Hari Venkatacharya was a man you could trust. A new-economy evangelist tailor-made for Toronto's diverse business community, his admirers included a who's who of Indo-Canadian business leaders. He had a big house, famous wife, international ties and a sparkling résumé – no wonder people put their faith in him.
Anthony Paolucci is one entrepreneur who says he did. Mr. Paolucci had a grand plan to put Toronto on the global soccer map with a massive 16-field complex north of the city. By spring 2011, he had the land, a partnership with the famed Italian club Juventus and the backing of a town council; all he needed was the millions of dollars in financing necessary to realize his vision. Like dozens of other business owners in the GTA looking for a trustworthy source of funding, he says he turned to Mr. Venkatacharya.
And, like others, he now considers himself bilked.
When Mr. Venkatacharya began promoting loans for an enigmatic group in the United Arab Emirates that had ties to the royal family, the arrangement hardly seemed out of the ordinary. Offshore investments had been fuelling Toronto's condo boom for years, the city seen as a refuge for foreign investors wary of sagging global markets. And besides, Mr. Venkatacharya was seasoned in the art of the deal. He had negotiated hundreds of millions of dollars in loans for dozens of companies. Mr. Paolucci hoped to join their ranks.
In all, he says, he paid out $77,691.59 to the impeccably connected businessman in the understanding that it would secure the loan. To this day, he despairs of seeing it again.
Once the spokesman for a new age of global business in Toronto, Mr. Venkatacharya now sits in Maplehurst Correctional Complex accused of involvement in an international scam that took at least $3-million from more than 40 companies – 25 of them based in the GTA.
Investigators with Peel Regional Police now believe the loans were phony. They're unsure if the UAE lending group ever existed and have charged Mr. Venkatacharya with defrauding the public. His family has not responded to repeated messages. His lawyer, Bode Odetoyinbo, refuses to speak about the case.
"Frauds come in all shapes and sizes, but this is something new to us," said Peel Regional Police Constable George Tudos. "This is one of the larger sums we've seen."
Fall from grace
"Previous to all this, Hari had a solid reputation not just in the Indo-Canadian business community, but in the Canadian and Toronto business communities," said Keith Thomas, president and chief executive officer of Vive Crop Protection, a company Mr. Venkatacharya advised until the relationship soured in recent years. "I would never have expected Hari to get involved in something like this, either inadvertently or intentionally. This doesn't seem like the Hari I knew. From what I know, he's a good man. … And obviously that reputation is gone now."
By the time he started appearing as a guest columnist in national newspapers, Mr. Venkatacharya had all the business credentials to dispense world-beating advice. He sat on several boards, including the Ontario Science Centre and the Mississauga Halton Local Health Integration Network. He had a dozen years' experience building firms in Canada, the United States and India. A decade ago, he helped build an IT security firm called Karthika, and oversaw its acquisition by a larger firm. He parlayed that experience into a spate of advising and consulting roles that appeared impressive on paper. By 2007, he had found his entree to the elite of Canada's Indo-Canadian business community, The Indus Entrepreneurs (TIE), a networking and mentoring group that includes influential Silicon Valley venture capitalists among its 13,000 global members. He acted as Toronto chapter president for two years ending in 2009. A number of members would soon fall prey to a scam that took Peel Police a year to crack.
Mr. Venkatacharya's personal bona fides were just as impressive. A trim, confident man with white hair and bold black eyebrows, Mr. Venkatacharya was a smooth public speaker and first-rate schmoozer. Born in Canada to an eminent Sanskrit scholar, Tuppil Venkatacharya, his speech betrayed no hint of Indian background. His wife, Lata Pada, is renowned in Canada and abroad for her pioneering dance choreography and advocacy for victims of the Air India bombing, which killed her first husband and two daughters. They lived together in a large Mississauga home that backs onto a creek.
Despite his sterling reputation, some clients were leery. When he offered himself up as an adviser to Nytric, a Mississauga-based tech consulting firm, the company's director of business development was skeptical. "Soon after we engaged him as a consultant, he gave himself the title of managing director [of Nytric]," said Anthony Gussin. "He was never managing director. And ultimately he produced nothing for us. We had an amicable parting of ways in 2009 or 2010."
In 2009, friends and associates noticed a change in Mr. Venkatacharya's business interests. He had completed his second year as president of TIE and soon let his membership lapse. He told those around him he was doing "big business" arranging financing from the Middle East for Canadian companies. Anyone showing further interest received a persuasive pitch. According to police, court documents and multiple individuals, he said he had developed a connection with a "funding group" connected to the royal family in the United Arab Emirates that was eager to dispense loans of up to $250-million to worthwhile projects in Canada.
"Hari took me to lunch one day and said he was working with a funding group in the UAE with links to the royal family and asked if I had any projects that needed financing," said one India-born entrepreneur who runs a tech company and knew Mr. Venkatacharya through TIE. "I didn't have any reason to doubt Hari's credibility. He was the former president of TIE, he was married to the famous Lata Pata."
That entrepreneur is now out $35,000. His story of how he lost it perfectly mirrors that of Mr. Paolucci, the soccer visionary.
Who's zooming who?
On May 4, 2011, Mr. Paolucci says he opened an e-mail that brought his soccer dreams as close to reality as they would ever come. Mr. Venkatacharya and his business partner, Dale Maharaj, had approved his loan request of $235-million. He could almost hear the crowds. He wired a fully refundable deposit, called a due-diligence fee, of $77,691.59 and waited for cash from the lender, or "the Funding Group" as they were referred to in multiple e-mails to several companies, to begin flowing.
By May 17, he says he had invested $400,000 of his own money into the venture and became anxious about the slow pace of the funding group's background checks. He says each time he wrote Mr. Venkatacharya expressing concern the loan would not arrive on time, he was assured the money was coming, according to e-mails filed with the lawsuit. Mr. Paolucci knew something was wrong, and on July 27 he got his confirmation when Mr. Venkatacharya wrote, "Dale updated me yesterday that the Funding Group has suddenly decided not to fund any loans for the next six months. … They will be terminating all existing loan applications and returning the deposit fees to you over the next 12 weeks or so."
By then Mr. Paolucci was out $500,000. Those imaginary crowds went silent. The return of nearly $80,000 would have helped stem the losses, but it never came. In their legal statement of defence, both Mr. Maharaj and Mr. Venkatacharya claim they were merely consultants on behalf of the funding group. They consented to a judge's order that the due-diligence fee be returned, but no refund has come. At one point, both men argued they couldn't defend themselves legally because their accounts had been frozen.
Whether Mr. Venkatacharya ever benefited from the scheme remains a question. Former colleagues suggest he may have been caught up in a fraud much larger than himself. Peel police lend some credence to that notion, saying that the Dubai Funding Group wasn't entirely fictitious, but refusing to elaborate about details of the ongoing criminal investigation. Mr. Maharaj, Mr. Venkatacharya's business associate and co-defendant in several lawsuits related to the alleged fraud, is out of the country, according to a relative at his semi-detached Mississauga home.
"[Mr. Venkatacharya] thought himself to be very important – to be a big businessman," said Mr. Gussin. "I don't think he had the chutzpah to be anything more than a pawn in this."