Three people entwined in the million dollar fraud case involving the City of Saskatoon said they too are innocent victims of fraud, according to newly released court documents.
In August, the city received an email from someone claiming to be the chief financial officer of a contractor used by the city requesting a change in deposit details.
Nearly $1.04 million was deposited in a TD Bank account after the city complied.
The fraud was uncovered when the company, Allan Construction, contacted the city stating it had not received the payment.
The money had instead been deposited into a number company — 2677367 Ontario Inc., with its two directors unaware what the account was being used for.
“Unbeknownst to TD Bank, however, 267, Khalaghi and Yousefian (company directors) did not use the account. Rather, they permitted Ali Ziloubaf to operate a money services business out of 267’s TD account,” Ontario Superior Court Justice J. Penny said in his decision.
Penny found Ziloubaf owned another company that was a registered money service business and had dispersed all but $95,000 deposited into the bank account to other persons or entities.
“All of the prior deposits into the account came from Dubai, none came from Canada,” Penny said.
“His money services were offered as a workaround of the embargo on financial dealings with Iran and the restrictions on taking money out of Iran.”
Ziloubaf said he met with someone named Gavin Kolner after being told by another person in Dubai, whom he had never met, that $1 million would be deposited into an account controlled by him.
He said the only time he met Kolner was when he met him briefly on the street for a signature before the money was deposited into the 267 account.
The money was subsequently dispersed to other people or entities.
“Leaving aside entirely whether the evidence supports an inference he was complicit in the fraud, it at least supports the inference that he was wilfully blind to it,” Penny wrote.
“Ziloubaf has not shown a bona fide receipt of these funds. Nor has he shown valuable consideration or change in position.”
Penny also found there was no “triable” issue on the evidence raised by two other people in receipt of fund disbursements from Ziloubaf.
“The three claimants have failed to show there is an issue requiring a trial about whether they are bona fide purchasers for value or that they changed their position in innocent reliance on receipt of the funds,” Penny said.
“The claimants’ remedy, if any, is against Ziloubaf or those to whom they made the alleged payments in Tehran or Dubai, not funds fraudulently stolen from the city.”