An Ontario court granted a motion sought by a pair of investors who lost money in a real estate investment scheme tied to a notorious fraudster — freezing $6.1 million in settlement funds, pending the resolution of their legal actions.
According to a decision of the Ontario Superior Court of Justice, the investors sought an injunction freezing funds that are being held in trust for a company that they are both suing in connection with investments that involved alleged fraudster, Arash Missaghi.
“Missaghi is an undischarged bankrupt and appears to have defrauded investors of millions of dollars,” the court noted — adding, “He was shot and killed by one of his victims in a murder-suicide in June of 2024.”
One of the investors seeking the injunction invested $700,000 in schemes tied to Missaghi, while another investor put in approximately US$3.4 million. Now, they are suing a company that was connected to the scheme, which controls $6.1 million that is to be repaid to certain investors. They sought a court order freezing those funds before they can be paid out to others.
The court ultimately granted the request for an injunction, ruling that the investors, “established a strong prima facie case that they are the victims of a fraudulent scheme” — and that there’s also a, “strong prima facie case that [the company] is using itself as a means of shielding the settlement funds from the plaintiffs.”
Indeed, the court said that the investors have grounds for believing that the money will be distributed to others before their legal actions are resolved — and that the proposed allocation of those funds isn’t connected to investors’ losses, but is being driven by other factors. It noted that close friends and family of people involved with the scheme are slated to get all of their money back, while other investors get little to nothing.
“Some of those funds are clearly proposed to be distributed to non-residents of Ontario. Others will be distributed in a way that makes recovery down the road even more difficult than it already is,” the court said.
And, while it granted the injunction, the court also ruled that the company should be allowed to use $250,000 of the money for its own legal fees.
“Although the plaintiffs have made out a strong prima facie case for fraud, that is not the same as saying they have actually made out a case of fraud,” the decision noted. “That will depend on the result at trial.”
In the meantime, the court granted the investors motion for an injunction, and ordered the funds to be paid into court, pending the resolution of their lawsuits.