Toronto (March 26, 2020) – The Ontario Court of Appeal dismissed the appeals of the disbarred lawyer, Marshall Kazman and his co-conspirators regarding multiple business loan frauds worth $1.5 million in January. Two years ago, Kazman was convicted of multiple counts of fraud over $5,000, money laundering and committing the frauds for the benefit of a criminal organization. The Ontario Court of Appeal Justice David Doherty confirmed the trial judge’s analysis and reasonableness of her decisions after the defendants appealed their sentence on the basis that the trial judge erred in dismissing three motions for an order staying the proceedings.
Lengthy court proceedings came to an end in the case of the disbarred lawyer, Marshall Kazman and his co-conspirators regarding multiple business loan frauds worth $1.5 million. The Ontario Court of Appeal dismissed the conviction appeal of sentences imposed by Justice Nancy Spies of the Superior Court of Justice two years ago and reserved judgment on the sentence appeals in January of this year.
The trial of the business loan frauds
Kazman was charged with five counts of fraud over $5,000, one count of money laundering, and one count of committing the frauds for the benefit of a criminal organization. The trial focused on 16 loans that were made between 2007 and 2010. Almost all of which defaulted within two years. Justice Spies found that 12 were tainted with fraud.
Kazman was accused alongside seven other defendants including Gad Levy, Madjid Vaez Tehrani, and Ali Vaez Tehrani. Miriam Cohen who was the initial borrower of four of the fraudulent small business loans pleaded guilty of about 30 charges for fraud and fraud related offenses in another trial in 2011.
The trial showed that the defendants conspired to obtain numerous fraudulent small business loans. These loans were acquired under the auspices of the Government of Canada’s Small Business Financing Program (SBFP) from several banks such as the Bank of Nova Scotia, Toronto Dominion Bank, Bank of Montreal, Royal Bank of Canada, and Canadian Imperial Bank of Commerce. This way, the accused fraudulently gathered loans worth $1.5 million within three years. Since the loans were part of the SBFP, Industry Canada insured the loans to a large extent.
Initially, the SBFP intended to assist small businesses with loans to boost the economy and create jobs for Canadians since the mid-2000s. Consequently, Kazman and his co-conspirators harmed not just the banks but the Canadian taxpayer with their bogus actions. Justice Spies determined that Kazman and Levy were at the center of this scheme and that it was fraudulent from the outset.
‘This was a pre-meditated, sophisticated, ‘large scale,’ multi-million dollar complex fraud of the Government of Canada’s [SBFP] and five major banks. It involved a high level of planning and orchestration, skill, deception and covert behaviour that took place over a lengthy period of time; many months and in some cases years. There were multiple victims, the principal ones being the Canadian taxpayers,’ wrote Justice Spies in the sentencing.
Disbarred lawyer convicted for key role in the business loan frauds
In 2008, the Law Society of Upper Canada disbarred Kazman for a ‘dishonest scheme to obtain mortgage financing concerning five properties,’ the legal decision reads. Justice Spies determined that Kazman played a key role in the business loan scheme and that his legal background was valuable to the operation including the laundering of the proceeds of the fraud.
Justice Spies found that especially Kazman, Levy, and Cohen benefited from the frauds while ‘the funds […] flowed back and forth between various other companies owned by Ms. Cohen and Messrs. Kazman and Levy who benefited in varying degrees from payments made to various companies that they owned and to them personally,’ she wrote in her decision in 2018.
After five months of trial, she convicted Kazman on all charges and sentenced him to seven years in jail. Furthermore, she ordered him to pay almost $800,000 in combined restitution and fines in lieu of forfeiture.
The mitigating factors she considered in Kazman’s sentence were his health and the negative impact of incarceration on his family. However, one of the aggravating factors was his disbarment.
The reasonableness of the trial judge’s decision
Four of the initial eight accused including Kazman appealed their convictions on the basis that the trial judge erred in dismissing three motions for an order staying the proceedings and the reasonableness of Justice Spies’ decision at the Ontario Court of Appeal.
At the heart of the appeal were multiple so-called Section 11(b) motions that were mostly dismissed by the trial judge. These motions refer to the Charter of Rights and Freedoms. Section 11 (b) states that ‘any person charged with an offence has the right to be tried within a reasonable time’. This is colloquially known as an accused’s right to a ‘speedy trial’.
The accused tried to stay the proceedings multiple times with s. 11 (b) motions. Anyhow, they never completed their motions and kept on asking for new extensions of deadlines. The trial judge did not comply with their requests, which prompted Kazman and Levy to allege that they were ‘treated unfairly’. They argue that this unfairness ‘rose to a level of a miscarriage of justice.’ Ironically, this line of action based on the accused right to a ‘speedy trial’ would have resulted in a further significant delay of the trial.
In court documents of 2016, Justice Spies explained: ‘I was now aware of why the two deadlines had not been complied with and it was clear to me that it was not because of a failure of counsel to cooperate or the lack of cooperation from transcriptionists but rather a failure of counsel to take any steps to do the work needed to perfect their applications until after the First Deadline and to a large extent just before the Second Deadline.’
In January of this year, the Ontario Court of Appeal Justice David Doherty dismissed all three related conviction appeals in connection with Section 11 (b) motions. He argued that ‘Kazman and Levy did not fail to perfect their s. 11(b) motion in a timely way because they did not know what was needed, or because the task was too complicated, or because they were missing some of the necessary minutiae. Kazman and Levy failed to perfect as required because, as Kazman’s lawyer indicated, no one took the October deadline seriously until a few days before the deadline. Kazman did next to nothing to perfect the motion until he hired a lawyer a few days before the deadline. Levy did next to nothing before the October deadline, and continued to do next to nothing until about a year later in November 2017 when some transcripts were ordered on his behalf.’
The sentence appeals
‘In terms of the length of sentence, our position is that it’s too long and doesn’t reflect some of the mitigating circumstances put before the court,’ stated criminal lawyer Richard Litkowski, who represented Kazman for the sentencing as well as in the appeal trial. They argued that the seven-year sentence was ‘manifestly excessive’ and that the trial judge ‘over-emphasized the principles of general deterrence and denunciation.’ Furthermore, he disagreed with the appropriateness of the restitution order given Kazman’s financial circumstances.
Justice Doherty argued that the conviction of money laundering and committing the frauds for the benefit of a criminal organization ‘required the imposition of a sentence consecutive to the sentence imposed on the fraud charges.’ Furthermore, he stated that the former lawyer’s personal history would offer little hope for rehabilitation. Subsequently, he decided that the period of incarceration was appropriate and that there is no argument against the restitution order. The judge explained that ‘it may be that the order will have very little ultimate value to the victims of Kazman’s crimes. That is no reason to refuse to make the order.’
Consequently, the court dismissed the conviction appeal of sentences imposed by Justice Spies and reserved judgment on the sentence appeals.
‘They lay bare a multi-layered fraudulent scheme perpetrated by the appellants on the banks and Industry Canada over a lengthy time period. The trial judge’s findings put Kazman, a disbarred lawyer, and Levy at the centre of this fraudulent scheme. On the trial judge’s unchallenged analysis of the evidence, there can be no doubt about the appellants’ guilt on the counts on which they were convicted.,’ concluded Justice Doherty in his sentence.
Marina Burghard writes for Canadian Fraud News about fraud-related cases, whistleblower, jurisdiction, identity theft, consumer protection, etc. – essentially about scams and how to protect yourself against this kind of fraudulent criminal behavior. She holds a Master’s degree in Political Science where her interest in criminology grew. Besides fraud, Marina’s scientific interest lies in terrorism, extremism and how to deal with it as a society.