Skip to main content

In the early 1990s, the defendants operated Aamazing Technologies Inc. (“Aamazing”), which was engaged in the distribution of computer monitors. KDS supplied Aamazing with a substantial amount of equipment without receiving payment. KDS subsequently launched a civil action against the defendants to recover the unpaid amounts. In 1998, KDS obtained a judgment in California against the two primary defendants. Shortly thereafter the defendants filed for bankruptcy protection.

Unable to collect on this judgment from the original defendants, KDS brought an action alleging that defendants conspired with family members and other entities to prevent KDS from collecting on the original judgment. At trial, KDS relied on the expert evidence of forensic accountant and economic damages expert, NERA Senior Vice President Mark Berenblut, to show that the defendants engaged in a variety of tactics to conceal funds that were subject to the original judgment. These tactics included the use of front companies and numerous transfers of funds through multiple bank accounts to family members and related companies in Canada, the US, and China, often for no apparent reason and for no consideration.

Finding that, “there was an overarching conspiracy to hinder, delay and defraud plaintiff's collection efforts,” the Court held additional family members liable for more than half of the original judgment as a result of these actions. Further actions were subsequently brought in Ontario to enforce the findings of the California Court.

Citing Mr. Berenblut's analysis and his testimony on the difficulties involved in recreating a history of transactions that has been deliberately hidden or destroyed by one party, the Court of Appeal found that his analysis of the transaction history was admissible and supported an inference that the debtors had engaged in fraudulent transactions.