Yogen Fruz founders sued by relative over stock trades
Alleges shares bought and sold without consent
• The Markham, Ont.- based Serruya family, founders of Yogen Fruz and majority- owners of Cold Stone and Pink Berry, are being sued by a relative alleging they bought and sold Yogen Fruz shares in his name in Canada and the United States without his knowledge or consent.
According to documents obtained by the Financial Post, Isaac Ben simon alleges in a statement of claim filed in September in the Ontario Superior Court of Justice that the Serruyas bought and sold 200,000 shares in Yogen Fruz World- wide — the predecessor to their publicly traded Coolbrands Inc. — in his name from a Thornhill address in 1995.
Bensimon is the brotheri n- l aw of Yogen Fruz cofounder Michael Serruya.
Bensimon is claiming $18.9 million for the amount of shares he says the Serruyas registered and sold in his name and asking for punitive damages of $15 million.
None of the allegations has been proven in court. The Serruyas and their companies deny the allegations.
“The purpose of purchase and sale of the 200,000 shares by the Serruya Defendants in the name of ( Bensimon) was to manipulate the share value of ( Yogen Fruz), to effect voting control of ( Yogen Fruz), to secretly profit the Serruya Defendants... and to shield the Serruya Defendants from their reporting obligations and requirements to Canadian and American equity and stock regulators and Canadian and American taxing authorities,” says the statement of claim. “The activities constituted insider trading, money laundering and other illegal forms of stock manipulation.”
The statement of claim alleges that, also in 1995, the Serruyas purchased and sold an additional 500,000 shares in Bensimon’s name and credit without his knowledge, using a U. S. address. It similarly likens the activities to insider trading, money laundering and stock manipulation.
In a statement of defence filed in March, the Serruyas and their affiliated companies say that, with the exception of an investment in a frozen yogurt business in Texas in or around 1996 or 1997, they have not participated in any trading activity with or on behalf of Bensimon. The statement of defence also claims that the Serruyas have provided substantial financial support to Bensimon over the years, including cash, property and free lodging. The statement of defence says that Bensimon’s lawsuit is an abuse of process intended to extract more money from the Serruya family.
The Serruyas further claim that, in 2007, Bensimon and his brother Simon signed a release of all claims against the family and their companies in exchange for $ 4 million. This release, their statement of defence states, arose from a claim by Simon Bensimon that he had a 20- per- cent beneficial interest in Coolbrands, and releases the Surreyas from Isaac Bensimon’s allegations. Isaac Bensimon also claims a 20-per-cent beneficial interest in his suit.
In t he l awsuit, Isaac Bensimon further alleges that, in 1997, the Serruyas established trading accounts in his name with Canaccord Genuity and bought and sold shares through those accounts. Bensimon claims he gave no consent to their establishment or activities, and alleges that Toronto- based Canaccord “failed to take the reasonable and proper steps necessary to verify” his authorization before processing transactions in his name.
Canaccord, who are named as co- defendants in the lawsuit, in a statement of defence says that Bensimon, not the Serruyas, opened and made transactions with the accounts in question. However, Canaccord also says that if Bensimon’s allegations are true that it had “no knowledge of, and was not complicit” in them.
The Serruyas and their companies say they have no knowledge of the Canaccord accounts.
The statement of claim alleges that activity on the Canaccord accounts included the purchase and sale of shares of companies owned and controlled by Jack Banks, a business associate of the Serruyas. Banks, also known as Jacques Benquesus, is an Ontario businessman and admitted fraudster who in 2000 agreed to a five-year ban barring him from entry to the U. S., working in the U. S. securities industry and from holding a controlling interest in a public company. In 2003, he was barred for life by the Ontario Securities Commission from becoming a director or officer of a public company in the province.
According to the l awsuit, Bensimon claims that cheques from the Canaccord accounts were deposited without his endorsement into various accounts, including into a Bendix Foreign Exchange accounts maintained by the Serruyas. It is alleged that the Serruyas, in order to deposit cheques payable from the Canaccord accounts, endorsed his name on them without his authorization or consent.
Bendix, which is named as a co-defendant in the lawsuit, says in a statement of defence that if the endorsements on any of the cheques, which it says it is the holder of, were forged or unauthorized that it had no knowledge of this.
The Serruyas, Bendix and Canaccord are requesting the lawsuit be dismissed because the allegations fall outside the 15-year limitation period on litigation in Ontario.
The statement of claim alleges Banks represented to Bensimon that the Serruyas engaged in further activity in his name, including subscribing to IPOs promoted by Banks. It also asserts the Serruyas sold Israeli bonds under Bensimon’s name from an address in Belgium. The Serruyas deny both claims.
Bensimon is also claiming $ 76,000 and US$ 31,000 from each of Canaccord, Bendix, TMX and Equity, Laurentian Bank, TD Bank and the Bank of Montreal for the alleged processing and payment of transactions issued in Bensimon’s name. The financial institutions have filed statements of defence and intend to defend the claim.
SAY THEY HAVE NO KNOWLEDGE OF CANACCORD ACCOUNTS.