Shory clients sent 'fraud' funds abroad: bank

Clients of lawyer and Calgary Conservative MP Devinder Shory wired nearly $3 million to India and Hong Kong — money a lawsuit claims is part of the proceeds of a multi-million dollar mortgage fraud.

According to court documents obtained exclusively by CBC News, husband and wife Sanjeev and Rajshree Malik of Calgary wired more than $825,000 to India.

The Maliks, together with Rajesh, Surinder and Suneet Sharma — who are not Shory's clients —  also wired more than $2 million to India and Hong Kong, according to the court documents.

It is unknown if Shory knew the money was being transferred overseas.

The Bank of Montreal has sued Shory, the Maliks and the Sharmas and hundreds of other Albertans, claiming they were part of massive fraud that generated $70 million in phony mortgages, costing the bank $30 million in potential losses. It is believed to be the biggest mortgage fraud in Canadian history.

None of the allegations has been proven in court.

Shory has publicly denied any wrongdoing and said he will defend himself vigourously against the bank’s accusations.

The bank has sued 17 lawyers alleging they were either directly involved in the scheme or did not perform their due diligence as lawyers.

In its statement of claim, the bank alleges Shory was one of several lawyers who were involved in the "fraudulent scheme of the Malik Group."

The bank claims Shory ran more than $3.7 million through an account that the bank has linked to the fraud.

The bank discovered the alleged fraud in 2006 and hired forensic accountants. They traced overseas transfers totalling $7.8 million to countries such as Lebanon, India, Pakistan, Saudi Arabia, and Dubai.

Gary Clement, the former head of the RCMP’s proceeds of crime division, told CBC that the offshore money transfers should have raised red flags for Canada’s government and various police and intelligence agencies.

When money is transferred to countries such as Pakistan, "that for me raises serious questions about terrorist financing," Clement said Thursday.

"Without knowing all the facts one can't say definitively whether there is any linkage to that at all, but it is something that I would say has to be answered.

"The question we need to look at is why did this money move, who is it moving to and for what purpose?"

Both the RCMP and Calgary police say they are still reviewing the voluminous court file before deciding if a criminal investigation is warranted.