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The collection of real estate investment entities placed under receivership at the request of the Ontario Securities Commission (OSC) last month is now seeking to overturn that decision.

On May 23, the Ontario Superior Court of Justice ordered a group of related entities — including Cacoeli Asset Management Inc., Cacoeli Capital Inc., and a series of real estate limited partnerships — into receivership and appointed Grant Thornton Ltd. as receiver.

The court issued the order based on the OSC’s concerns about possible misconduct, including the possibility that investor funds raised for certain projects were improperly diverted to others.

The OSC has not made any enforcement allegations, and no misconduct has been proven.

The receiver was appointed to protect investors’ interests given the OSC’s “serious concerns” that funds may have been diverted — contrary to what investors were told and in violation of the terms of the limited partnership agreements.

Now, the Cacoeli entities are asking the Court of Appeal for Ontario to set aside the receivership and dismiss the OSC’s application, or to send the case back to the Superior Court.

In their appeal, the Cacoeli entities argue the lower court judge erred in several ways by granting the OSC’s request. Among other issues, they say the judge applied the “incorrect evidentiary standard.”

“The application judge concluded that the appropriate evidentiary standard was a ‘serious issue to be tried,’ even though the commission’s application sought final orders and extraordinary relief,” they said.

They also argue the judge erred in finding that the OSC met that standard.