the case. The Crown made it clear, however,  
that it was not saying that because he misrepresented his taxes that this makes him less  
believable. It is the Crown’s position that he did not declare his income because it was  
fraudulent. I chose not to rely on this evidence, as there could have been any number of reasons  
for the underreporting.  
[85] As already stated, I have ruled with respect to the use to be put to the revocations of Mr.  
Kazman’s licence to practice law in Appendix A. However, in addition to this issue which Mr.  
Levy pursued in cross-examination of Mr. Kazman, during their cross-examinations of each  
other they each made many and various allegations of discreditable conduct allegedly illustrating  
bad character that was denied by the other. This evidence was aimed primarily at how their  
relationship broke down and whether or not Mr. Kazman was carrying his weight in terms of  
making his financial contributions and whether or not Mr. Levy took advantage of Mr. Kazman  
at the end by registering mortgages on properties Mr. Kazman claimed an interest in and Mr.  
Kazman’s assertion that Mr. Levy obtained the Bluerock SBL behind his back. Each blames the  
other and their animosity towards each other at trial was palpable when they were examining  
each other. That is relevant to how I assessed their evidence when they testified about how the  
other was dishonourable in various ways.  
[86] Although the Bluerock SBL is before me, as I explained to Messrs. Kazman and Levy,  
the time necessary to determine whose position was correct on the major issues between them  
was not something that could be undertaken in the trial. Although the timing of when their  
relationship broke down is relevant, who was at fault and whether or not it amounted to prior  
discreditable conduct is a collateral issue and not something that I can determine as it would  
amount to a complex trial within a complex trial. Neither of them pursued a civil action and the  
prejudicial effect on the trial in trying to get to a point where I could make any findings of fact  
far outweighed any possible probative value to this evidence, which certainly was not readily  
apparent in any event.  
[87] Mr. Kazman called Edwin Cheng and David Richards to give evidence of possible  
discreditable conduct by Mr. Levy. They both testified about their experience with Mr. Levy  
when they obtained SBLs with his assistance for their franchised businesses. Mr. Inoue called  
Deborah Bendavid who obtained a SBL for her company Kidshill Ltd. (Kidshill). I also heard  
some evidence in this regard from Armando Benlezrah, the owner of Bonded Contracting and  
Design Inc. (Bonded), the purported contractor and supplier to Bluerock.  
[88] I have summarized all of this evidence in Appendix G.  
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General Assessment of Credibility and Reliability of the Witnesses  
General Comment  
[89] In assessing the credibility and reliability of all of the witnesses, I have taken into account  
that the events they gave evidence about were a number of years ago, and particularly if no  
documents exist, that it is natural that memories fade. Furthermore, as Ms. Barton submitted,  
some witnesses clearly had a better memory of events than others.  
WD  
[90]  
In making my decision, given that save for Mr. A. Levy, the defendants testified, the  
principles set out in W.(D.) v. The Queen (1991), 63 C.C.C. (3d) 397 (S.C.C.) (WD) apply. I must  
acquit a defendant if I believe his/her evidence or, even if I do not believe his/her evidence, I am  
left in a reasonable doubt by it. If I am not left in doubt by his/her evidence, then I must ask  
myself whether, on the basis of the evidence, which I do accept, I am convinced beyond a  
reasonable doubt by that evidence, of his/her guilt. In my analysis, I am not bound by the strict  
formulaic structure set out in WD, but rather must adhere to the basic principle underlying the  
WD instruction that the burden never shifts from the Crown to prove its case beyond a reasonable  
doubt.  
[91] In considering the evidence, I am entitled to believe all, some, or none of each witness’s  
evidence. Further, in assessing the evidence of each of the defendants who testified, I am  
entitled to consider it in the context of all of the other evidence. However, I must remind myself  
that this is not a credibility contest. WD prohibits me from concluding that the Crown has met its  
burden simply because I might decide to prefer the evidence of some or all of the Crown  
witnesses to that of a defendant. As I am faced with contradictory versions of what happened in  
this case, I would add that if, after considering all of the evidence, I am unable to decide whom  
to believe, I must acquit.  
[92] Assessment of a witness’s credibility includes evaluation of his or her demeanor as  
testimony is provided to the trier of fact in the courtroom -- this includes "non-verbal cues" as  
well as "body language, eyes, tone of voice, and the manner of speaking: R. v. N.S. (2010), 102  
O.R. (3d) 161 (C.A.), at paras. 55, 57. However I must be mindful of the fact that a trier's  
subjective perception of demeanor can be a notoriously unreliable predictor of the accuracy of  
the evidence given by a witness: Law Society of Upper Canada v. Neinstein (2010), 99 O.R. (3d)  
1 (C.A.), at para. 66; R. v. Smith, 2010 ONCA 229, at para. 11. Demeanour evidence alone  
cannot suffice to found a finding of guilt: R. v. K.(A.) (1999), 123 O.A.C. 161 (C.A.), at p. 172.  
[93] With these principles in mind I will first make some general assessments of the  
credibility and reliability of the various witnesses, although I recognize that assessing the  
evidence of a witness is not an all or nothing proposition.  
     
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The Crown Witnesses  
[94] I deal with my assessment of the credibility and reliability of the Crown’s witnesses in  
Appendix “H”. For the reasons set out there, I find that the evidence of Cpl. Thompson, Mr.  
Coort, Mr. De Franco, the various bank witnesses, the appraisers (with some exceptions), and the  
other Crown witnesses, to be both credible and, for the most part, reliable.  
The Defendants  
[95] Because this is a case where some co-defendants have given evidence against another  
defendant, I begin with the general observation that I must consider the case for and against each  
defendant separately and bear in mind when I consider the evidence of each co-defendant that  
s/he may have an interest of his/her own to serve. Apart from that, the evidence of the defendants  
is assessed in the same way as any other witness, subject to the application of WD.  
(a)  
Mr. Kazman  
[96] I found serious problems with Mr. Kazman’s evidence and in many respects I have  
concluded that it was self-serving and not reliable. He was evasive at times and on occasion, as I  
will point out, his evidence was internally inconsistent. It seemed that his evidence would shift if  
he thought he could say something helpful to his position, not realizing that it was inconsistent to  
evidence he had already given. For example, Mr. Kazman would on the one hand claim to have  
no knowledge of Ms. Cohen’s business dealings and, on the other hand, he would offer an  
explanation on a particular issue, suggesting he did know. In the same way he would profess  
having no knowledge of a particular SBL and yet he would testify that it was legitimate and the  
leasehold improvements were made. Both cannot be true. On other occasions, as I will come to,  
his evidence was simply incredible and nonsensical. The only positive aspect of Mr. Kazman’s  
evidence was that on occasion he would agree with a seemingly obvious proposition in cross-  
examination - something Mr. Levy was not capable of doing.  
[97] Mr. Kazman’s demeanour as a witness did not assist me in the assessment of his  
credibility. However, he was on the stand for a number of days and I would not conclude that he  
is so easily duped as he suggested to me he was in his dealings with Mr. Levy.  
[98] As I will come to, in the case of the SBL obtained by Mr. A. Tehrani from the RBC for  
Contempo, litigation ensued and Mr. Kazman and Mr. Levy swore affidavits, which were filed  
with the court. I have dealt with the admissibility and use of these affidavits in Appendix O.  
Although I concluded that these affidavits are not admissible as evidence in this trial, they can be  
used for the purpose of impeachment and, in particular, I may consider any inconsistencies in  
these prior sworn statements to these defendants’ sworn evidence when assessing their credibility  
as witnesses. This gives rise to one of the biggest issues I have with the veracity of Mr.  
Kazman’s evidence.  
[99] Mr. Kazman swore that he was the President and General Manager of Northwood  
Contracting (Northwood), which is one of the Disputed Construction Companies. His affidavit  
   
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suggests that he had personal knowledge of the leasehold improvements done for Contempo,  
which he completely resiled from at trial when he claimed that he knew nothing of the operation  
of this company, which he said was totally controlled by Mr. Levy.  
[100] Mr. Kazman’s explanation was that he drafted the affidavit at Mr. Levy’s direction. I do  
not believe that. If Mr. Kazman was relying on information from Mr. Levy, given his civil  
litigation experience, he was well versed in the boilerplate language that he should have added to  
his affidavit to reflect this. His submission that this was not necessary given Mr. Levy was also  
filing an affidavit is clearly not an answer to this - something any lawyer would know. Further,  
his position further undermines his credibility as it means he was prepared to swear an affidavit  
that contained information from another that he did not swear he believed to be true; in an  
affidavit he knew was being presented to the court. Mr. Kazman submits that the affidavit was  
true for what it actually attests to but, as I will come to, I have found to the contrary.  
[101] For these reasons and for reasons set out elsewhere in this judgment, I have concluded  
that on the disputed parts of his evidence, I do not believe Mr. Kazman, nor does his evidence  
raise a reasonable doubt in my mind.  
(b)  
Mr. Levy  
[102] Before I get into an assessment of Mr. Levy as a witness, I will consider the evidence  
before me that he attempted to interfere with the evidence of Mr. Tehrani. Mr. Tehrani testified  
that on one occasion during the course of the trial Mr. Levy whispered to him in court that he  
should make sure he told the Court that Mr. Levy just prepared his first Business Plan and that  
he, Mr. Tehrani, copied the others. Mr. Tehrani could not remember the date but he immediately  
told Ms. Barton about this. In answer to questions from Mr. Levy, Mr. Tehrani repeated this  
evidence. Although, as I will come to, I have concerns with some of Mr. Tehrani’s evidence, I  
accept this evidence as true. The fact Mr. Levy would attempt to interfere with the evidence is of  
concern but it is only one relatively small factor in how I have assessed his evidence.  
[103] Much of Mr. Levy’s evidence was very general in many respects. As Mr. Chapnick  
submitted, most questions were answered in one of the following four ways: 1) I did the work;  
2) this cheque/draft was for a loan; 3) this cheque/draft was repayment of a loan; or 4) I deny that  
and/or there is no formal proof - referring to the fact there was no document that would prove the  
point one way or the other.  
[104] When confronted with the allegation that his co-accused attributed alteration of GICs and  
the creation of fabricated NOAs to him, Mr. Levy denied the allegation. When confronted by the  
Crown with the fact that co-accused, who did not know each other, had similarly altered  
documents presented to the banks, Mr. Levy responded “not me”.  
[105] It was clear that Mr. Levy did not have specific recall about specific cheques or drafts. If  
there was a reference to an invoice number he testified that the payment was for that invoice but  
he could only say it was for lights if the payment was to Save Energy or for furniture if the  
Page: 27  
payment was to one of Mr. Tehrani’s companies. As I will come to, where there was a payment  
to Mr. Kazman with an invoice number, his evidence became incredible given other evidence he  
gave.  
[106] Mr. Levy was also quick to say that if a cheque Re: line said “on account” it was for a  
loan or repayment of a loan but his evidence that he would only loan or be paid back even  
amounts, by which he meant no cents, did not hold up when compared with all of the cheques  
and drafts that he testified were for loans.  
[107] Mr. Levy often answered questions with a request to see an invoice or document,  
knowing there was none. What I also found very troubling was that in cross-examination Mr.  
Levy would very often not admit evidence that he said in chief. I appreciate this is not a memory  
contest but if what he said in chief was the truth I would have expected him to at least admit that  
the suggestion being put to him was true. This was not a case where the cross-examiner was  
misquoting him.  
[108] There were also internal inconsistencies in Mr. Levy’s evidence. As Mr. Inoue submitted,  
when Mr. Levy testified about business plans and was shown the Contempo Business Plan he  
identified it as the one that he prepared. This was in fact, however, Mr. A. Tehrani's second SBL.  
Mr. Inoue's position is that an honest answer would have been that he didn't know or could not  
tell. I agree. Similarly, in his testimony, Mr. Levy admitted providing two Business Plans to Ms.  
Chapkina but he later retracted this and said he only provided one. Although Mr. Levy testified  
in chief that he knew nothing about what I will call the Bochner Condo, upon cross-examination  
he testified that he was aware of the Bochner refinancing matter when it happened in 2008.  
[109] Mr. Levy came across as a confident witness and he seemed impressed with himself in  
terms of how he was able to answer questions in cross-examination that he appeared to believe  
rebutted the suggestion being put to him. His demeanour did not assist me but I have found one  
aspect of his personality to be relevant. According to Ms. Chapkina, in Mr. Kazman’s office they  
called Mr. Levy "the king" or "the emperor" because of his attitude and the way he presented  
himself. There was evidence from Mr. Kazman and some of the other defendants that Mr. Levy  
was a “control freak” and with respect to the 3042 Keele Street property, in cross-examination by  
the Crown, Mr. Levy admitted “I am a control freak”, “I watch over everything”. I found this  
evidence relevant to some extent in dealing with the Disputed Construction Companies, as I will  
come to.  
[110] For these reasons and for reasons set out elsewhere in this judgment, I have concluded  
that on the disputed parts of his evidence, I do not believe Mr. Levy, nor does his evidence raise  
a reasonable doubt in my mind.  
(c)  
Mr. Ali Vaez Tehrani  
[111] Mr. A. Tehrani testified that he has been taking medication for pain and depression for  
five years, which he said has affected his memory. He testified that he takes Tylenol 3 for pain in  
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his back, neck and shoulders and Nabilone and some Cymbalta for depression and to calm him  
down but I believe Nabilone is for chronic pain as well. He is also a diabetic. In answer to  
questions from Mr. Levy, Mr. A. Tehrani admitted that his memory was better when he had his  
businesses. At one point in answering questions for Mr. Kazman, Mr. A. Tehrani said that he had  
“so much problem with my memory” because of the medication that he could not remember  
what he did last week. Towards the end of Mr. Kazman’s cross-examination, Mr. A. Tehrani said  
that he was doing his best and queried why should he go into details “who, what, what they are  
doing. I don’t know anything about that”. He testified that he was relying only on his memory  
and that his memory was failing. Mr. A. Tehrani denied that he was claiming memory loss to get  
out of answering questions.  
[112] Mr. Inoue submitted that there is no evidence that Mr. A. Tehrani remembers more than  
he admitted. However, no evidence was called to support Mr. A. Tehrani’s claim that any of the  
medication he is taking would have an adverse impact on his memory and in my view, having  
raised this, it was up to Mr. A. Tehrani to call some evidence in support of his position.  
[113] I appreciate that some people have better memory than others but in the case of Mr. A.  
Tehrani his alleged loss of memory was extreme. Although he did give the impression he was  
trying to be responsive to questions asked in cross-examination, he answered many, many  
questions with “I can’t remember”. In addition, when he did have an answer he prefaced the  
answer to almost every question with “If I’m not mistaken; I can’t be 100% certain” and then he  
would go on to answer the question or make a statement. It was clear he was trying to protect  
himself from being contradicted.  
[114] Having considered all of his evidence, I find that Mr. A. Tehrani was using his  
medication and alleged memory issues as an excuse not to answer many questions. I accept that  
there would be things he would not be sure of but the extent of his alleged memory loss was  
extreme and very selective. There were only a few things that he seemed certain of and what he  
did remember was surprising and self-serving. The most obvious example is that he supposedly  
remembered getting an envelope from Mr. Levy to take to the bank that was of a certain colour  
and size and was sealed when he could not remember things that would have been much more  
important at the time. The envelope has only become important now because the banks were  
given fraudulent documents. For example, he could not remember much about the TD GIC he  
brought to the bank or any detail about discussions with Mr. Levy about how he wanted the  
premises renovated. As I will come to, I do not accept Mr. A. Tehrani’s evidence about the  
envelope and the only explanation for this evidence is that Mr. A. Tehrani was adopting what he  
knew his brother was going to say about this same topic.  
[115] As I will explain, there were many times that I found Mr. A. Tehrani’s evidence to be  
incredible. It simply did not make sense given his background, experience and what, on his own  
admission he had at stake when he attempted to start these businesses. Furthermore, in certain  
respects I have been able to make a positive finding that Mr. A. Tehrani was not being truthful  
with respect to some of his evidence because of certain documents, which are reliable.  
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[116] I also found that Mr. A. Tehrani’s evidence was unreliable in the sense that when he was  
being cross-examined; particularly by Ms. Brun, he would change his evidence to accept a  
suggestion she was making because it was a “good point”.  
[117] As for demeanour, Mr. A. Tehrani came across as a very unsophisticated witness and  
perhaps as someone who is not very smart. Some of this could be attributed to the fact that  
English is not his first language. It was also part of his defence, however, as he repeated many  
times that he trusted Mr. Levy.  
[118] For these reasons I find that I do not believe much of Mr. A. Tehrani’s evidence.  
Furthermore, as I will come to, for certain SBLs, it does not raise a reasonable doubt.  
(d)  
Mr. Tehrani  
[119] Mr. Tehrani came across as a much smarter, sophisticated witness as compared to his  
brother. Ms. Barton was well prepared with documentation that she took him through to address  
the various allegations by the Crown of money laundering. There is also the fact that he repaid,  
in full, the first SBL that he obtained for his company Meez Corp. There is no question that that  
was a legitimate SBL and business.  
[120] As I will come to however, there were aspects of Mr. Tehrani’s evidence that I have  
found to be untrue. As I will explain I do not believe his evidence about a sealed yellow  
envelope. There is, as well, the fact that he did his best to distance himself from his brother’s  
SBLs and yet was willing to borrow large sums of money for his brother at prohibitively high  
interest rates. It simply made no sense to me. As well, as I will come to, I do not accept his  
evidence that all of the money paid to him by Mr. Levy’s companies was for furniture he sold to  
Mr. Levy. There are other aspects of his evidence that I have not accepted as well, that I will  
come to. On occasion Mr. Tehrani gave evidence that was simply nonsensical. For example, he  
gave an incredible story about how his accountant "saw he was successful" and recommended an  
overseas investor. Subsequently, the accountant kept Mr. Tehrani’s tax and business records  
because of a business dispute. Given Mr. Tehrani was underreporting his income his accountant  
would not have known that he was successful and when this was pointed out to Mr. Tehrani he  
had no answer to this.  
[121] For these reasons I found Mr. Tehrani was not a credible witness. In some cases  
however, his evidence still raised a reasonable doubt. In other cases it did not. I will deal with  
these issues as I review the evidence.  
(e)  
Ms. Chapkina  
[122] Ms. Chapkina appeared to have good recall of the events in issue and for the most part I  
found she was doing her best to recount those events accurately. Her evidence was internally  
consistent and for the most part unshaken in cross-examination. Her demeanour did not change  
when she was cross-examined.  
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[123] I accept that Ms. Chapkina was not a sophisticated businessperson and apart from her  
experience with Blue Glass, she had no business experience. Ms. Chapkina was clearly very  
much influenced by Mr. Levy and more so by Mr. Kazman, who she clearly trusted to act in her  
best interests. The evidence concerning what I call the Bochner Condo makes that very, very  
clear. As Mr. Chapnick submits, this evidence demonstrates Ms. Chapkina’s naiveté if not blind  
trust in Mr. Kazman. Mr. Chapnick argues that Ms. Chapkina had no reason to suspect any mala  
fides and was not willfully blind to anything. However, there is no doubt that Ms. Chapkina is  
also an intelligent woman and I believe she had to know more than what she sometimes  
admitted. As I will come to however, there were times when I found her evidence to be  
incredible.  
[124] Unlike some of the other defendants, I did not get a sense that Ms. Chapkina’s evidence  
was impacted by any malice towards Mr. Kazman or even Mr. Levy. To the extent that she was  
able to shed some light on Mr. Kazman’s role in certain matters that I must determine, I found  
her evidence very compelling.  
[125] As I will come to, I have come to the conclusion that some of the evidence Ms. Chapkina  
gave is not true and in each case, to the extent it goes to an essential element of an offence that  
the Crown must prove, I have considered whether or not it raises a reasonable doubt in my mind.  
(f)  
Mr. Ghatan  
[126] Mr. Ghatan gave evidence and was cross-examined by both Mr. Levy and the Crown.  
[127] Mr. Fox submits that Mr. Ghatan was not shaken in cross-examination but as I will come  
to, he did change his evidence on occasion and I have difficulty with some of it.  
[128] I noted that when Mr. Ghatan was questioned about the loan he arranged with Mr. Levy  
that he now knows came from the Bankays, he became very agitated with Mr. Levy and he  
testified that Mr. Levy had destroyed his life to which Mr. Levy responded that he was the  
victim. At another point in his evidence Mr. Ghatan testified emotionally and said that he was  
upset because of what Mr. Levy did to his life - he lost a great deal including his licence and  
ability to work as a real estate agent, something he appears to have been good at. He also  
expressed upset because of what Mr. Levy had done to all of the other defendants. I accept that  
Mr. Ghatan is very upset about what has happened to him but that does not assist me in assessing  
his credibility as a witness one way or another save to consider this in terms of any adverse  
evidence he gave about Mr. Levy.  
[129] There was otherwise nothing in Mr. Ghatan’s demeanour to assist me in assessing his  
evidence. As I review his evidence I will make my findings of fact relevant to him and Homelife  
largely based on the documents in evidence and the Coort Analysis, bearing in mind that I do not  
have to believe his denials of participation in any fraud that I may find and that the Crown bears  
the onus throughout to prove its case against Mr. Ghatan beyond a reasonable doubt.  
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The Defence Witnesses  
[130] I deal with my assessment of the credibility and reliability of the witnesses called by Mr.  
Kazman, Mr. Levy and Mr. Inoue in Appendix I. For the reasons set out there I find those  
witnesses to be credible and their evidence to be reliable with the exception of Armando  
Benlezrah, the principal of Bonded, who was called by Mr. Levy. I found Mr. Benlezrah to be a  
wholly untruthful witness and find that none of his testimony can be relied upon for the reasons  
set out in Appendix I. I also have issues with the evidence of Deborah Bendavid given her flip-  
flop from her statement to Cpl. Thompson.  
Preliminary Findings of Fact  
[131] In order to decide this case there are many, many factual findings to be made. I will deal  
first, to the extent I can, with those preliminary findings of fact that relate to evidence that  
applies to the whole case or to an aspect of it that is broader than the evidence and issues that  
pertain only to an individual SBL in issue. At this stage I have only made findings of fact that do  
not rely on the similar fact evidence. My preliminary findings are as follows.  
Findings with Respect to the Canada Small Business Financing Program (CSBFP)  
[132] Mr. De Franco explained the CSBFP based on his 20 years of experience with Industry  
Canada. He reviewed the relevant legislation and in particular the Canada Small Business  
Financing Act, S.C. 1998, c. 36 (the Act) and the Canada Small Business Financing Regulations,  
SOR/99-141 (the Regulations). Appendix Jsets out the relevant provisions.  
[133] Anyone can apply for a SBL, be they an individual, a partnership or a corporation,  
provided it is a Canadian controlled corporation. There are some exceptions such as, for  
example, charitable or non-profit organizations. In this case for all of the 16 SBLs in issue, a  
corporation that was 100% owned by one of the defendants obtained the SBL.  
[134] The loan limit for most of the time in issue in this case was $250,000. It was increased on  
April 1, 2009 to $500,000 for two loans maximum but the limit for equipment and leaseholds  
was $350,000 and the balance could be used to purchase real property. The attraction for the  
borrower is that the borrower only has to give a personal guarantee in favour of the lender for  
25% of the loan amount.  
[135] According to Mr. De Franco, decisions related to granting loans rest entirely with the  
lenders, in this case banks, and their own established criteria. Lending rules are not necessarily  
consistent from bank to bank. Industry Canada is not involved in the process or in the decision of  
granting the loan. They do not deal with the borrowers whatsoever. There are certain parameters  
for the loan, however, to qualify for the program. The bulk of the requirements for the lender are  
set out in section 5(1) of the Regulations. For example, inventory cannot be financed.  
Furthermore, if the loan is for too much money or there is a disclosure of revenue of the small  
business exceeding $5 million, then Industry Canada will not register the loan. I note as well that  
s. 8 sets out the Due Diligence Requirements that the banks must follow.  
     
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[136] After the loan is approved, the next step is for the borrower to inform the bank when the  
leasehold improvements and delivery of furniture, fixtures and equipment, has been completed.  
The borrower then provides the bank with invoices from its contractor(s) and the bank starts to  
advance funds. Once the funds have been released, either partially or in full, a Loan Registration  
Form must be completed and submitted to Industry Canada for registration along with a fee,  
which is 2% of the loan amount. Industry Canada then issues a Loan Acknowledgement form,  
which is provided to the lender.  
[137] Mr. De Franco gave evidence about what happens if a SBL goes into default. I have not  
considered this evidence, as it is not relevant to the issues that I must determine. As already  
stated, this evidence may become relevant at sentencing if there are convictions.  
[138] Mr. De Franco stressed in his evidence that the CSBFP is not a guarantee. It is more akin  
to an insurance policy for the lenders. The lender has to satisfy compliance with the Regulations  
otherwise a claim for loss could be rejected. If, for example, a lender does not provide a copy of  
an invoice as proof of purchase of an asset or proof of payment for the asset, that asset is  
deducted and not eligible for a claim. Where a claim is accepted, the bank only pays 90% of the  
loss. As Mr. Kazman submitted, provided the banks grant the SBL in accordance with the  
Regulations, given their ability to claim most of their loss from Industry Canada, the banks are  
well secured.  
[139] Back in 2007 there was a provision in the Regulations that if the landlord and tenant were  
not at “arm’s length” then the loan for the leasehold improvements would have to be secured by  
a mortgage on the landlord’s property. This was to discourage situations where the owner of the  
property improved the property by having a family member open a business to do improvements  
like air conditioning, electrical, that would have no benefit to the small business. I will come to  
the definition of “arm’s length”.  
[140] Finally, the documents from Industry Canada were proven authentic and introduced  
through the evidence of Mr. De Franco.  
Findings with Respect to the SBL Loan Process  
[141] Although the precise application process for each of the SBLs in issue varied to some  
extent depending on the bank applied to, there were a number of steps that were uniform and a  
number of documents provided to and from Industry Canada that existed in each case. To  
understand my analysis of the 16 SBLs, some attention to the loan process generally will assist.  
(a) Business Plan  
[142] Most of the loan files contain a copy of a Business Plan for the SBL in question. Given  
the evidence of Mr. Levy and the defendants, Business Plans were provided to the bank in all  
cases and so I have assumed that some have been lost. All of the Business Plans in evidence,  
including the ones Mr. Levy admitted to preparing, were designed and formatted in the same  
way and the content is very similar. There is a cover page, sometimes with a graphic and,  
 
Page: 33  
according to Mr. Levy, this is always followed by a Table of Contents in the Plans he prepared,6  
which is followed by typed information under the headings: Executive Summary, which as the  
heading suggests, explains what the new business intends to do and who will operate it;  
Introduction, which explains where the business will operate and how it will thrive; Mission  
Statement, which is typically a short statement saying that the business will operate with  
integrity and maintain a high standard of “Value, Design, Quality Products and Services”; and a  
section headed Management, which describes the owner of the borrower and their experience  
suitable for the new business in question. There is also a section on Financing, which sets out  
what the estimated start-up costs for the business will be, how much the borrower is prepared to  
invest of their “own equity” and the amount of the SBL sought, including the amortization period  
and that it will be “collaterized [sic] by all the Equipment, Furnishings, Fixtures and Leasehold  
Improvements”. Each of the Financing sections also includes an itemized list of Estimated Start-  
Up Cost which totals the amount of the SBL sought.  
[143] Through his company Fairbank, Mr. Levy admitted preparing the first Business Plan for  
Ms. Cohen, Mr. Tehrani, Mr. A. Tehrani, Ms. Chapkina and Mr. Ghatan. He denied preparing  
more than one Business Plan in the case of Ms. Cohen and those defendants who obtained more  
than one SBL.  
[144] Mr. Levy testified that the banks required a business plan before approving a SBL. There  
is no evidence from any of the bank representatives that confirms this save for the BNS  
representative who testified that they were required in some cases. It is clear from the evidence  
however, that if a business plan was provided it was read by the bank representative and in fact,  
some of the defendants also testified that the account manager they met with was very interested  
in the business plan and in a couple of cases required changes to the financial projections.  
[145] In a few instances the Crown relies on what is alleged to be misrepresentations in the  
Business Plan but the relevance of the Plans in this case is primarily the question of who  
prepared the Plan, given the evidence that a package, including a Business Plan, was provided by  
the defendants to the bank and in most cases the package included fraudulent documents.  
[146] There is no evidence that Mr. Kazman assisted in any way in the preparation of Business  
Plans, loan applications, or any other loan documents, real or altered.  
6
There is no Table of Contents in some of the Business Plans entered into evidence and in some cases the bank’s  
copy is missing page numbers, which Mr. Levy said he always included. The bank may have removed the Table of  
Contents but in my view would not have erased page numbers. However, I find this issue is not relevant to the  
question of whether some of the defendants copied Business Plans, as this is a fact even with some of the Business  
Plans in the bank files that Mr. Levy admitted he prepared.  
Page: 34  
(b) Loan Application Documents  
[147] The loan application process varied depending on the bank. In each case however, there  
were certain documents provided as part of the loan application and this included a financial  
statement of some sort completed by the borrower, by hand, setting out personal information as  
to income, assets and liabilities. I will review these forms in the context of each of the 16 SBLs.  
However, it is important to note that many of the documents were signed by the borrower and in  
doing so they were certifying the accuracy of the contents of the document, which is important to  
some of aspects of the Crown’s case.  
[148] In most but not all cases, the SBL loan files contain copies of GICs, NOAs, and T1  
Generals, which I have found were fraudulent either because they were entirely forged or altered  
to change the information from the original document. In all cases the fraudulent documents  
enhanced the financial resources of the borrower. Mr. Chapnick argued that there is no evidence  
the bank asked for GICs and NOAs and that the only evidence is that Mr. Levy asked for these  
documents. It is his position that as a result, the Crown has not proven that the banks relied on  
this information, to the extent they were presented with fraudulent documents, in deciding  
whether or not to grant the SBL. That is an issue I will have to consider on all of the evidence as  
it varies; for example, the representative from the BNS said it was customary to get them. I will  
also have to consider to what extent any of the defendants in question were aware of these  
alterations and if possible who created what I will call the fraudulent documents. The evidence is  
clear that they were altered or prepared in a professional manner and that the differences from  
the original authentic document would not be obvious.  
[149] In addition, the SBL loan files all contain a copy of either an Offer to Lease or an  
Agreement to Lease which was clearly to provide evidence that a location for the proposed  
business had already been found. In some cases, as I will come to, those leases were fabricated.  
[150] Once the SBL was approved, the borrower applied to open at least one bank account with  
the bank in question and executed a banking agreement, a personal guarantee for approximately  
25% of the SBL amount and certain security documents such as a promissory note and  
documents permitting registrations of the equipment financed by the bank under the Personal  
Property Security Act, R.S.O. 1990, c. P.10.  
[151] Invoices from purported contractors for leasehold improvements, furniture, fixtures and  
equipment are found in the SBL loan files and save for a couple of exceptions I will come to,  
they were paid from the SBL proceeds. In some cases these invoices were paid directly by the  
bank to the contractor pursuant to a direction signed by the borrower. In other cases the bank  
paid the SBL proceeds to the borrower who then paid the invoice.  
(c) Start-up Capital  
[152] Under the CSBFP, banks require an "injection" of start-up capital in order to release loan  
proceeds. Every business plan clearly states how much money the borrower is prepared to invest  
Page: 35  
his/her own equity”. The whole purpose of showing "start-up capital" to the bank is to represent  
that the borrower has money to help run the business. This makes sense since the SBL proceeds  
cannot be used to pay for inventory or the operating costs of the business. If the supposed start-  
up capital never existed or is quickly paid back to the original lender, it begs the question of how  
the borrower ever intended to actually run the business.  
[153] During the trial the Crown repeatedly took the position that the start-up capital in the  
CSBFP had to be non-borrowed funds. The Crown’s position is that the phrase "his/her own  
equity" which is found in the Business Plans means the funds are not borrowed. I agree that the  
Business Plans represented that the borrower would invest their own equity but it was silent on  
how that equity could be acquired. Mr. Fox argued the opposite and developed an elaborate  
argument that in reality, the start-up capital for a new small business in Canada will often come  
from borrowed sources and gave detailed reasons for this but there was no evidence to support  
this argument. However, there was no evidence presented that the Act required that the start-up  
capital not be borrowed funds.. There was no evidence that any of the defendants had been  
advised that the start-up capital could not be borrowed. Furthermore, in most cases start-up  
capital was in fact injected into the business from various sources. When asked about this Ms.  
Coutts from the RBC, who is well versed in the SBL process, could not say although she did  
know that the bank wants the clients to have assets in case they get into a cash flow problem.  
[154] For these reasons I have not considered the fact that the start-up capital was borrowed,  
even if that is the case, to be relevant save to the extent it may shed light on the relationship  
between the defendants.  
(d) Loan Registration Form  
[155] The Loan Registration Form is a Government of Canada form that is filled in for each of  
the SBLs by hand. The form is identical for each of the 16 SBLs. As I will come to, in some  
cases it was completed by the bank representative and in other cases by the borrower.  
[156] The main significance of this form from the Crown’s perspective is that it contains a  
section headed “Borrower’s Acknowledgement and Consent” where the borrower (or responsible  
officer of the company) certifies certain facts, including para. 1 (b) that:  
the total amount of the proposed loan and the principal amount outstanding, in  
respect of the borrower and all borrowers related to the borrower within the  
meaning of the Regulations, does not exceed $250,000 (including outstanding  
SBLA loans. [Emphasis added, hereinafter referred to as the Loan Limit Clause]  
[157] Para. 1 (e) of the Loan Registration Form has a box next to it that provides for a  
checkmark indicating “yes”, “no” or “not applicable” and an initial by the borrower and asks:  
if the loan or part of the loan is to finance leasehold improvements, the  
borrower and the landlord are at arm’s length. [Emphasis added, hereinafter  
referred to as the Arm’s Length Clause]  
Page: 36  
[158] At the bottom of the Loan Registration Form, just above the signature of the borrower, it  
states in bold that “it is an offence to make any false statement or misrepresentations on this  
registration form and is subject to punishment as stated in section 15” of the Act. I have  
summarized the evidence and the law as to the meaning of the terms “related” and “arm’s  
length” in Appendix “K. Save for the SBL Mr. Levy obtained for Bluerock, each of the  
defendants certified that they were not in breach of the Loan Limit Clause or the Arm’s Length  
Clause. Where the Crown asserts that there was a misrepresentation or omission by the borrower  
in the Loan Registration form, that will be dealt with when the SBL in question is reviewed. For  
the purposes of this case, borrowers are related when one borrower controls, directly or indirectly  
in any manner, the other borrower. There is no doubt that in the case of those defendants who  
obtained more than one SBL in quick succession, that all of their borrower companies were  
“related” and so the only question is did the amount of their loans add up to more than $250,000.  
[159] There are other more difficult questions with respect to the Arm’s Length Clause. I have  
found that in many cases the Crown’s position is inconsistent with the legal definition at the time  
in question. Furthermore, every bank witness that was called had no idea about the legal  
definition of the term and appeared to give evidence about it based on what one might consider  
the layperson’s meaning of the term to be. There was also no evidence called to contradict the  
evidence of the defendants that the term was not explained to them. Furthermore, there was no  
evidence that Bluerock SBL was treated any differently even though Mr. Levy represented that  
the borrower and the landlord were not arm’s length.  
(e) Loan Registration Acknowledgment  
[160] The Loan Registration Acknowledgment is also a Government of Canada form that is  
identical in format for each of the 16 SBLs. It is a form Industry Canada provides to the bank in  
question and includes the name of the borrower, the date of loan approval and when the loan was  
disbursed. According to Mr. De Franco, this is the date of the first advance only, not all of the  
advances. This form also included the total amount of the loan and the registration fee.  
(f) Payment of Invoices for Leasehold Improvements and the Supply of Equipment,  
Furniture and Fixtures  
[161] In the case of each SBL the bank in question was provided with invoices purporting to  
show leasehold improvements that had been done to the rental property and the purchase of  
equipment, furniture and fixtures for the business. The SBL funds were used to pay these  
invoices although up to 25% of the invoices were the responsibility of the borrower, to pay from  
his/her own funds towards the invoice.  
(g) Default/Appraisals  
[162] Most of the SBL loan files contain documents related to the default of the SBL loan in  
question and appraisals of the borrower’s assets. This evidence will be referred to below for each  
of the SBLs.  
Page: 37  
(h) Internal Bank Notes  
[163] Most of the SBL files contain copies of internal notes made by bank employees. When  
these records were admitted into evidence through the SBL files I made a number of evidentiary  
rulings that I have already referred to, that no party objected to.  
Findings with Respect to the Accuracy of the Coort Analysis  
[164] Mr. Coort was tendered as an expert in forensic accounting and for the reasons set out in  
Appendix H, I found him to be a credible and reliable witness. There was some debate about  
whether it was necessary to qualify him as an expert as his report was essentially factual, but I  
decided to err on the side of caution  
[165] As I have said, no issues of accuracy were raised with respect to any of the factual  
information that is set out in the Coort Analysis. I find that it is entirely reliable to the extent that  
he analyzed banking records that were provided to him. Issues, however, were raised as to  
whether or not the Coort Analysis presents an incomplete picture.  
[166] Mr. Levy testified that the Coort Analysis misrepresents the facts for two reasons. First of  
all, because for the most part with respect to his companies, Mr. Coort only looked at bank  
account records for a specific period of time; not from the opening to the closing of the account.  
Mr. Levy testified that tracing does not work this way and that you have to go back to the  
opening of the account. He disputes the proposition that if an account has no money and then  
gets $100,000 from a SBL, which is spent on the purchase of a property, that this is using SBL  
proceeds to buy the property. That argument I do not accept. If the only source or major source  
of funds is the receipt of funds from a SBL then obviously the defendant has used SBL proceeds  
to purchase the property if Mr. Coort was able to trace the funds from the SBL to the purchase of  
the property.  
[167] Mr. Levy also testified that he pre-bought all of the lumber, tiles, drywall and other  
supplies years earlier and that he stored all of those supplies in the basements of 1040 and 1048  
Eglinton Avenue West. Mr. Levy said earlier bank statements would have shown all of those  
purchases. He testified that later he used trailers to hold the materials behind the stores. I do not  
accept this evidence. Given the Eglinton properties were usually leased and had parking for  
tenants behind them, this evidence did not make sense. Furthermore, many invoices refer to  
renovations on the lower level at those locations for the benefit of the tenant. Mr. Levy did not  
own a warehouse devoted to the storage of construction material during the material time. In  
addition, Mr. Levy was not consistent on this point. When Mr. Coristine cross-examined Mr.  
Levy about how he was paying for work for Alta, Mr. Levy said that he saw some payments to  
Home Depot but that Mr. Coort did not see his credit card statements.  
[168] Mr. Levy’s second reason for challenging the Coort Analysis is his evidence that he had  
bank accounts that Mr. Coort did not see. It is significant that although Mr. Levy put to Mr.  
Coort that he did not always have the entire bank records from the opening to closing of an  
 
Page: 38  
account, he never put to him that he missed other accounts that Mr. Levy had. As a result, I don’t  
know what Mr. Coort would have said as to how likely this is.  
[169] If I consider Mr. Coort’s evidence about how he prepared his Analysis, I am able to come  
to a conclusion. For every SBL where one or more of Mr. Levy’s companies received money,  
Mr. Coort had the account where the funds were deposited to analyze. He traced the source and  
destination of all payments in and out of the accounts for Mr. Levy’s corporations and others that  
he did have and I would have thought that process would have provided some evidence of the  
existence of other bank accounts, if they existed. The evidence of Mr. Coort was that he would  
flag certain accounts and request them if needed. Mr. Coort certainly would have seen any  
cheques or drafts to and from these other accounts when he reviewed the bank records for the  
accounts he had and to the extent those were identified they were either from corporations that I  
am now aware of or from unknown sources. There are only a relatively few payments where the  
source or destination is unknown. Mr. Levy did not testify that any of the unknown sources were  
from other accounts of any of his corporations.  
[170] I also would have expected that the account that received funds from a borrower would  
be the account used to buy construction materials and pay employees and suppliers. There is  
some evidence of that with payments to various people Mr. Levy hired. Even if that were not the  
case, as the Crown submitted, the accounts Mr. Coort analyzed would have had to send the  
money received in payment of invoices to another account since it was Mr. Levy's position that  
this other account Mr. Coort did not see was used for supplies and payroll. Mr. Levy denied this  
suggestion and said that he had money in his other accounts that we do not have that he used but  
that does not explain why Mr. Coort would not have realized there were other accounts in the  
analysis he did do. In my view if there were in fact other accounts as Mr. Levy alleges, Mr.  
Coort would have seen that and based on his evidence, I am satisfied that he would have asked  
Cpl. Thompson to obtain the records of those other accounts.  
[171] The significance of this issue is that although Mr. Levy was adamant that he spent a lot of  
money at suppliers for all his various construction jobs, and certainly the various invoices  
suggest extensive and expensive leasehold improvements, the bank records show very little  
money going out to suppliers such as Home Depot, Rona, Lowes, etc. The amount of money  
spent at suppliers especially pales in comparison to the money Mr. Levy was bringing in through  
the same construction companies. Mr. Levy's answer to this discrepancy was that "the Crown  
didn't do its job by getting all of his bank accounts", or "the bank accounts obtained did not go  
back far enough," but for the reasons stated I do not accept that evidence. As I will come to, for  
the Cohen Loans I have concluded that no leasehold improvements were done and no furniture,  
fixtures or equipment was supplied - the SBLs were entire shams. In the case of some of the  
others, I have concluded that at least some leasehold improvements were done and some  
furniture, fixtures and equipment was supplied but given the absence of money being spent by  
Mr. Levy on payroll and supplies, and other evidence I have determined that not all that was  
represented to the bank was done. Whether or not the defendant in question was aware of this is  
something I have considered for each of those SBLs based on the evidence I have.  
Page: 39  
[172] For these reasons, even if there is some truth to Mr. Levy’s position, I find that it would  
not materially impact on the Coort Analysis. The likelihood of Mr. Coort missing any significant  
account belonging to Mr. Levy or one of his corporations is in my view virtually non-existent.  
[173] With respect to Mr. Tehrani, however, the Crown acknowledged that not having the Meez  
Ltd. account(s) was an unfortunate oversight. Mr. Tehrani testified that he had a regular and US  
dollar account at TD for Meez Ltd. He had the same for As Is as well as HSBC accounts, both  
Canadian and US dollar. He had personal accounts including a home equity line of credit that the  
RCMP was not aware of (the source of the 'mystery' start-up capital for Uzeem), and he also  
gave evidence (confirmed by his brother) that they had a joint account at TD, opened when they  
owned a condo together.  
[174] I also have to be mindful as to whether I have all of the records of a particular account.  
For example, Mr. Chapnick pointed out that the RCMP's records for Exclusive stopped just as  
the business started running, so could say nothing about the business conducted by that company  
once it started. Furthermore, repayments by Mr. Tehrani for the Blue Deer and Oakwood loans  
that I will come to, were both after the period studied by the RCMP. Mr. Coort agreed that these  
repayments would result in the numbers changing accordingly for Mr. Kazman and Mr. Tehrani.  
Findings with Respect to the Lack of Evidence of Payments by the Various Construction  
Companies for Leasehold Improvements, Equipment, Fixtures and Furniture  
[175] The Crown submitted that given the general lack of evidence of money being spent by the  
construction companies in question for leasehold improvements, equipment, fixtures and  
furniture, that an inference should be drawn in all cases that at the very least any work that was  
done was done cheaply and that all or some leasehold improvements that were billed were not  
done, that all or some furniture, fixtures and equipment was not supplied as invoiced and that the  
invoices were therefore fraudulently inflated. Having found there are unlikely any missing bank  
accounts I considered whether or not I could draw such an inference.  
[176] I found that the difficulty with drawing such an inference in general is that, as I will come  
to, the evidence is clear that at least from the drywall in, in some cases a lot of work was done to  
renovate the premises. For example clearly a lot of work at least from the drywall in was done to  
renovate the Homelife offices, which begs the question where did the money come from to pay  
for those leasehold improvements?  
[177] Considering the totality of the evidence, it is clear that sometimes Mr. Levy would do the  
work by paying cash or hiring his contractors Danil or Morningstar and other suppliers, for  
example of HVAC systems. Those payments however do not necessarily explain all of the work  
I have found was done based on the evidence.  
[178] Given the volume of transactions in the banking records of the various construction  
companies and the money that is circling after each of the SBLs between Mr. Levy, Mr. Kazman,  
Ms. Cohen and their related companies, and the fact that payments could have been made by  
 
Page: 40  
cash, in cases where it appears that leasehold improvements were done and equipment, furniture  
and fixtures was supplied, it must be that this was paid for in some manner, I presume cash. For  
that reason I determined that I cannot draw the inference in all cases that simply because there is  
no evidence that the contractor company paid for certain leasehold improvements and/or  
equipment, furniture and supplies that it was not in fact done or supplied. Instead that is one  
factor I have considered with all of the other evidence.  
[179] For that reason I have not accepted the Crown’s submission that the absence of a record  
of these payments means that the work was not done or the equipment was not supplied.  
Findings with Respect to the Relationship between the Defendants  
[180] The nature of the relationships between the defendants, if any, at the material time, is of  
course relevant, particularly to the criminal organization charge. However, to the extent that the  
Crown has proven that there was a relationship between one or more of the defendants, that does  
not necessarily imply that one defendant had knowledge of any wrongdoing by the other.  
[181] There is no dispute that Mr. Kazman provided legal services to Ms. Cohen and they were  
partners in certain properties. He also testified that she loaned money to him. There is no  
evidence that they were partners in any businesses although they were partners in certain  
properties. Mr. Kazman did admit that he and Ms. Cohen were intimate and when he was asked  
when, he said it was probably before the SBLs in issue, but that he was not sure. He was not  
asked how long this intimate relationship was. In his written submissions he stated it was only  
one occasion but that was not his evidence at trial.  
[182] An issue at trial was to what extent Ms. Cohen told Mr. Kazman about her businesses. He  
testified that she did not confide in him about the day-to-day operations of her businesses.  
However, as I will come to, despite this evidence, on many occasions it seemed that Mr. Kazman  
did know about her business plans.  
[183] Mr. Kazman also provided legal services to Mr. Levy and they were partners in certain  
properties as well. The evidence is clear that despite any issues in their relationship they were  
very close for most of the time period in issue. In fact Mr. Levy chose Mr. Kazman as his best  
man when he got married instead of one of his brothers. Nevertheless, Mr. Kazman submits that  
he did not know about Mr. Levy’s businesses and that Mr. Levy was a very secretive individual.  
[184] Mr. Levy said that by 2010-2011 Mr. Kazman owed him almost $2 million. He admitted  
it would have been less in 2008. He said he started lending Mr. Kazman money in 2006 and that  
by 2008 Mr. Kazman could have owed him between $1.3 and $1.4 million. He said he had  
everything in writing with promissory notes. At the end he didn’t care about keeping the  
promissory notes because he knew he wouldn’t get the money although he also said that Mr.  
Kazman was giving him partial payment on these loans.  
 
Page: 41  
[185] As already stated, by 2010 Mr. Kazman and Mr. Levy had a falling out and parted  
company. Part of the dispute between them was Mr. Kazman said that he was a partner with Mr.  
Levy in four properties, whereas Mr. Levy said it was only two. Mr. Kazman filed cautions as a  
result against the properties in 2010 but there has been no judicial determination as to ownership.  
The hostility between them was palpable at the trial.  
[186] Mr. Kazman and Ms. Chapkina worked together during the relevant period and it was not  
until Ms. Chapkina was charged that she left his employment. Although Ms. Chapkina did not  
agree with Mr. Kazman that they had a father/daughter relationship, they were clearly very close  
and there is no doubt that she trusted him.  
[187] Mr. Kazman recalls buying a stool from Mr. A. Tehrani when he was operating  
Contempo and he testified that this is when he met him for the first time. Mr. A. Tehrani agreed  
with this and explained that Mr. Kazman told him at the time that he knew Mr. Levy. Mr. A.  
Tehrani was adamant that he did not deal with Mr. Kazman for the leasing or leasehold  
improvements for any of his SBLs. Although the Crown argues that Mr. Kazman must have met  
Mr. A. Tehrani at the time loans were made to him from him and/or Ms. Cohen, I do not agree as  
it is just as likely that those loans were entirely arranged by Mr. Levy. I accept, on the evidence,  
that Mr. Kazman and Mr. A. Tehrani had no direct dealing for any of Mr. A. Tehrani’s SBLs but  
there is still the issue of who controlled the Disputed Construction Companies that purportedly  
did the leasehold improvements and purchased furniture, fixtures and equipment and as a result  
received SBL proceeds.  
[188] Both Mr. Kazman and Mr. Tehrani testified that despite the fact that Mr. Tehrani was  
borrowing significant sums of money from Mr. Kazman’s companies that they did not meet each  
other at the time as the loans were arranged by Mr. Levy. The Crown takes the position that this  
evidence is incredible but given the relationship between Mr. Levy and Mr. Kazman, I disagree.  
There is no evidence of any relationship between Mr. Kazman and either of the Tehranis at the  
material time.  
[189] Mr. Kazman and Mr. Ghatan met for the first time when Mr. Ghatan moved into the first  
floor of 1048 Eglinton Avenue West (1048 Eglinton) where Mr. Kazman had his Dufferin  
Paralegal office on the second floor. He did not know that Mr. Ghatan had applied for a SBL.  
They both agree they had no dealings with each other save for one letter Mr. Kazman was asked  
to prepare for Mr. Ghatan to the Real Estate Board. I accept that this was the only contact  
between Mr. Kazman and Mr. Ghatan prior to the charges.  
[190] Mr. Levy knew everyone at the material time although he downplayed his relationship  
with Ms. Cohen and Ms. Chapkina. According to Mr. Levy, Mr. Kazman introduced him to Ms.  
Cohen. He had seen her in Mr. Kazman’s office but he never had any discussions with her until  
she came to see him about the preparation of a Business Plan. In this regard, as I will come to,  
his evidence was internally inconsistent. Mr. Levy’s relationship with the Tehranis went back to  
when Mr. Tehrani was operating Bizarre. Mr. Levy testified that he had had no prior dealing  
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with Mr. Ghatan before he applied for his SBL and this was confirmed by Mr. Ghatan. I accept  
that evidence.  
[191] Mr. Levy and his brother, Mr. A. Levy, appear to have had a close relationship at the  
material time. Mr. Kazman and Mr. A. Levy knew each other as a result of Mr. Kazman’s  
friendship with Mr. Levy and there is evidence of loans between them. For example, Mr.  
Kazman’s company, Blue Deer Holdings Inc. (Blue Deer), advanced $100,000 to Mr. A. Levy’s  
company, Blue Beach Avenue Corporation. There was no evidence to contradict the evidence of  
Mr. Kazman that this was a loan.  
[192] The other defendants had little or no dealings with Mr. A. Levy. The only evidence of  
any contact with the other defendants is that Mr. A. Levy picked up some furniture that Mr.  
Tehrani had sold to Trust Inc. in May 2010.  
[193] It is the position of the Tehranis that they never met Ms. Cohen, Ms. Chapkina or Mr.  
Ghatan until these criminal proceedings. Ms. Chapkina and Mr. Ghatan confirm this. I accept  
this evidence. The evidence, however, is clear that Mr. A. Tehrani, Mr. Tehrani and Mr. Salehi  
were close and as I have stated at one point Mr. Salehi and Mr. Tehrani were partners in Meez  
Ltd.. The evidence of Mr. A. Tehrani and Mr. Tehrani is that Mr. Tehrani supplied furniture for  
inventory to Mr. A. Tehrani’s and Mr. Salehi’s stores.  
Findings with Respect to M&M 155 Holdings Inc.  
[194] The Crown alleges that M&M 155 Holdings Inc. (M&M) was Mr. Levy’s company, no  
doubt because he incorporated this company as first director on September 7, 2007, was  
President and Secretary and a signatory on the CIBC bank account along with Mr. Kazman. Mr.  
Levy disputes the Crown’s position. Although Mr. Levy was clearly associated with this  
company, for the reasons that follow, I find that it was Mr. Kazman who was actually the  
beneficial owner and the directing mind of this company.  
[195] Mr. Kazman admitted that M&M stood for “Maxine and Marshall;” his and his wife’s  
first names. I presume, given that this company purchased what Mr. Kazman described as his  
wife’s dream home at 155 Sandringham Drive, Toronto (Sandringham), that the 155” in the  
corporate name is a reference to that property.  
[196] Mr. Kazman testified that Mr. Levy agreed to help him buy Sandringham and that M&M  
held title to this property for the benefit of Mr. Kazman. As I understand the evidence, Mr.  
Kazman would not have been able to get financing to purchase the property on his own and he  
might have lost his deposit had Mr. Levy not assisted him in getting mortgage financing. There  
was some evidence as to why a corporation was used, rather than Mr. Levy personally, but  
clearly Mr. Levy had the ability to obtain a mortgage that Mr. Kazman could not.  
[197] Mr. Levy introduced a document entitled “Declaration of Trust” with the words “and  
Partnership Agreement” stroked out, dated October 30, 2007 (“M&M Declaration of Trust”). Mr.  
Kazman testified that he did not recall the details of this document but he admitted that he or Mr.  
 
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Levy prepared it, that the initials looked like his and that he and Mr. Levy both signed the  
document. Although it does not matter, in my view as the lawyer, Mr. Kazman likely prepared  
the M&M Declaration of Trust. It is formatted and has similar language to the Whitehorse  
Contracting Inc. (Whitehorse) Declaration of Trust that I will come to, that Mr. Kazman  
admitted he probably prepared.  
[198] The recitals of the M&M Declaration of Trust confirm that the company was to become  
the registered owner of Sandringham. Para. 2 states that Mr. Levy is the sole shareholder, officer  
and director of the company and Mr. Kazman testified to this before he was shown this  
document. Para. 3 states that Mr. Levy holds 100% of the shares of the company as a bare trustee  
for Marshall; Mr. Kazman. Para. 4 states that the company holds title to the said property solely  
as bare trustee and para. 5 states that the property is to be 100% beneficially owned by Mr.  
Kazman. Para. 6 provides that Mr. Levy does not have any interest in the property or in the bank  
account of the company and that this was correct at the time the document was signed.  
[Emphasis added] Para. 8 provides that all expenses for utilities, taxes, etc., are to be paid by Mr.  
Kazman alone and that Mr. Levy is not to be responsible for the same.  
[199] Mr. Kazman testified that since Mr. Levy was the owner of M&M that he had to open the  
bank account and that Mr. Levy was a signatory on the bank account. They needed an account to  
pay the mortgage that M&M obtained for the purchase of the property, as the banks usually like  
pre-authorized cheques for that purpose. All of this makes sense and I accept this evidence.  
[200] Mr. Levy put to Mr. Kazman that he was only authorized to sign cheques to pay  
insurance and taxes for Sandringham, but Mr. Kazman testified that Mr. Levy used the M&M  
bank account for whatever purposes he wanted. Mr. Kazman’s evidence, however, is at odds  
with the clear terms of his agreement with Mr. Levy.  
[201] Mr. Coort analyzed M&M’s CIBC account from September 11, 2007, when it was  
opened, until December 31, 2010. There are significant deposits into the account from Mr.  
Kazman or his companies including $118,000 noted “3rd Mortgage advance 155  
Sandringham”. Payments out of the account include monthly mortgage payments related to  
Sandringham, to three different mortgagors and other payments clearly personal to Mr. Kazman.  
[202] As to who controlled M&M’s account, I find it was Mr. Kazman and that, contrary to his  
evidence, Mr. Levy was not and did not use it for whatever purposes he wanted. Based on the  
Coort Analysis, the account was used to pay the three mortgages on Sandringham and what  
appear to be other expenses associated to the maintenance of the property, payments for the most  
part to Mr. Kazman and his wife and his companies. There are also payments to Mr. Levy and  
some of his companies but those do not alter my view overall that M&M was really Mr.  
Kazman’s company. I believe those would have been to reimburse Mr. Levy for payments he  
made for Sandringham such as insurance. This is what the M&M Declaration of Trust provides  
for and this conclusion is the only one in my view that makes any sense given the reason the  
company was incorporated.