An Ontario judge has ruled in favour of a Canadian NBA player in an "unprecedented" case of buyer beware.
Shai Gilgeous-Alexander, a Toronto-born point guard for the Oklahoma City Thunder, has won a lawsuit to rescind his purchase of a Burlington mansion that was once home to Aiden Pleterski, Ontario’s self-described "Crypto King."
In his ruling, Ontario Superior Court Justice Robert Centa found that the sellers fraudulently misrepresented the home by marketing it as "private and secure," and failed to disclose ongoing safety risks, including threatening daily visits by "randoms" looking for Pleterski.
Pleterski has been accused of defrauding his cryptocurrency investors out of more than $40M. According to court documents, he lived in the Burlington home under a rent-to-own agreement from March 2021until the summer of 2022. Investors knew that he had used over $1M of their stolen money to make payments towards the home, which amounted to over $42,000 per month.
Gilgeous-Alexander and his girlfriend, Hailey Summers, moved into the mansion in May 2023 after purchasing it for $8.45M from an Ontario numbered company, which is owned by Ray Gupta. His son, Sandeep Gupta, was "intimately involved in the events surrounding the house and had a curious and complex relationship with Mr. Pleterski," Centa’s ruling reads.
That relationship included moving Pleterski into a different home owned by the Guptas, rent free, in the summer of 2022 when Sandeep became sufficiently worried that defrauded investors would physically harm the "Crypto King."
Four days after the NBA star and his girlfriend moved in to the Burlington mansion, a stranger appeared at their door demanding to know Pleterski’s whereabouts and refusing to leave the property.
After scouring the internet, an "unnerved" Summers discovered that Pleterski had been sued for fraud, and was involved in "hotly contested" bankruptcy proceedings.
After contacting police, she learned that there had been previous reports of people trying to break into the Burlington home. A contact in the private security business then told her that Pleterski had defrauded some “very bad people,” and that someone had threatened to burn down the home.
"Whether or not these latter statements were true, Ms. Summers and Mr. Gilgeous-Alexander were sufficiently alarmed by this news that they moved out of their newly purchased dream house, never to return," Centa said in his ruling.
"As is now clear, the persons behind the vendor of the Burlington property knew all of this and much more when they listed it for sale. None of this information was disclosed when the Burlington property was marketed and sold."
As such, Centa found that the Guptas made a fraudulent misrepresentation to Gilgeous-Alexander, and failed to disclose a latent defect on the Burlington mansion. The judge voided the sale of the home and awarded damages to Gilgeous-Alexander for mortgage payments, property taxes, and other costs related to the property.
Bob Aaron, a Toronto-based real estate lawyer who was not involve with the case, told STOREYS that this is the first "buyer beware" case he’s seen that didn’t revolve around the physical safety of the property.
While the case is unique, it’s unlikely to result in an onslaught of buyers getting out of purchases. Its success, Aaron noted, hinges mainly on the fraudulent misrepresentation element, rather than the "latent defect," or ongoing safety risk, of the home.
"This was a really unusual set of circumstances. It’s an unprecedented case," Aaron told STOREYS. "But [...] I don't think people should take it as an indication that any real estate purchase that they're unhappy with is going to be unwound."
"The court has really set a high bar for rescinding or undoing a purchase agreement. The high bar is that you've got to prove fraud. If somebody's unhappy with the neighbours, or the furnace isn't working, or the roof is leaking, that's not going to be enough in the future. Anything short of fraud is not going to be enough to unwind an agreement."