Legal Battle Between Khavari and a Real Estate Developer Over Housing Construction in Toronto

Sam Mizrahi, one of the most famous real estate developers in Canada, has filed a lawsuit claiming that last year, while constructing two luxury residential complexes in downtown Toronto, Mahmoud Reza Khavari, the former head of Bank Melli Iran who has been wanted since 2011, threatened him over the phone, stating that if he did not pay him millions of dollars, he would burn down his house and destroy his reputation. Mahmoud Reza Khavari is a key suspect in the largest fraud case in Iran's history and a significant point of diplomatic conflict between Iran and Canada; he is the father of Mizrahi's partner in this construction project and one of its main investors. Previously, Masoud Rezvani, the head of Interpol Iran, stated that the extradition documents for Mahmoud Reza Khavari had arrived, and they had received cooperation promises from the head of Interpol Canada in Ottawa. Some officials from Mahmoud Ahmadinejad's government have been accused of being behind Khavari's embezzlement. Bloomberg reports, based on court documents related to the counterclaims between Sam Mizrahi and the Khavari family, that this case, still under review, reveals facts about investment methods in one of the hottest real estate markets in North America. The central issue of this case is the transaction and partnership between Sam Mizrahi and Khashayar, the son of Mahmoud Reza Khavari, the emergence of disputes and deterioration of their relationship, and ultimately the battle over ownership and profit from this construction project. Bloomberg writes: Khashayar Khavari, in evidence submitted to the court, claims that the allegation of the phone threat is false and that his father is a calm 63-year-old man who has never threatened anyone. He did not even respond to multiple inquiries from Bloomberg for an interview about his father's situation, and calls to Mahmoud Reza Khavari's phone number listed in the city directory went unanswered, and no one opened the door when visiting his registered address in Toronto. The news agency continues: According to evidence in the case, Khashayar Khavari and his brother-in-law, who worked as company managers alongside Sam Mizrahi, initially filed a lawsuit against him. They claim that Sam Mizrahi deceived them by misusing company assets and mismanagement. Khashayar Khavari claims that his profits have not been paid, and due to this debt and collaboration with Sam Mizrahi in several other construction projects in Toronto, he is seeking CAD 105 million in damages. Sam Mizrahi, one of Canada's most famous real estate developers, has had a dispute with Khavari that has led to court proceedings. Mizrahi acknowledges that the Khavari family, particularly Mahmoud Reza, invested in this project and that according to the initial contract, only 50% of the profits belong to them at the project's completion. He emphasizes that they are not partners in any other construction projects and that they can claim their money once the Yorkville project in downtown Toronto is completed. At the same time, he has also filed a lawsuit against Khashayar Khavari for 'breach of contract between the two parties' seeking CAD 50 million in damages. Bloomberg writes: Despite all the disagreements, both parties agree on how the collaboration began. They met six years ago when the Khavari family hired Mizrahi for construction projects. Sam Mizrahi, who is of Iranian descent, immigrated to Canada with his family in 1977 at the age of six. He claims to have a high school education and has turned to construction after selling a chain of laundries a few years ago. The Khavari family intended to invest in the real estate market, and Sam Mizrahi had a construction company. At the beginning, everything was clear: the Khavari family would provide the capital, and Sam Mizrahi would do the work, dividing ownership of the building equally at the end, with each party taking 50% of the profits. According to court documents, the Khavari family invested at least CAD 14.2 million in this project. Based on evidence presented by Mizrahi to the court, the interesting aspect of this partnership was that with the Khavari family's cash, there was no need to borrow from the bank. Their capital covered not only the land purchase but also the construction costs. Sam Mizrahi stated in an interview with Bloomberg: 'They pretended they had enough money to finish this project.' In contrast, Khashayar Khavari claimed in a call with the news agency: 'Mr. Mizrahi pretended that he had the necessary resources and facilities to execute this project, providing the budget and financial resources required for a construction company.' In September 2011, as the project neared completion, events in Iran jeopardized their deal. Seven state and private banks, including Bank Melli, were accused of participating in a $2.6 billion (3,000 billion tomans) fraud. Mahmoud Reza Khavari, who Iranian media says holds Canadian citizenship, fled to Canada. Interpol documents at that time show that the Iranian government issued an arrest warrant for him 'on charges of participating in fraud, corruption, bribery, and earning illegal income through the banking network.' However, later this arrest warning was removed from Interpol's news page. Other individuals accused in this banking fraud case have been tried and sentenced to punishments such as execution, imprisonment, and flogging. Canada does not extradite individuals facing the death penalty and has no extradition treaty with Iran, and currently, the two countries do not have diplomatic relations. Mostafa Pourmohammadi, Iran's Minister of Justice, stated on June 8 that 'despite Canada being a signatory to the UN Convention against Corruption, it has not cooperated in the extradition of Mahmoud Reza Khavari.' A spokesperson for Canada's Ministry of Justice also responded to Bloomberg's inquiry on June 16, stating: 'Due to the confidential nature of relations between the two governments, we cannot comment on his extradition request until an individual is arrested under the extradition law.' According to both parties in the dispute, as soon as news about Mahmoud Reza Khavari's case was published in October 2011, they met at Khavari's home in Canada. Sam Mizrahi claims that due to the freezing of Khavari's bank accounts, he requested to terminate their collaboration and partnership during that meeting. However, Khashayar Khavari denied the issue of the family's assets being frozen and claimed that at that meeting, they decided to continue their collaboration.