The Decibel - The killing of a multimillion-dollar fraudster

Episode Date: August 22, 2024

On June 17, police were called to a shooting in a neighbourhood of Toronto. Three people were killed, two victims and the shooter. We learned as the days went on that one of the victims – Arash Missaghi – was a notorious serial fraudster, and the shooter – Alan Kats – was one of his alleged victims.Globe reporters Mariya Postelnyak and Colin Freeze have spent months untangling the web of criminal charges and lawsuits against Missaghi. Today, Mariya tells us how Missaghi apparently got tens of millions of dollars out of people, why he was never convicted, and what led to his killing in June.Questions? Comments? Ideas? E-mail us at [e-mail]

It was June 17th. It was the first heat wave of the summer, actually. And I had been covering a story around that all day. Around 4 p.m., I started wrapping up for the day, getting ready to go home. And my editor came to my desk and he said, there's been a shooting in Don Mills. Can you go see what's going on? All we knew at that point was that it was near a daycare, which is obviously concerning. So I jumped into the Uber and I headed out. Maria Postelnyak is one of The Globe's summer staff reporters in Toronto.

I arrived at this large suburban plaza. There was a gym, a daycare, there were churches on almost every corner, and some office buildings. And the first person I immediately spoke to was a daycare worker. She had helped to get all the kids out when the building went into lockdown, and then afterwards everyone had to leave. She told me that she had heard gunshots and she described this kind of scary scene, obviously. The police eventually came out and told us that three individuals were killed. So it was two men and a woman. They were not looking for a suspect, which immediately rang a few bells in our minds that potentially the suspect was deceased. And when police the next day identified Arash Mazahi and Samira Yousefi as two of the victims of that shooting,

we could start searching their names. And that's when we began to uncover this whole lengthy legal footprint and all the civil and criminal proceedings that Mr. Misahi had been involved in. Maria has spent months now, along with The Globe's crime and justice reporter, Colin Freese, untangling the webs of Misahi's alleged career in fraud that spanned decades. Today, she tells us how he reportedly got tens of millions of dollars out of people, why he was never convicted, and what led to his death at the hands of one of his alleged victims. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Masahi. What do we know about him? Who was this man? So Arash Masahi was an alleged fraudster with a career that spanned two decades, at least. In June of this year, he was killed by one of the individuals he had allegedly defrauded, Alan Katz. But if we rewind through those last 20 years,

Mr. Masahi allegedly victimized dozens of people, primarily through fraudulent mortgage schemes. But he also had a variety of other methods, like he would hire people and then fail to pay for their service. There were allegations that he did money laundering, participated in art theft, and he also allegedly used businesses and individuals, including his own family members, to serve as proxies for some of his crimes. And he was actually bankrupt, though, wasn't he? How does this work? Yes. So since the year 2000, Mr. Mazzahi has been an undischarged bankrupt, which has actually been incredibly advantageous for him, allegedly, because he can then hide his funds under different business associates and family members. And when things unravel in any of his frauds,

he's not the one who's on the hook. It's often these people who are approached first. Do we have a sense of when his career in alleged crime and fraud started? Like, according to the documents you found, what do we know? The first criminal allegations against him began around 1999, when he was allegedly involved in cargo theft of these large shipments that included pineapples. It included garlic, asparagus, bottled water, computers, and just a bunch of other consumer goods. And his first known criminal charge came in June of the year 2000, when he was arrested in relation to an import-export company that was accused of scamming businesses

out of property and different sorts of assets worth up to $3 million. Wow. He was never convicted, though. Is that right of those crimes? No. And that's one of the most important things to note about Mazzahi is that he was never convicted of a crime and never faced any jail time whatsoever, despite all the accusations leveled against him and this massive legal footprint that we can see. Okay. And he was primarily, though, accused of mortgage fraud. Maria, do we have a sense of how his schemes allegedly worked? Mizahi had a number of schemes he did, but according to legal documents, syndicated mortgage fraud was sort of his bread and butter. And to kind of break that down, it's helpful to understand

how a syndicated mortgage works. Yeah, I think this is something not all of us really know about, right? Yeah, absolutely. So when a borrower finds more than one private lender to invest money in a property instead of going to the bank. That's usually a syndicated mortgage. So what happens is that the money from all these different investors is combined to create a single mortgage. So instead of going to a bank to get a mortgage loan, there's a whole bunch of people that are contributing to the pot. And that is your loan then for the mortgage. Exactly. And the reason that investors sometimes find these sorts of

arrangements appealing is because they're looking to earn better interest than they might get at the bank. Now, in a legal syndicated mortgage, the amount an investor lends is less than what the property is worth, so that they will get their investment back once the property is sold. But in mortgage fraud, the investors might collectively lend, for example, much more than the property is actually worth. And the fraudster may also misrepresent information or provide falsified documents to overvalue that property, often significantly overvalue that property well beyond its actual value. So even while the investors might initially receive some of their interest on these investments, ultimately, the whole thing is a scam and they end up losing the rest of their money. Okay. Let me ask you about Alan Katz. He

was one of Masahi's alleged victims, who is the man who ended up shooting Misahi, as well as an associate, Samir Yousefi, and then shot himself. Maria, what do we know about how Alan Katz got involved in Misahi's alleged schemes? Yeah, I think you're right. The best way to understand Misahi's schemes is to really look at an example. So speaking to Elisa Pogorlovsky, the widow of Alan Katz, and looking at the legal documents, Alan and his wife were introduced to Samira Yousafi, a business associate of Mr. Mazzahi, through a friend in late 2022.

Then Yousafi started to sort of push an investment opportunity onto Ms. Pogorlovsky and her husband while promising these massive returns or 10% returns. So ultimately, as Elisa describes it, Yusefi was using very aggressive sales tactics and was relentless in telling Elisa and her husband that they were at risk of missing out on this incredible investment opportunity. To close on the mortgage, Yousefi convinced them to obtain a nearly $1.4 million line of credit against their home in King City, and she pushed them to meet with a lawyer to get syndicated mortgages on three properties as investments. At this point, they had not yet met Mizahi,

as far as we know. But as time passed, Elisa and Alan were waiting for their returns, and they never materialized, right? Yousafi kept making excuses about why the profits weren't materializing. She also would refer them to the lawyers who had this, you know, authority and they were trusted figures, right? So they were, they felt confident speaking to them. And then at one point, Yousefi actually introduces Ms. Pogorlovsky and her husband, Alan Katz, to Mr. Mazzahi, who she presents as a lawyer. And Mr. Mazzahi... Even though there's no record of him being a lawyer. There is no record of him being a lawyer. So they meet Mr. Mazzahi, I believe in late 2023,

and he reassures them. He's kind of this authoritative voice, and he reassures them that everything's okay and that they're going to get their returns. So at what point did they realize something was really off then, that something was wrong here? Yeah, so the pivotal moment came when they got an independent lawyer to finally just look at the documents, look at the case, and see what's going on here. And what happened there was the lawyer took one look and said, OK, there's something happening here. Something is is wrong. Miss Pogorlovsky and her husband ultimately were told that they were part of a scam. The lawyer uncovered all of these legal proceedings related to Mr. Mizahi and told them about all the other fraud accusations leveled against him. And they were in shock, I mean, as anyone would be. Elisa said that she was particularly

crushed. She couldn't eat, she couldn't sleep. She also told me that for a few days, she couldn't even speak because she couldn't verbalize her emotions. As she tells it, Alan was the one who was very level-headed at that point because he had a lot of trust in the legal system, that the legal system would do them right. So they worked with lawyers to build a legal case against Ms. Yousefi and Mr. Mazzahi. They also filed complaints with the Law Society against the lawyers they say were involved in this, Fred Yak and another lawyer, Sharyar Mazahari.

Those complaints are still being investigated. OK, so Alan Katz and his wife, Elisa, they're, you know, they're obviously really upset that they found out they've been scammed in this way, but they've launched this civil lawsuit. Seems like they're taking action in that way. How do we then get to the day of the shooting, Maria? Like, what do we know about what led Allen to resort to those measures? After they started to build this sort of legal case against Mr. Mazzocchi and his associates, months passed. They started to accumulate hundreds of thousands of dollars in legal fees without any clear sign of light at the end of the tunnel. And that's when Elisa said, Alan's health and well-being really started to

spiral. Part of the reason it was so devastating for both Alan and Elisa is that they had borrowed money from multiple relatives and had told them that this is such a great investment opportunity and that they'll all be able to walk away with some returns. So he felt as if he didn't just betray his immediate family, but that he's betrayed all of these relatives who really counted on this investment and trusted him as well. As she puts it, he became totally absorbed in the case. He didn't eat. He didn't sleep. What he couldn't wrap his head around was that Mr. Mazzahi and his business associates,

as well as the lawyers, could wake up every morning, leave their house and go to work, and continue to perpetrate the same sort of scam on other people as they did with them. And Allen wrote a suicide note where he said that his death is on the hands of Miss Yousefi, Mr. Mazzahi, and the two lawyers allegedly involved in their fraud. We'll be back in a moment. Maria, you touched on the role of lawyers. So let's talk about that. How important were the lawyers who worked with Misahi and how were they involved in all of this? Legal professionals, they have the knowledge and experience and authority to advise you about any amendments or additions needed to a contract. They sign off on documents. They essentially

legitimize transactions. We know of at least seven different lawyers who worked with Mr. Mizahi, and five of them have been disciplined. This is disciplined from the Law Society of Ontario, all in Ontario. Disciplined by the Law Society of Ontario, yes. He has an extensive record of threatening people. So there are records of Mazzahi comparing himself to Al Capone. So I believe he said at one point that stealing from me is like stealing from Al Capone. Can you tell me more about that? Where did he say that? I believe that was in a text message to one of the people he was working with at the time. One of the lawyers, actually, probably one of the most infamous lawyers to work with, Mr. Mazzahi, she was a rookie lawyer by the name of Golnaz Vakili.

She supposedly ended up fleeing the country with only just her yoga pants, a bunch of purses and $5,000 of cash. Do we know why she fled the country? Like, what did she say about that? So she at one point said that Mr. Mazzahi had forced her to flee the country because obviously she had been legitimizing a lot of these illegitimate transactions. So if the police come looking for someone, they're going to look for her. And if she's not there to provide documents, if she's not there to provide testimony, then he's more or less safe, even though there's an accusation leveled against him. Wow. Yeah. I guess I wonder, because, you know, if he's going through a lot of lawyers here, it sounds like, you know, seven different lawyers who over time who had worked with him.

Wouldn't these lawyers have an idea that Mizahi was maybe known for doing things that were a little shady? Like, I guess, wouldn't this information get around? Yeah. So we know that at least one lawyer warned other lawyers that Mr. Mizahi was a risky person to work with. But that's where the role of the law society really comes into play. Obviously, there's the right to counsel. So they can't just say, oh, you can't work with this person. You can't work with them ever again. Nobody can work with them. But they also have an obligation to work in the public interest. So they do need to protect the public. And that's where they are facing this sort of bind right now. And those two lawyers that we were talking about earlier, Maria,

what's happening with them? Do we know? Yeah. So after our investigation into the complaints against those two lawyers, there was a motion filed for an interim suspension of their license by the Law Society, which will be decided at an upcoming hearing. Okay. Okay, so Misaki might have been known as maybe a bad actor among lawyers. He was also caught up in several police investigations over the decades, which I think we should talk about here, Maria. Can you just kind of walk me through some of the big ones? I think, you know, starting in 2006, really. Yeah, for sure. There were several serious criminal probes into Mr. Mazzocchi. The first happened in 2006, and that was Project TikTok, which was an 18-month investigation into this massive cargo theft ring where Toronto police ended

up arresting both Mr. Mazzocchi and about 20 other of his associates. They seized drugs. They seized $3 million of stolen property and a handgun. But most strangely, they also seized a bunch of fake York regional police uniforms as well. Yes. When the charges went to trial, prosecutors chose not to enter a lot of wiretap evidence against Mr. Mazzahi, according to a retired officer who shared some of this information. And then in 2015, there was that OPP, Ontario Provincial Police Investigation, right? What was that one?

Yes, this was an investigation in northern Ontario town called Timiskaming Shores, where Mr. Mazzahi was charged with being a member of a criminal organization. And he was also charged with seven counts of fraud. And there were also a number of other individuals arrested in that case. And what exactly did they say he had done there? Do we have any details on that? Yeah, there was a number of different scams that Mr. Mazzocchi and his associates did into miscarrying, allegedly.

So the biggest scam was sort of this restoring and flipping houses mortgage fraud scam. So very similar to his traditional mortgage fraud scam. But in addition to that, they were also employing a lot of different companies who would, for example, install waste management at the property and then never paid. As you may have guessed, the charges were eventually withdrawn by the Crown. And then there was this Project Bridal Path, right? So this is like 2018. What was happening there? This is in Toronto. Yeah. So in 2018, Toronto police charged Mr. Mazzocchi and three others with fraud and conspiracy in relation to this

massive five-year investigation of mortgage fraud that was valued at more than $17 million. And then on the eve of the trial, the case was suddenly withdrawn by the Crown for unexplained reasons. So what's going on here? Why are all of these cases falling apart like this? Well, there are still a lot of unanswered questions, but a key reason that the experts we spoke with have shared is that Crowns don't want to take risks. They want to win. If they don't win, it essentially looks bad on them.

So major fraud cases often fall apart in Canada's criminal courts because these cases are super complicated. They're very time-consuming for both police and prosecutors. And there's also a lot of pretrial challenges. And in the end, you might lose. So according to our experts, the courts often don't find it worthwhile or, as we were told, not in the public interest to pursue these cases. There's also some ongoing civil cases against Mousahi. What happens to those now that Muzahi is dead? Yeah, so you're right. There's still a number of civil cases against Muzahi and his associates. Alan and Elisa's case is still in litigation. But as Elisa told me, they've now spent thousands and thousands of dollars on legal fees.

So even if they get that money that they were defrauded back, they've already lost so much, and obviously not just financially. It's incredibly challenging for people to get their money back because you have to remember that Mr. Mazzahi was an undischarged bankrupt, which essentially means he doesn't actually have a penny to his name and all his money is under his business associates, his family, and Shell Corporations. Yeah, it makes it a lot more complex. Exactly. It's very complex. Maria, just lastly, before I let you go here, I mean, this is, it's a long, it's a complicated story. It has a really tragic ending. I guess I'm just wondering, after all the work you've done untangling all of the details here, what do you make of this whole situation and everything that's

happened? You know, it's interesting because Mr. Mazzahi is famous for allegedly saying in, I believe it was an email exchange from 2018, he said, I shake the system and change it and evolve people. And that everyone sort of follows the new pattern that he sets. But I think he actually was the system. It's that unchanged system that allowed him to operate the way he did. And he reflected its sort of glaring problems. There were so many opportunities along the way to stop this guy, but he was able to get away time and time again. There were the courts, there were regulators like the Law Society. All of them had an opportunity to make an impact in preventing him from perpetrating his fraud. I think it's incredibly sad that what brought his alleged

criminal career to light was this tragic shooting that happened last June. Maria, thank you so much for your reporting here and for taking the time to be here today. Thank you so much. That's it for today. I'm Mainika Raman-Wilms. Our producers are Madeline White, Rachel Levy-McLaughlin, and Michal Stein. David Crosby edits the show. Adrienne Chung is our senior producer, and Matt Frainer is our managing editor. Thanks so much for listening, and I'll talk to you tomorrow.