Have you ever pursued a fraudster through the courts—obtained a Mareva injunction, secured a contempt order—but knew your client needed more? Not procedural wins, but meaningful remedies: a judgment, accountability, and where warranted, incarceration.
That was the reality in a recent case involving Valdemiro Pacheco, who persuaded three international investors to fund the development and licensing of a retail cannabis store in Ontario. Despite receiving substantial funds, Pacheco failed to provide a transparent accounting, offered a series of shifting explanations, and ultimately left the investors empty-handed. The three investors, acting through a corporate vehicle in which they were shareholders, sought relief for oppression, fraud, misrepresentation, and breach of trust. Pacheco had claimed the funds were held “in trust.”
The Ontario Superior Court found otherwise. In a detailed decision, Justice Kimmel concluded that Pacheco and his son Mervyn had misappropriated nearly $370,000 USD, diverting the funds to personal use, including gambling. A Mareva injunction was granted, freezing the defendants’ assets. When Pacheco failed to comply with disclosure obligations and defied court orders, he was found in contempt and sentenced to 30 days in jail. Rather than submit, he fled the jurisdiction to Quebec, continuing to make vague and unfulfilled assurances of repayment.
The Court’s tolerance was exhausted. On September 22, 2023, final judgment was granted, including findings of fraud, breach of trust, breach of fiduciary duty, and oppression. Pacheco was ordered to pay damages for lost opportunity, $25,000 in punitive damages, and over $50,000 in full indemnity costs. As Justice Kimmel concluded: “The defaulting respondents have come to the end of the line.”