Article Courtesy of The Toronto Star

By Diana Zlomislic and Raveena Aulakh

Published September 17, 2011

More than 1,000 condo owners across Toronto fear they are on the hook for millions of dollars as victims of an alleged property fraud. 

Lawyers estimate the total misappropriation may exceed $20 million.

Manzoor Moorshed Khan, president of Channel Property Management, borrowed millions against at least five buildings without their knowledge, according to documents obtained by the Star. 

Khan — a “rags-to-riches” entrepreneur who collected cars like shoes and wore gold and diamond rings on every finger — left the country for Bangladesh a few weeks ago, former employees said. 

The publicly traded financial institution that lent the money said it, too, is a victim. 

“It seems to be a case where a fairly sophisticated criminal fraud has been perpetrated,” Andrew Moor, president of The Equitable Trust Company, said in an interview. He said the suspected scheme “managed to penetrate a longstanding process that has kept us safe.”

On Wednesday, Channel was evicted from its swanky, marble-clad Woodbridge office for not paying rent. 

Industry experts said they have never seen anything like this before. 

“This is totally unprecedented,” said Dean McCabe, president of the Association of Condominium Managers of Ontario. “Everyone (in the industry) is in a tizzy.” 

The Star has learned that at least four condominium corporations managed by Khan’s company were victims in the alleged fraud. Of these, one has filed a lawsuit for $3.1 million against Khan, his company and several financial firms, including Equitable Trust. 

The suit, filed by owners at 25 Grenville St., a luxury condo with around 200 units in downtown Toronto, alleges Khan registered a fake bylaw without the board’s knowledge that authorized him to borrow more than $3 million against the property, according to court documents. 

The boards of directors for three other properties have yet to inform the condo owners of the suspected loan fraud.

Khan is also accused of siphoning off money from another condo in a construction fraud. A separate lawsuit, filed by owners at 236 Albion Rd., claims Khan rigged the tender process on building projects by creating a company that would come in at the lowest bid to win lucrative jobs and then subcontract the work at half the cost. 

Channel and Khan “expressly deny they committed any wrongful acts as alleged,” according to a statement of defense filed in court. 

Last week, surprised and angry residents of 25 Grenville St. crowded into a hotel banquet room for a meeting with lawyers to discuss the case.

“I think the question raised most often was, ‘How could this have happened?’ ” said a resident who did not want to be named. 

Khan falsified a series of legal papers to obtain the loans, including one that declared two of his employees as the condo board’s president and secretary, the lawsuit alleges.

According to allegations filed in court, Khan arranged a loan in the condo’s name and had two of his employees pose as board directors to obtain the loan. Without the board’s knowledge, he opened a bank account in the condo’s name and $3.1 million was deposited into the account in January.

Eight months later, Equitable Trust Company, a niche mortgage lender that does a lot of business with condos, issued a notice of defaulted payments on 25 Grenville St.

Equitable Trust has since issued a notice to shareholders alerting them to the suspected fraud relating to four loans having a total outstanding balance of roughly $14 million. 

All of the loans involve Channel Properties, Moor confirmed.

He said his company is investigating. 

Mohammad Irfan Naeem , 38, is one of two Channel employees named in the lawsuit filed by 25 Grenville St. 

He says his signatures were forged on loan documents. 

“My life is a mess now.” 

Naeem joined Channel about four years ago. He was already working at 25 Grenville St. as the security supervisor when Khan took over the property and asked Naeem to step up to manage the property. 

Naeem jumped at the offer. He knew the board and got along with residents. The next four years were perfect, said Naeem.

Until a phone call in mid-August.

A lawyer who was helping a client buy a condo in the building wanted to talk with his supervisor, Mihaela Jurkovic. 

A few hours later, Naeem said Jurkovic called him; she was hysterical. 

“She was crying on the phone. She said we are gone,” said Naeem. 

Naeem said she told him that the lawyer had faxed her documents showing a loan of more than $3 million against the property. 

“She said our names — hers and mine — were also there. I was speechless.”

Jurkovic faxed the documents to Naeem who said he barfed when he read them. 

Khan did not respond to their calls or emails for two days, said Naeem, who heard his boss was in Dubai.

Naeem said he passed on the documents to the board president. 

“I’d worked there for eight years . . . my loyalties were with the board and the residents.” 

Jurkovic, the other Channel employee named in the lawsuit, declined the Star’s request for an interview. 

Naeem is unemployed now. The board fired Channel on August 18. 

“I was upset to lose my job but I was angry that this had happened with people I knew so well, who had helped me when I needed a job,” he said. 

At 236 Albion Rd. , Khan’s management company was responsible for soliciting tenders to repair exterior walls, windows and balconies in the buildings. 

Unbeknownst to the condo board, one of the bids put forward by Khan came from a company he created called Canali Engineering. It submitted the lowest bid with a tender amount of $1.2 million. After it won the contract, Canali advised the board it needed more money to complete the job, inflating the value of the work to $1.3 million, court documents allege. 

But Canali never did the work. 

Instead, it hired a subcontractor at half the cost.

A property manager who took over one of Khan’s buildings after the board detected the alleged fraud described him as a “rags-to-riches story.”

Khan was working as a superintendant at an apartment rental building near Martingrove and Rexdale when he decided to create his own property management firm in 2003.

During an interview with the Star in August, Khan boasted that he managed more than 40 condos — positioning himself as a mid-level company. His employees, though, say the actual number was less than 15 at any one time. 

So who is Khan? 

Depends who you ask.

Ranjan Bhasin, who worked as an accountant for Channel Property Management for four years, said Khan is private, religious and kept his staff happy. 

“He was always good to us,” said Bhasin. 

In late-August, when Bhasin and other staff learned of the lawsuit, Khan said “his enemies were out to get him.”

A former employee, who did not want to be named, described Khan as outgoing, lavish and personable. “He was a good businessman… he had his fingers in many pies,” he said. Khan, said the former employee, travelled often to the Middle-East, especially Dubai where he had business interests. 

What everyone agrees to is that Khan loved high-end cars. “He changed cars like shoes… there was a new one every few months,” said the former employee. 

At his two-storey home in Brampton this week, a small army of luxury vehicles — Mercedes, Lexus, Audi, BMW — fill the driveway and the two-car garage. 

Four video cameras monitor the premises but nobody answered the doorbell when the Star visited.

According to sources, Khan got contracts at condominiums by bidding lower than others. “Also, you have to remember that a lot of these (condo) board members are immigrants and they identified with Khan,” said one of Khan’s former senior-level employees. “He was persuasive.” 

Khan was known to argue with condo boards but “there was never a problem that couldn’t be solved,” said a former employee, adding that the allegations against Khan are shocking. 

Kamal Sharma, a part-time accountant who looked after the company’s payroll, was laid off 10 days ago. 

“They laid off everybody, actually,” Sharma said, noting the company employed about a dozen staff.

Khan’s 25-year-old daughter Sharmin Sadia has been left to run the show. 

Sadia referred the Star’s requests for an interview to her lawyer who said the family had no comment. 

On the day of the firings, Sharma said Sadia told staff her father went to Bangladesh and that her mother was ill.

“There are no more properties to manage,” Sadia told staff. “There is nothing left to do . . . Everybody should go now.”