An Ontario judge has ordered two alleged fraudsters to pay at least $9-million to investors as punishment for repeatedly disregarding his pretrial orders in a civil lawsuit.
In a decision released Thursday, Ontario Superior Court Justice Markus Koehnen said that the contempt for the court exhibited by property developers Michael Hyman and Giuseppe (Joe) Anastasio means they should pay the full amount sought by the investors suing them – even though the case hasn’t gone to trial.
Although issuing a judgment without trial is rare, Justice Koehnen said Mr. Hyman and Mr. Anastasio have so flagrantly breached his preliminary orders that it was an “appropriate case in which to use that power as a sanction for contempt.”
Justin Necpal, a lawyer for Mr. Anastasio, said his client intends to appeal. A lawyer for Mr. Hyman did not respond to a request for comment.
Mr. Hyman, a former CFL football player, and Mr. Anastasio, who has previously listed his professional expertise as performing “odd jobs,” were the principals behind Noble Developments Corp., a housing company that partnered with a Brampton, Ont.-based real estate investment fund Thrive Capital Management Ltd.
In 2019, Noble was supposed to purchase land in Brampton and Richmond Hill, Ont., slated for a total of 82 homes. In return for Thrive’s $9-million investment, it was to become a 50-per-cent shareholder in the companies that owned the properties.
Instead, the Richmond Hill property sale never closed and a $2-million deposit was lost, court records show. As for the Brampton land, Thrive alleges the developers bought it through a different company and placed several mortgages on the property, leaving Thrive with no security for its investment.
Thrive’s capital came, predominantly, from unsophisticated retail investors in Brampton’s Sikh community.
When Thrive realized its investment had allegedly been squandered, it obtained multiple orders from Justice Koehnen. The judge ordered Mr. Hyman and Mr. Anastasio to provide, among other things, a list of their assets, an accounting of what happened to Thrive’s investment, as well as the locations of the developers’ luxury automobiles, including a 2019 Lamborghini Aventador and a 2019 Porsche 911.
In August, Justice Koehnen found the developers in contempt of court for failing to comply with his orders, ruling that they had said contradictory things about their assets at different times to different people. He said their explanations for failing to produce records lacked credibility, and they “treated court orders as meaningless scraps of paper.”
In his sentencing decision released Thursday, the judge said that, although jail terms would be an appropriate penalty for his contempt finding, he preferred to “tailor the penalty to the default.” Instead, he issued the monetary judgment against the developers, with the precise amount they will owe to be determined at a later date.
Justice Koehnen also imposed a sort of fail-safe to ensure that the pair are penalized. Anticipating the possibility of his decision being appealed, he said that if his judgment is overturned he will sentence the men to six months in jail.
“The magnitude of the fraud allegations, the extent of the breaches, and the repeated, deliberate nature of the breaches call for a sentence at the high end of the spectrum. If anything, it strikes me that six months incarceration would be on the light side,” he wrote.
Thrive lawyer Brian Radnoff, a commercial litigator at Dickinson Wright LLP, said: “This is an important decision about enforcement of and respect for court orders. It will also assist the plaintiffs in trying to recover their money.”
Justice Koehnen also imposed strict restrictions on how Mr. Hyman and Mr. Anastasio can conduct themselves from this point on. He ordered that Thrive can begin tracing assets through judgment debtor examinations, and that during such questioning, neither man is allowed to refuse to answer questions. Any objections they have can be aired later, he said.
As an added incentive to obtain the co-operation of the pair, Justice Koehnen said he would take the rare step of supervising some of the questioning. Such examinations are usually conducted out of court and not in front of a judge.
Both men had pleaded that a jail sentence would be unduly harsh because of the increased risk of transmission of COVID-19 in such a setting. Justice Koehnen said, regardless of the pandemic, they will face “a longer, not shorter incarceration,” given their history of obstruction and if they continue to erect roadblocks as Thrive hunts for its money.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.