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Sanjay Madan and family denied funds frozen in massive fraud case alleged by the Ontario government

Feb. 16, 2021 – In the ongoing litigation in Ontario’s civil court system, the provincial government rejected a motion by the Madan family for access to assets frozen by what is known in the legal system as a Mareva injunction. 

The case involves an Ontario government program known as the “Support for Families” (“SFF”). The goal of the program is to cover the costs of at-home learning through one-time payments of $200 or $250 per eligible child. 

The province employed the defendants Sanjay Madan, his wife Shalini Madan and their two sons, Chinmaya Madan and Ujjawal Madan, in information technology roles to operate the SFF program.

The Ontario government alleges the Madan family opened thousands of bank accounts at Ontario financial institutions, then fraudulently diverted at least $11 million in SFF program payments into accounts they controlled.

Ontario’s Mareva Injunction

On Oct. 19, 2020, the Ontario government obtained a Mareva injunction (asset freezing order) against the Madan family. The Mareva injunction applied to all of Madan family assets situated in Ontario. The Government’s motion was brought without notice to the Madan family.

The frozen assets included the sale proceeds of a property known as 5 Deerling Crescent, North York, Ont. Sanjay had purchased the Deerling Property on Jan. 12, 2016 and sold it on Sept. 29, 2020, before the Mareva injunction was issued.

A total of $911,486.32 from the sale of the Deerling Property was held in a trust account of a real estate lawyer at the time the Mareva injunction was issued. The Ontario government accepts (for now) that these funds are not tied to the proceeds of the alleged fraudulent SFF program scam.

Madan family motion for Access to Assets Frozen by the Mareva Injunction

On Dec. 16, 2020, Sanjay brought a motion to vary the Mareva injunction to grant him and his wife Shalini and their two sons Chinmaya and Ujjawal access to funds to retain criminal and civil counsel, and to fund their personal lives. 

The Madam family sought $7,000 per month for “home”, “utilities”, “car”, “internet/phones”, and “groceries and food.” The Madam family further sought $591,600 to pay retainers to criminal counsel and a further $315,270 to pay civil counsel, including the cost of this motion.

The Ontario government opposed the motion on the basis that the Madan family had not discharged their onus to show that they have no assets, other than the frozen assets, were available to pay their expenses.

On Dec. 24, 2020, Justice Dietrich in Toronto dismissed the Madam family’s motion. The Court held that the Madam family had not disclosed whether they had other assets in Ontario for which to pay for the legal counsel and personal expenses. 

Only one of the three defendants—Sanjay—filed an affidavit in support of the family’s motion. Shalini, Chinmaya  and Ujjawal offered no evidence whatsoever in support of their request for access to the frozen assets which would justify a grant of legal or living expenses to them. For this reason alone, their motions were dismissed. 

Justice Deitrich went on to find that Chinmaya is employed at Microsoft in the United States and owns two condominiums, one of which is being rented out. Chinmaya has provided no information regarding rental income. His annual salary (estimated to be $130,000-140,000 USD) is deposited into his bank account and is not subject to the Mareva injunction or the preservation order.

Justice Deitrich also went on to find that Ujjawal is a graduate student in the United States. He has a U.S. bank account, which is also not subject to the Mareva injunction or the preservation order. 

Justice Deitrich further found that parts of Sanjay Madan’s affidavit were false; he had obtained access and used funds frozen by the Mareva injunction when he should not have, and that he arranged for family members from India to come to Canada and smuggle out cash. 

Justice Deitrich found that Sanjay, the Ontario government employee, is a citizen of India and has been granted permanent residency in Panama. Sanjay Madan refused to disclose his assets in Panama, India or elsewhere. 

Ontario’s failure to conduct due diligence and audits of Madan 

The Ontario government’s civil prosecution of the Madan family is being led by Ontario civil justice lawyers Christopher Wayland and Amy Then. The Ontario Government has not retained private sector lawyers for this case. 

Despite attempting to recover funds for provincial taxpayers, the case shed light on the fact that the Ontario government failed to conduct sufficient due diligence on the employees of the SFF program and failed to detect this loss through audits. Canadian Fraud News will follow the case as it moves through the court.