Rabbi Momi Pinto, his wife and three children filed a complaint against the Autorité des marchés financiers (AMF) earlier this month, alleging the watchdog’s investigators conducted an unlawful and unreasonable search of their two-storey Montreal home last September. They are seeking compensation for damages worth $230,000, the lawsuit states.© Christinne Muschi / Reuters
A Montreal rabbi is suing Quebec's securities watchdog for infringing on his family's rights in a raid at their home linked to the Amaya Inc. insider trading investigation, a case his lawyer says exposes the regulator's "high-handedness."
Rabbi Momi Pinto, his wife and three children filed a complaint against the Autorité des marchés financiers (AMF) earlier this month, alleging the watchdog's investigators conducted an unlawful and unreasonable search of their two-storey Montreal home last September. They are seeking compensation for damages worth $230,000, the lawsuit states.
"What this case illustrates is a certain high-handedness, which not just the AMF but all sorts of government institutions are having right now," said Montreal lawyer Julius Grey, who is representing the Pinto family.
"They were, I think, trying to get any information they could without considering what the law said," Mr. Grey said of the AMF. "It's cutting corners, cutting them very egregiously. … They simply did not consider the effect that such a thing can have on completely innocent people."
The lawsuit underscores the frustration boiling against Quebec's regulator in the saga of Amaya, a fledgling gambling equipment supplier that became one of the world's biggest betting portals with the $4.9-billion (U.S.) purchase of PokerStars in 2014. In the wake of insider trading and market manipulation charges against David Baazov, Amaya's founder, in March, 2016, the company changed its name to The Stars Group and moved to Toronto. He remains a shareholder but is otherwise not involved with the company.
Mr. Baazov and five other co-accused have expressed exasperation with a securities watchdog they say has consistently failed to disclose the evidence against them in a timely manner. A judge is scheduled to rule next week on an application by the defendants to dismiss the case. Other individuals ensnared by the investigation say they're suffering reputational harm as the probe continues without charges against them.
Mr. Pinto says the AMF was simply wrong to bring him into the affair. He accuses AMF investigator Xavier Saint-Pierre of exhibiting "at best, serious recklessness" in making the warrant application to search the rabbi's home. And he says the investigator showed "extreme incompetence" by attesting that there were probable grounds for the warrant when, in fact, there were none.
Sylvain Théberge, a spokesman for the AMF, said the regulator will contest the complaint, but would not comment further.
Mr. Saint-Pierre sought and obtained a court warrant last September to search a property he believed belonged to a man named Yosef Ifergan. Mr. Ifergan, whose name surfaced only recently in the Amaya case, is described in court material as an "offshore" finance specialist who worked for Mr. Baazov's brother, Josh Baazov, and another associate, Craig Levett.
The AMF alleges that Mr. Ifergan allowed his name to be used as cover to own and sell a big block of Amaya shares actually held by the Baazov brothers and Mr. Levett, a situation that was never disclosed to other investors or to the regulator. The AMF continues to investigate information disclosed by David Baazov and Amaya but hasn't filed any charges in that aspect of the case.
At 6:45 a.m. on Sept. 12, six AMF investigators and two uniformed police officers descended on Mr. Pinto's McLynn Avenue home, armed with a search warrant targeting Mr. Ifergan, the Pinto lawsuit states. Mr. Pinto and his wife identified themselves and explained that they had bought the house more than five years ago from Mr. Ifergan, whom they did not know.
Despite Mr. Pinto's insistence that they had no connection to any of the people or companies listed in the warrant, the investigators proceeded to search the home for six hours, scrutinizing the family's computers, tablets and cellphones, even though the warrant granted access only to devices belonging to Mr. Ifergan, according to the complaint. "The AMF found absolutely nothing, not even the most tenuous link to the charges they were supposed to be investigating," the complaint states.
When the family expressed their concern about how the search might affect their reputation in the community, they were told by one of the police officers not to tell anyone and to "make up a story" explaining why the police were there, according to the lawsuit. The whole episode was "very traumatizing" to the Pinto family, particularly the children, who required a visit with a social worker to calm their nerves, the lawsuit states.
The suit says the AMF's search was, in fact, not authorized by law because it relied on faulty information that evidence would be found at the location of Mr. Ifergan's home. The suit states that the AMF relied on an old Amaya shareholder registry, which listed Mr. Ifergan's address as McLynn, despite the fact that he had since moved to Calgary. Public land title records confirm Mr. Pinto as the owner of the house for the past five years. Driving records confirm Mr. Ifergan lives in Calgary, according to the lawsuit.
In order to obtain the search warrant, AMF investigator Laurianne Carrière also made what she said were two positive visual identifications of Mr. Ifergan at the Pinto home, according to the suit. In the first, Ms. Carrière said she saw Mr. Ifergan getting out of a vehicle and entering the house but, contrary to police procedure, she did not write down the licence plate nor describe the vehicle. In the second, she said she saw Mr. Ifergan leaving the house and when she dialled his phone number, the person leaving the house put the phone to his ear. But she gave no further details about whether the person answered the call or whether she spoke to him.
"It is clear that the person she saw could not have been Mr. Ifergan because he was not in the province on that day and because he has not set foot in the plaintiff's residence since they took possession of the house," the lawsuit states. "Plaintiff Pinto and Mr. Ifergan look completely different in their appearance, aside from the fact that both men have beards and wear Jewish skullcaps."
Nicolas Van Praet