Suspected serial fraudster escaped justice after three failed cases

In the 18 years leading up to Arash Missaghi's fatal shooting last month, Crown prosecutors deployed legal maneuvers that weakened three major criminal cases against the accused serial fraudster, court proceedings and interviews with people involved in the cases show.

The Crown's decisions to withdraw two major cases against Mr. Missaghi and to exclude potentially contentious evidence in a third case in which Mr. Missaghi was acquitted have left the 54-year-old charged in civil and criminal courts with defrauding dozens of people of millions of dollars. has never been held accountable.

On June 17, Mr. Missaghi was killed along with his associate Samira Yousefi in their north Toronto office.

Prosecutors in failed criminal cases declined to be interviewed when contacted by The Globe and Mail. But one expert on Canada's criminal justice system said prosecutors may lack persistence when it comes to complex fraud cases.

“The Crowns don’t want to take any risks. They want to win. If they don’t win, it’s not looking good for them,” said Christian Leuprecht, director of the Institute of Intergovernmental Relations at Queen’s University’s School of Policy Studies. He added that major fraud cases regularly fail in Canada’s criminal courts because the cases are complex and time-consuming for police and prosecutors, often sparking myriad pre-trial challenges where defence lawyers fight to exclude evidence.

The first known large-scale criminal investigation to fail against Mr. Missaghi was a bust that police called Project Tic Toc. The 2006 joint investigation involved intensive surveillance of Mr. Missaghi and at least 20 others, who were arrested for allegedly running an elaborate cargo theft ring in Ontario that stole transport trucks and sold the goods at the International scale.

At trial, prosecutors chose not to introduce extensive wiretapping evidence against Mr. Missaghi, According to a retired police officer familiar with the case, the wiretaps could have damaged the credibility of several witnesses who testified in favor of Mr. Missaghi, but the Crown has expressed concerns about the Garofoli requests, motions presented by the defense to exclude police evidence that may have been obtained illegally. The Globe and Mail is not naming the officer because he was not authorized to speak publicly about the case.

Mr. Missaghi was acquitted of fraud, conspiracy to commit an indictable offence and two other charges, according to the Ontario Ministry of the Attorney General. The Crown assigned to the case did not respond to an interview request.

Years later, Ontario Provincial Police detectives alleged that Mr. Missaghi and his associates ran a criminal organization whose goal was to commit fraud in a northern Ontario community.

In 2015, the Ontario Provincial Police laid charges alleging that people and entities were defrauded out of $6 million. But in 2017, prosecutors negotiated a plea deal. They agreed to drop all charges against Mr. Missaghi and his co-defendants in exchange for findings of fraud made against one of his companies.

Audio proceedings from the final preliminary hearing show that Mr. Missaghi's lawyers presented the court with a check for $32,500 in compensatory damages for victims and that the defense said some lawsuits stemming from the same frauds had been settled.

A prosecutor noted a judge's preliminary ruling suggesting the frauds were not a matter for criminal courts, but rather matters for civil courts.

The following year, in 2018, Toronto police charged Missaghi and three others with masterminding $17 million in fraud. Project Bridle Path, as the investigation was called, was a five-year probe into transactions involving large homes in Toronto’s affluent Bridle Path neighbourhood, as well as other properties in similar neighbourhoods. The scheme, police said, dated back to before 2013 and involved tricking private lenders into handing out mortgage money to people or companies posing as the owners of expensive homes. The mortgages were never registered, and police said false documents were used to complete the fake transactions.

But in July 2021, on the eve of a scheduled trial, the Crown withdrew its case and the four men were free to go.

Court audio obtained by The Globe shows prosecutors were vague about the reasons.

“It is clear that it is no longer in the public interest to pursue these charges,” Crown prosecutor Mitchell Flagg said at the hearing. Among the reasons for dropping the case, he said, were “some potential disclosure issues that were brought to the attention of the Crown and the police several months after the charges were laid – and that have crystallized recently.”

Contacted in June by the Globe and Mail, Mr. Flagg declined to provide further details. Serge Hamel, the prosecutor for northern Ontario, also declined to comment.

The decision to withdraw the Bridle Path case frustrated attorney Doug Bourassa, who represented victims of this alleged fraud scheme, especially since he said a lawyer involved in the frauds, who was later disbarred, was ready to testify.

“This is a lamentable and disappointing decision that allowed Missaghi to continue his frauds with complete freedom,” said Me Bourassa in an interview. He added that his clients remain “incredibly disappointed.”

At times, Mr. Missaghi boasted that he was a master manipulator who could not be contained by lawyers, police or prosecutors. Records obtained by The Globe show that he had been repeatedly unsuccessfully prosecuted and that he may have been richer than previously thought.

“Mr. Missaghi just advised me…his 70-plus companies manage over $700 million in investment funds,” criminal lawyer David Bennett said at a bail hearing in 2015 for the accused fraudster in the Northern Ontario case.

Shortly after the Bridle Path project was completed, Mr. Missaghi and his associates entered into a mortgage agreement with a man named Alan Kats.

Mr Kats' body was found by police in the same office where Mr Missaghi and Ms Yousefi were found dead. He left behind a suicide note. His widow, Alisa Pogorelovsky, has since alleged that their family was defrauded of more than $1 million.