Many victims of fraud want their day in Court but often, due to the misconduct of the rogues they are suing, it is difficult to obtain. Instead, due to the inefficiencies of the Canadian justice system, victims can get bogged down in procedural motions by lawyers for rogues who test whether litigation exhaustion will set in. When this occurs, the best route to obtaining judgment against a rogue may be to set them up to strike their defence. We had this occur recently in a case reported as Allen v. Kumar, 2022 ONSC 4223.
Backstory on Brian Anish Kumar
Between 2015 and 2018, the victims in this case entered into various investment agreements with Brian Kumar (“Kumar”). Kumar represented to his victims that he was a licensed Chartered Professional Accountant (“CPA”), licensed with the Ontario Securities Commission, and was a successful trader. Kumar represented to his victims that they could invest their funds by simply transferring money to an account he controlled. Kumar represented to his victims that the return of their investment principal was guaranteed, meaning that investing with him was low risk.
What Kumar did not disclose to his victims was that he had pleaded guilty to the criminal offence of uttering forged documents as a result of his misconduct while he was working as an investment advisor at a bank. The particulars of his crime was reported by the Investment Industry Regulatory Organization of Canada (“IIROC”). In Re Kumar, 2015 IIROC 33, the IIROC tribunal found that between February 2013 and April 2014, Kumar made improper use of $1,450,980 in client funds by transferring these funds from the brokerage accounts of four clients into his own personal brokerage account without the clients’ consent or authorization. Between February 2013 and April 2014, Mr. Kumar forged copies of cheques and client signatures to facilitate the unauthorized transfer of client funds into his personal brokerage account. Kumar agreed to the penalty of a permanent prohibition on registration with IIROC, a fine in the amount of $50,000, and costs of $5,000.
Given that this occurred in Canada, the Crown took a plea to one count of the utter forged documents offence and gave Kumar a discharge. As we have reported before, the Canadian criminal justice system is often soft on rogues and is an unreliable system for fraud victims hoping for recovery. This is because the Canadian criminal system is often inefficient, and even those cases that are prosecuted to the point of conviction often result in soft penalties because the focus at sentencing is on offender rehabilitation rather than the victim’s interests. Rogues sometimes are skilled actors—they play a role when gaining the trust of their victims, just as they sometimes play the part of a reformed person for our criminal Courts.
Mareva Injunction Proceedings and an Anton Piller Order against Kumar
Where the victims can afford their own private justice, we recommend that they attempt to obtain asset freezing and tracing orders (often referred to as a Mareva injunction), and an evidence preservation order (an Anton Piller order). Without such orders at the front-end of litigation, the chances of recovery are markedly reduced. See Ndrive v. Zhou, 2020 ONSC 4568, paragraph 6:
6 The mareva injunction is a tool designed to address the problem posed when a defendant utilizes the time lag between a claim being prosecuted and a plaintiff’s attainment and execution upon a judgment to divest itself of assets which would otherwise be available to satisfy that judgment in whole or in part. A preservation of assets order, also known in commercial parlance as a “freezing order”, is thus of great utility. It is often the only means by which to preserve exigible assets where other forms of security for payment of a judgment such as liens, charges, cautions or guarantees are unavailable.
In the case of Kumar, on March 15, 2019, the Superior Court in Toronto issued a Mareva injunction and an Anton Piller order. Kumar, claiming impecuniosity, still managed to hire a defence lawyer and brought motions to set aside the orders. This lead to a series of contested ‘set-aside’ motions, all of which Kumar was unsuccessful on. On June 30, 2020, in an unpublished judgment, the Courts in Toronto declared the Mareva injunction and Anton Piller order to continue to trial. Ultimately on August 4, 2020, in an unpublished judgment, the Courts in Toronto issued a $100,000 cost order against Kumar for his failed set-aside motions.
The Motion to Strike Kumar’s Defence
Up to this point in time, Kumar refused to disclose what he had done with all the victim’s funds, nor how he funded his affluent lifestyle. What we knew is that other victims were continuing to suffer losses at the hands of Kumar while the Mareva injunction was in effect. Kumar represented to the Court that he was receiving funds from benevolent friends. In the face of Kumar’s continued misconduct, we brought a motion for contempt before a judge to have him incarcerated until he disclosed the source of his funds, and simultaneously a motion to strike Kumar’s defence for not paying the $100,000 cost order and not producing documents as previously ordered.
The motion to strike Kumar’s defence was heard first – the contempt motions have not been heard yet.
On July 19, 2022, the Toronto Courts finally released their decision on the motion to strike Kumar’s defence. In Allen v. Kumar, 2022 ONSC 4223, the Court held that:
There comes a point in litigation where the Court’s tolerance for breaches of court orders and evasion of obligation ends. Striking a defence is not a step taken lightly. However, […] Kumar’s conduct evinces an intention not to submit to the Court’s jurisdiction and further demonstrates a level of defiance and obstruction that cannot be condoned. Allowing him to continue to defend this action despite repeated opportunities to comply with Court orders, to abide by obligations imposed by those Court orders, and to comply with the rules of this Court would be doing just that. I grant the Plaintiff’s motion and I strike Kumar’s defence.
As mentioned above, this decision was published. The decision is 12 pages long and contains the legal mumbo jumbo that is usually only of interest to lawyers. Of interest to fraud victims is that one of Kumar’s excuses for failing to comply with Court orders is that he was also on criminal charges—in other words he argued he was invoking his right to silence. The Court in this case correctly held that there is no right to silence in civil litigation, and the mere laying of criminal charges does not stay civil proceedings from being prosecuted – including the enforcement of a $100,000 cost judgment.
At this point, the victims have to assess the economics of whether to continue their quest for justice.
The Motion for Contempt and Judgment
All fraud recovery cases require an ongoing assessment of the economic basis of prosecutions as opposed to the legal viability of the prosecutions. Given the affluent lifestyle that Kumar continues to lead, he has access to cash – whether sourced lawfully or sourced through unlawful means. Given the findings of the Court, there certainly is a legal basis to bring contempt proceedings and to have a judgment quantified.
We are often asked by fraud victims whether they are ‘throwing good money after bad.’ What is known is that the striking of a defence has not motivated Kumar to repay his victims. The 2015 IIROC decision already destroyed Kumar’s reputation. It is unlikely Kumar will be motivated to pay his victims by the 2022 published judgment striking his defence. What is left to determine is if the prospect of incarceration through contempt proceedings will achieve the objective of behaviour modification and in Kumar’s case motivate him to give his victims answers and to respect Ontario’s justice system – a concept often referred to as the ‘rule of law.’ What we know is that one Crown prosecutor has given Kumar a pass – a story for another blog.
The problem with contempt proceedings is that although Canadian Courts talk a good talk about the ‘rule of law’, they do not make this process affordable or efficient—let alone a litigant who has just been robbed. A victim is required to fund contempt of court proceedings. And far too many Courts do not even provide fraud victims with full indemnity costs for having a court maintain its vaunted ‘rule of law’.
Contempt motions should be a quick and efficient process – it is not rocket science in most (not all) cases where rogues fail to not comply with Court orders. Yet far too many Courts make a lot of hay in the process, to the point that victims can be financially exhausted by the time a contempt declaration and sentence is issued. To be sure, contempt of court proceedings are quasi-criminal proceedings, and due process is required. The reality, however, is that contempt proceedings are supposed to be ‘summary proceedings’, yet unlike criminal summary conviction proceedings, civil contempt proceedings often get bogged in procedural issues.
All of this to say is that what victims are often left with is an economic assessment of whether they are ‘throwing good money after bad’ by asking a Canadian Court to enforce their lofty ‘rule of law’ goals. Perhaps there will be another chapter in the Kumar prosecution that will result in the next chapter of this story. For now, it was nice to see this story was picked up by a Lexis Publication.
Striking Defences of Rogues that Resulted in Recovery
Not every case where defences are struck against rogues involves Mareva injunctions. In another one of our fraud recovery files, in an unpublished judgment cited as Agha v. Khan, Court File No. CV-19-620135, the Court struck the defence of one of the defendants for non-compliance with various discovery orders. In this case, funds were preserved via a Rule 45.02 preservation order – not a Mareva injunction. In the face of judgment, the defendants offered to settle the action, and the case ended without a trial.
Most of our recovery cases occur without published judgments. Having judgments published is the only fair way to protect the public and would-be victims by giving them a means to conduct due diligence. On the other hand, the prospect of a published judgment encouraged settlement in the Agha v. Khan case. Often courts are hesitant to publish their judgements for reasons they do not disclose. Perhaps it is because if they publish their decisions where judgments are not yet issued they believe it will reduce the chances of a defendant doing right by their victim. This is yet another issue to be addressed one day in another blog.
The Allen v. Kumar, 2022 ONSC 4223 motion was handled by Ashley Ferguson of our office. The Agha v. Khan, Court File No. CV-19-620135, motion was handled by Geoff Keeble of our office.
At Investigation Counsel PC, we investigate and litigate fraud recovery cases. If you discover you are a victim of fraud, contact us to have your case assessed and a strategy for recovery mapped out before contacting police or alerting the fraudster. We also promote victim advocacy and academic discussion through various private and public professional associations and organizations. If you have an interest in the topics discussed herein, we welcome your inquiries.
 2022 ONSC 4223 (CanLII) | Allen v. Kumar | CanLII – https://www.canlii.org/en/on/onsc/doc/2022/2022onsc4223/2022onsc4223.html?searchUrlHash=AAAAAQAdYWxsZW4gdi4ga3VtYXIgMjAyMiBPTlNDIDQyMjMAAAAAAQ&resultIndex=1
 https://www.newswire.ca/news-releases/enforcement-notice—decision—in-the-matter-of-brian-anish-kumar—settlement-accepted-523258691.html . TORONTO, Aug. 28, 2015 /CNW/ – On August 19, 2015, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a Settlement Agreement, with sanctions, between IIROC staff and Brian Anish Kumar. Mr. Kumar admitted that he made improper use of client funds and that he forged copies of client documents and signatures. Between February 2013 and April 2014, Mr. Kumar made improper use of $1,450,980 in client funds by transferring these funds from the brokerage accounts of four clients into his own personal brokerage account without the clients’ consent or authorization. Between February 2013 and April 2014, Mr. Kumar forged copies of cheques and client signatures to facilitate the unauthorized transfer of client funds into his personal brokerage account. Kumar agreed to the penalty of a permanent prohibition on registration with IIROC, a fine in the amount of $50,000, and costs of $5,000.
 See for example, 2021 Update: Why the Criminal Process is Secondary in Fraud Recovery –Part II: Criminal Funding Rights Override Victim Mareva Recovery Rights – Fraud Recovery Lawyers | Investigation Counsel PC
 Severe Remedy of Striking Defence warranted in loan fraud litigation, Court Rules – July 22, 2022: https://www.thelawyersdaily.ca/articles/38150/-severe-remedy-of-striking-defence-warranted-in-loan-fraud-litigation-court-rules
 Reasons for Decision of Justice Vella issued April 1, 2022 (4868-9963-7548)