Ontario alleges family employed by province perpetrated $11M COVID benefit fraud

Four family members who worked for the Ontario government in information technology defrauded the province of at least $11 million destined as COVID-19 relief money, a statement of claim alleges.

The unproven civil claim on behalf of the province, which also seeks $2 million in punitive damages, accuses them and others of illegally issuing and banking cheques under the Support for Families Program that aimed to defray the cost of children learning at home.

Named as a defendant in the Superior Court claim is Sanjay Madan, who had a senior IT role and helped develop the computer application for applying and approving the benefit.

"The Madan family exploited their positions of employment with Ontario and unique access to the (program) and payment processing system," the government says. "The plaintiff was uniquely vulnerable to Sanjay, particularly with respect to the integrity of the...application."

Also named is Madan's wife Shalini Madan, a senior level IT manager with the ministry responsible for electronically processing program payments.

According to the lawsuit, Sanjay Madan and his family opened more than 400 accounts at the Bank of Montreal between April and May. They then deposited around 10,000 cheques made out to fictitious applicants with thousands of non-existent children under the support program.

Most deposits were made over a four-week period starting on May 25, coinciding with a rule change that allowed more than five payments to be made to an applicant. The government alleges Sanjay Madan either sparked the rule change or knew about it and took advantage.

"He would have been very familiar with the[program]computer application and with any vulnerabilities it may have had to fraud and other misuse," the government asserts.

The claim also says that Sanjay and Chinmaya Madan wiped their government-issued phones to hide their misdoing.

Christopher Du Vernet, the family's lawyer, said he could not discuss the claim.

"As I am sure you can appreciate, this is a very difficult time for the entire Madan family," Du Vernet said on Wednesday.

"Moreover, the matter is currently before the courts. Given these circumstances, I am instructed to advise that any comments our client makes will be in material filed with the courts and only there."

However, in other court filings, Sanjay Madan is said to have told the government that he could explain "all of this" and that he has "helped many families."

Other defendants include their son Chinmaya Madan, a technical product manager who resigned in July, and his brother, Ujjawal Madan, a programmer analyst, who worked indirectly under his father. He resigned in August.

No criminal charges have been announced.

Ontario intends to seize money obtainedfraudulently

The government also served notice it intends to seize any money the family obtained fraudulently. It obtained a court order to have their bank accounts turned over to the court pending the outcome of the lawsuit.

To prevent the respondents from hiding any money, the government obtained a court order freezing the family's assets, which include a list of properties in Toronto.

The government says in one document that Sanjay Madan maintains the program payments were directed to him by tenants for rent.

"It is reasonable to believe that Sanjay's alleged tenants are not the parents to over 10,000 children," the government says.

"The attorney general submits that the cash in the bank accounts and safety deposit boxes is likely proceeds of unlawful activity."

The freeze order was subsequently varied to allow some payout of money from an earlier Madan property sale but the family will have to return to court to have other funds for living expenses and legal bills released.

Other defendants in the suit filed in the court's commercial lists division are several companies: Intellisources, Newgen and Wang and Associates.