From 1999 to April 2002, Salim Damji—who claimed to have invented a new teeth-whitening product for Colgate—defrauded investors out of approximately $77 million.
And he used BMO accounts to deposit and transfer the stolen funds. It’s alleged the bank knowingly assisted Damji; according to the Ontario Superior Court’s decision documents, it was aware the funds were fraudulent and/or failed to investigate them upon receipt. These accusations are unproven.
Read: Ignorance no defence for client fraud
In 2002, Damji was arrested and sentenced to seven-and-a-half years in prison. But, a court appointed receiver hasn’t been able to recover the stolen money over the past decade.
Read: Awareness helps fraud-proof your clients
As a result, the fraudster’s victims are launching a class-action suit against BMO for assisting his breach of trust. Court officials declined to certify the proposed class action this past April, but revised their decision yesterday after receiving a revamped litigation plan and proof the plaintiff will be able to withstand trial.
They say the case meets all conditions and granted its approval. BMO’s claims the case was filed too late and is an abuse of process—since another similar case was brought against it in 2008—were dismissed.
Alnassir Pardhan, the plaintiff, is pursuing three causes of action: knowing assistance, receipt and negligence. He’s asking for $50 million in damages and $5 million for punitive damages.