Homeowner testifies at trial of 2 men accused of defrauding Shariah mortgage holders

The trial of two men accused of defrauding homeowners who had taken out "Shariah-compliant" mortgages heard from one of those mortgage-holders Thursday.

Defence is trying to demonstrate homeowners were credited for payments they made

Homeowner Faruk Atasever testified at the fraud trial of Omar Kalair and Yusuf Panchbhaya in Ontario Superior Court. He told the court he made two payments that were not accounted for after the the company went into receivership. (Jasmin Seputis CBC)


Omar Kalair and Yusuf Panchbhaya,  who provided Shariah-compliant mortgages to Muslim homeowners in the GTA, were found not guilty of a dozen criminal charges in Ontario Superior Court on June 7, 2019 after a trial that began back in October 2018. They were on trial for fraud, theft, laundering the proceeds of crime, and violations under the Bankruptcy and Insolvency Act in a case that dates back eight years.

The trial of two men accused of defrauding homeowners who had taken out "Shariah-compliant" mortgages heard Thursday from one of the mortgage holders, who admitted under defence cross-examination that he and his wife eventually got credited for their payments.

Omar Kalair and co-accused Yusuf Panchbhaya have pleaded not guilty to numerous charges, including fraud, theft over $5,000, and laundering the proceeds of crime. Kalair's lawyer has told CBC News his client "intends to vigorously defend against the charges."


The Crown alleges Kalair misappropriated payments from clients of his mortgage company, United Muslim Financial (UMF), weeks before it went into receivership in 2011. His co-accused Yusuf Panchbhaya is also alleged to have been involved.

Omar Kalair's trial began in Ontario Superior Court in Toronto on Thursday Oct. 18, 2018. (Oliver Walters/CBC)

The court has heard UMF offered mortgages to devout Muslims who wanted to strictly adhere to Islamic (Shariah) law, under which no interest can be charged on a loan.

Faruk Atasever testified Thursday his wife signed what's known as a "Musharakah" agreement with UMF for an Oakville home they purchased in 2006 for $280,000.

He told the court the agreement was renewed every couple of years. Atasever said the payments were high, so they wanted to pay down the "Musharakah" agreement as soon as possible, and go to a regular mortgage lender.

"It was costing us more so I wanted to pay it off with from my HSBC line of credit," he testified.

This cheque for $42,000 sent to UMF by Faruk Atasever's wife was signed as received by Omar Kalair. (Court exhibit)

In June 2011, Atasever told the court, he wrote two cheques to UMF that totalled $142,000. He told the court they were both signed by Kalair.

He said Kalair did not tell him that at the time that an application had been made to put UMF into receivership.

Atasever said he only learned about it after getting a letter from the accounting firm Grant Thornton, the court appointed receiver that handled UMF's trusteeship and bankruptcy.

Atasever told the court he was surprised at the amount that Grant Thornton told him was owing on his mortgage with UMF. 

"The balance was too high and did not reflect the two cheques. We told him we did pay off [our second mortgage]. Please check the balance."

This is a cheque for $100,000 from Faruk Atasever and his wife to UMF. Atasever testified the receiver had no record that the payment was made after UMF went into bankruptcy. (Court Exhibit)

The homeowner explained he told the trustee, "we have a document from UM Financial saying our balance is zero."

Atasever testifed he faxed copies of the cheques to Grant Thornton, and about six months later was credited for the payment.

In cross examination, Kalair's defence lawyer Edward Prutschi asked Atasever why he stopped paying his mortgage after November 2011.

"You were in arrears and they kept deducting the $1,199," Prutschi said.

"I stopped because the principal repayment is not there," replied Atasever. "Where is the $142,000 I gave?"

 "Eventually Grant Thornton agreed you did make the payment … and you did not lose any money?" Prutschi asked.

"Maybe I wasn't counting," Atsever responded.

Accountant Mark Thomson, the senior manager who handled UMF's trusteeship and bankruptcy for accounting firm Grant Thornton, leaves Ontario Superior Court after testifying at the trial on Oct. 25, 2018. (Jasmin Seputis/CBC)

"You provided Grant Thornton with receipts and they wiped it out, is that right? asked Prutschi.

"Yes," Atasever replied.

Earlier this week, accountant Mark Thomson, the senior manager who handled UMF's trusteeship and bankruptcy for Grant Thornton, testified at the trial.

Crown Prosecutor Damien Frost asked Thomson about $910,000 in prepaid mortgage payments from homeowners that UMF had not been passed on to Central 1 Credit Union, its main financier and creditor.

Yusuf Panchbhaya served as chairman of a Shariah board and issued fatwas sanctioning UMF's mortgages as 'Sharia-compliant.' (Oliver Walters/CBC)

"It was just a loss", Thomson said. "The credit union did not get the money."

But he explained many of UMF's mortgage holders were credited for their payments to UMF by Central 1 Credit Union's insurers.

"It was a tedious process. We had to check with homeowners to confirm payment. It was a difficult task."

"No homeowners lost money, if they were able to demonstrate they had paid [their mortgage]?" Prutschi asked during a testy cross examination. 

Thomson replied, "I don't know."

"You do know," Prutschi said. 

"There was not a single homeowner that presented documents to you that did not get credited."

"You are asking me to confirm. I am not confirming," Thomson replied.

This 1-kilo gold bar similar to the 17 bars purchased by Omar Kalair for just under $2 million. Money was transferred from his mortgage company UMF to Scotiabank and Bendix Foreign Exchange to buy the precious metal weeks before the company went into receivership. (Submittted/Court exhibit)

The Crown has entered bank statements into evidence to try to show that show a month before UMF went into receivership, Kalair had  depleted the company's account to buy gold and silver bullion.

The silver was returned to Grant Thornton. But when the crown asked Thomson about the firm's numerous attempts to locate the gold bullion. Thomson replied the gold, worth just under $2 million, was never recovered.