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Twenty-five people face charges in alleged fraud, money-laundering scheme

Rafal Gers/The Globe and Mail

Twenty-five people face charges in an alleged multimillion-dollar fraud and money-laundering scheme that targeted major financial institutions across the GTA.

Toronto police announced the arrest of these individuals Monday and said they are still looking for about six more suspects. The accused face a variety of charges including fraud, laundering, forging documents and obtaining credit under false pretenses.

"Between March, 2011, and October, 2012, several people participated in an organized scheme to defraud banks, money lenders and other financial institutions in the Greater Toronto Area and launder the proceeds,"Detective Constable Sarath Thayalan said. "The scheme involved the creation of several shell companies which were then used to apply for credit from a targeted lender."

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The accused are residents of Toronto, Brampton, Mississauga, Cambridge, Markham, Vaughan, Bradford, Woodbridge and Ajax. They all have different last names and range in age from 26 to 75. Det. Constable Thayalan said that some of them are friends, some are family members and some have had business dealings with each other in the past. Not all the accused know each other, he said.

"This is not the type of plan that can be done overnight. Some of the set-up times were in the order of months for some of these frauds to be tried and then tried repeatedly," he said. "There is the motivation purely for monetary gain in which someone could perceivably see a scheme like this being worthwhile."

Three of the 25 arrested – Daniel Kebbe, 33, from Bradford, Elias Rassi, 33, from Vaughan, and Michael Shawn Majeed, 33, of Markham – are alleged to have orchestrated the fraud scheme, Det. Constable Thayalan said.

The operation involved individuals impersonating accountants claiming to have connections to a shell company looking to borrow money, the constable explained. The fraudster would produce forged financial documents to a bank. A bank representative would visit the location of the business, which often had equipment and staff working. If the representative was satisfied that the deal appeared legitimate, a line of credit was granted.

"The information I have supports the belief that certain businesses participated in the scheme by allowing their business, their equipment to be misrepresented as belonging to the shell company," he said. "However, during the course of a fraud, some or all of the items that would normally be in that business would be either taken away or moved aside or replaced with items to facilitate the fraud."

The largest loan amount requested was $1.7-million. The total amount of credit requested is $8-million. Not all the money was granted, and while police have recovered some of the money, millions remain lost. The money was transferred to various places in Ontario, the United States, Hong Kong and Switzerland.

Toronto police will not reveal the names of the banks that were targeted, saying only that they are "companies we all deal with on a regular basis." The businesses that are alleged to be involved in the scam include Omnium Financial Group, Yorkshire Capital, Global Granite and Shankar Woodcrafts. Some other businesses that went by a few different names include a crown moulding company, a printing company, and a cabinetry business.

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Canadian taxpayers often end up footing the bill for these crimes, Det. Contable Thayalan said. Banks often pass on the costs associated with these frauds to their customers, he said. As well, government programs subsidize some of these loans.

"Some of the money that is given out under loans of this type is often subsidized in part by government programs designed to help businesses and promote the economy. When funds are misappropriated in this way, the cost of that is transferred directly to the Canadian government who created these programs and that in turn is funded by the Canadian taxpayer."

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