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Sign for Law Society of Upper Canada.Barrie Davis/The Globe and Mail

The Toronto lawyer whom regulators allege may have misappropriated more than $3-million in client funds and abruptly left the country was a no-show on Friday as a judge found him in contempt of court, an offence that could mean jail time or a fine, or both.

Javad Heydary, a 49-year-old Toronto litigator whose website tells a rags-to-riches story that began with the selling of candy on the sidewalks of Tehran at age 7, was the owner or majority shareholder of a group of small law firms and an Osgoode Hall graduate who had practised law here for 12 years.

He is now believed to be in his native Iran, court heard Friday. He left Canada on Nov. 15, a day after a judge ordered his law firm to hand over the bulk of $3.6-million in settlement money that was supposed to be held in trust for former clients.

Justice Julie Thorburn of the Ontario Superior Court agreed with lawyers for Mr. Heydary's former clients and found Mr. Heydary in contempt, saying he had "deliberately or recklessly disregarded" her order to immediately repay $2.1-million and to show that the remaining $1.5-million was still held in trust.

She will preside over a sentencing hearing for him on Dec. 17, although whether he will be there remains unknown.

Lawyer Ray Thapar – who is acting for the Mississauga couple suing Mr. Heydary to obtain the remainder of a settlement they are owed from a shareholder dispute – said he will be asking the judge for a jail sentence, the seizure of Mr. Heydary's passport and a "substantial fine," among other measures.

Questions are swirling around after the collapse of his law firms and Mr. Heydary's sudden disappearance. All of the 11 to 15 other lawyers involved in his firms have resigned, but a lawyer for the Law Society of Upper Canada told court on Friday that they continue to work with existing clients.

The firms themselves are now under the control of the Law Society, which regulates Ontario lawyers and obtained a court order this week to seize Mr. Heydary's businesses and begin combing through their financial records.

In court Friday, an associate at Heydary Hamilton PC – one of Mr. Heydary's law firms – told court that Mr. Heydary's wife had told people at the firm that her husband was in "various locations," namely Dubai or Iran. The associate, Darren Smith, also said that Mr. Heydary had said before he left that he would take care of the issue of the judge's order.

One of the firm's law clerks, Margarita Park, told court that after Mr. Heydary left the country, he called the office on Nov. 18 but refused to be put through to the lawyer acting for him on the issue of the judge's order. Ms. Park also said that she repeatedly tried to phone a number Mr. Heydary left to call him, apparently in Iran, but was unable to reach him. He did not respond to e-mails about the issue after Nov. 17, court heard.

Samatha Kesel, a lawyer for the former clients suing Mr. Heydary, told court she tried the number on Friday during a court recess. She told the judge that the person who answered the line told her to contact Mr. Heydary's wife, Marjan, who is believed to still be in Toronto.

When The Globe tried the phone number, which was read out in court, on Friday afternoon, a male voice speaking in accented English hung up after a reporter identified himself.

Also on Friday, Mr. Heydary's lawyer, David Shiller, resigned. Gil Fischler, a lawyer from Mr. Shiller's firm Shillers LLP, told the court they could not reach their client to obtain instructions and that the "solicitor-client relationship has broken down."

Nadia Musclow, a lawyer for the Law Society of Upper Canada, convinced the judge that she needed to make arguments to her behind closed doors about a second court order the regulator was requesting.

Ms. Musclow said the discussion could involve "very sensitive issues," such as client confidentiality and third-party financial information. She said making the arguments or the resulting court order public could hinder the Law Society's ability to track and seize assets.

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