ALBERTA SECURITIES COMMISSION

Docket: ENF-011765

Citation: Re Ghani, 2022 ABASC 54 Date: 20220516

AMENDED NOTICE OF HEARING

To: Ali Ghani, Summerside Development Trust, Summerside Commercial Trust,

Prism Summerside Limited Partnership, Prism Summerside Development
Corp., and Prism Real Estate Investment Corporation

Notice: The Alberta Securities Commission (the Commission) will convene at

Appearance 9:00 a.m. on Wednesday, March 23, 2022, or as otherwise
directed (the Set Date Hearing), at Calgary, Alberta, to set a date or dates for
the conduct of a hearing regarding the allegations in this Notice
(the Merits Hearing). At the Merits Hearing, the Commission will consider
whether the allegations have been proven. If so, the Commission will
subsequently consider whether it is in the public interest to make orders
against you under sections 198, 199, and 202 of the Securities Act, RSA 2000,
c. S-4, as amended (the Act).

Location: Alberta Securities Commission, 5th Floor, 250 – 5 Street S.W., Calgary,
Alberta.

Procedure: 1. You may obtain disclosure and particulars of the allegations in this
Notice from Tom McCartney, c/o Alberta Securities Commission,
600, 250 - 5 Street SW, Calgary, Alberta, T2P 0R4, telephone:
403.355.4480, email: [email protected].

2. You may be represented by legal counsel or represent yourself. You

or your legal counsel may make representations at the Set Date
Hearing as part of the process for scheduling the Merits Hearing and
the hearing management sessions that will take place between the Set
Date Hearing and the Merits Hearing. At the Merits Hearing, you or
your legal counsel may make representations and introduce evidence
regarding the allegations in this Notice.

3. If you or your legal counsel fail to attend the Set Date Hearing, the
scheduling of the Merits Hearing and the hearing management
sessions may proceed in your absence without further notice,
following which orders may be made against you.

See attached sections 29, 93(1)(b), 198, 199, and 202 of the Act, and
Commission Rule 15-501 – Rules of Practice and Procedure for Commission
Proceedings.

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Reciprocation: Take notice that orders or settlements made by the Commission may form the
basis for parallel orders in other jurisdictions in Canada. The securities laws
of some other Canadian jurisdictions may allow orders made in this matter to
take effect in those other jurisdictions automatically, without further notice to
you. If an order is made or a settlement agreement is reached in relation to this
Notice, you should contact the securities regulator of any other jurisdiction in
which you may intend to engage in any securities related activities.

Allegations

Parties

1. Ali Ghani (Ghani) is an individual who resided in Calgary, Alberta during some or all of
the period from January 2013 to April 2018 (the Relevant Time).

2. The other respondents are entities comprising a complex structure set up to flow investment
funds through two trusts and a limited partnership for a commercial real estate
development.

3. The Summerside Development Trust (Development Trust) was created January 4, 2013,
and maintained its registered office in Calgary. Ghani and his father, Abdul Ghani (Ghani
Sr.), were the trustees of the Development Trust during some or all of the Relevant Time.
Ghani Sr. is now deceased.

4. The Summerside Commercial Trust (Commercial Trust) was created January 4, 2013,
and maintained its registered office in Calgary. Ghani Sr. was the trustee of the Commercial
Trust during some or all of the Relevant Time.

5. Prism Summerside Development Corp. (Development Corporation) was the General

Partner of the Prism Summerside Limited Partnership (Limited Partnership). It was an
Alberta company with a registered office in Calgary. Ghani and Ghani Sr. were the
directors of the Development Corporation during the Relevant Time.

6. The Limited Partnership was created December 13, 2012, and maintained its principal
office in Calgary.

7. Prism Real Estate Investment Corporation (PREIC) is an Alberta company with a

registered office in Calgary. Ghani was a director of PREIC during the Relevant Time.

8. During the Relevant Time, Ghani was the guiding mind of each trust, partnership and
corporation named as Respondents in these proceedings.

Circumstances

9. The Prism Group of Companies (Prism) consisted of several entities involved in raising
funds and developing real estate projects in Alberta. Prism’s office was located in Calgary.
Ghani and Ghani Sr. were the founders of Prism.

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10. One of Prism’s real estate projects was the development of a strip mall in the Summerside
neighbourhood in Edmonton (Summerside Project).

11. The Development Trust issued an offering memorandum dated January 5, 2013
(Offering Memorandum), and offered trust units to investors (Development Trust
Units).

12. Each of the Development Trust Units is a security within the meaning of section 1(ggg)(v)
or section 1(ggg)(viii) of the Act.

13. The Respondents represented to investors that:

13.1 the Development Trust would use funds raised from investors to acquire trust units
in the Commercial Trust;

13.2 the Commercial Trust would use funds raised from the issuance of trust units to the
Development Trust to purchase Class “A” Limited Partnership units in the Limited
Partnership; and

13.3 the long-term objective of the Development Trust was to provide funding for the
Limited Partnership to develop the Summerside Project, which would ultimately
provide income for distribution to investors in the form of rent paid by commercial
tenants and proceeds from a potential sale of the Summerside Project.

14. The Respondents represented to investors that once there was distributable cash from the
development and sale of Summerside, other than debt obligations that had to be satisfied,
the proceeds would be distributed as follows:

14.1 first, to pay the expenses of the Development Corporation;

14.2 second, the repayment of capital invested by holders of Limited Partnership units;
and

14.3 third, provided that the distributable cash remaining would result in the holders of
Development Trust Units earning a return of more than 10 per cent per annum, the
balance of distributable cash would be split, 70 per cent to the holders of Limited
Partnership Units and 30 per cent to the Development Corporation.

15. Between August 30, 2013 and May 7, 2014, approximately $4.25 million was raised
through the sale of Development Trust Units to approximately 207 investors, of whom
more than half were Alberta residents.

16. The Summerside Project was completed, leased to tenants and sold on December 12, 2017,
for approximately $22 million. Of that approximately $22 million, the Respondents
received approximately $4.1 million in net sale proceeds (Sale Proceeds).

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Fraudulent Course of Conduct

17. The investors in the Development Trust were not repaid their invested capital or any
returns.

18. The Respondents misappropriated approximately ^$3.6 million of the Sale Proceeds for
the benefit of Ghani, his family and entities controlled by him. In particular, the
Respondents made the following unauthorized uses of funds:

18.1 the repayment or satisfaction of debts unrelated to the Summerside Project;

18.2 the payment of debts related to businesses controlled by Ghani and his family;

18.3 the payment of construction costs and other expenses unrelated to the Summerside
Project;

18.4 the purchase of equipment for businesses unrelated to the Summerside Project;

18.5 the purchase of at least three vehicles;

18.6 the payment of rent to landlords unrelated to the Summerside Project;

18.7 the payment of funds to entities under Ghani’s direction and control; and

18.8 the payment of funds to, or on behalf of, entities that are not related to the
Summerside Project and in which Ghani has or had an interest.

(collectively, the Prohibited Acts).

Investors’ Pecuniary Interest at Risk

19. By carrying out the Prohibited Acts, the Respondents put investors’ pecuniary interests at
risk as follows:

19.1 the Respondents used the Sale Proceeds for purposes that were contrary to the
representations the Respondents made to those investors about how the Sale
Proceeds would be used; and

19.2 the Respondents either put investors at risk of losing funds or caused investors to
lose funds.

The Respondents had Knowledge of the Fraud and Deprivation

20. Ghani, by engaging in the Prohibited Acts, had knowledge of the Prohibited Acts.

21. In carrying out the Prohibited Acts, Ghani knew or reasonably ought to have known that
engaging in the Prohibited Acts could result in investors losing their money or investors’
pecuniary interests being put at risk.

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22. Through their guiding mind, Ghani, each of the Development Trust, Commercial Trust,
Development Corporation, Limited Partnership and PREIC had knowledge of the
Prohibited Acts and knew or reasonably ought to have known that engaging in the
Prohibited Acts could result in investors losing their money or investors’ pecuniary
interests being put at risk.

23. Ghani authorized, permitted or acquiesced in the misconduct of the Development Trust,
Commercial Trust, Development Corporation, Limited Partnership and PREIC described
in this Notice of Hearing.

Breaches

24. As a result of the above, Staff allege that the Respondents breached section 93(1)(b) of the
Act by directly or indirectly engaging or participating in an act, practice or course of
conduct relating to securities that they knew or ought to have known may perpetrate a fraud
on Development Trust investors.

Amended in Calgary, Alberta, 16 May, ) ALBERTA SECURITIES COMMISSION

2022. )
)
) “Original signed by”
) David C. Linder, Q.C.
) Executive Director

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