In Lalani v. Reeves, Justice Belobaba of the Ontario Superior Court of Justice certified a class action brought on behalf of thousands of Toronto-area investors who were defrauded of more than $75 million some fifteen years ago by a promoter who spent the money given to him in trust on off-shore gambling and other personal indulgences. The bulk of the money was not recovered. Six class actions were subsequently commenced by the investors against secondary players such as the financial institutions involved in the receipt, deposit, purchase and transfer of the investment funds. The most recent decision certifies a proceeding against Edward Reeves, who owned and operated Cash Plus Services, a cheque-cashing facility that processed $54 million of the investment monies and transferred them to the promoter. Justice Belobaba found that the pleading disclosed causes of action in knowing assistance and knowing receipt (relating to fraud and breach of trust), constructive trust and negligence. Significantly, the plaintiffs were allowed to amend their pleading to add further particulars to the negligence claim to set out a basis for piercing the corporate veil and suing Mr. Reeves personally.
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