MANDEL: Mastermind of TTC kickback scheme denied in bid to recover cash

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Adam Smith certainly has a lot of nerve.

For years, he ran quite a scheme out of his Healthy Fit business, conveniently situated near the TTC’s Wilson Ave. yard: Dealing almost exclusively with TTC employees, the company would submit claims to Manulife on their behalf for often unnecessary orthotics, compression sleeves and other products he either sold at inflated prices or never provided at all. The employee would pay Healthy Fit the invoiced amounts by credit card, get a cash kickback from the company amounting to 60% and would later be reimbursed in full by Manulife.

Between January 2012 and July 2015, when an undercover police sting ended the fraud and Smith was under arrest, Manulife paid out $5.6 million in medical benefit claims originating from Healthy Fit involving more than 670 TTC employees.

Labelled the “mastermind of the scheme” by the Crown attorney, Smith was convicted in 2017 of fraud over $5,000 and sentenced to two years in prison. He was also sued for millions in damages by the TTC, a case which he settled in 2022.

Now he wants to recoup what he had to pay out.

Smith is now suing many of the former TTC employees who were fired or forced to retire because of their involvement or alleged involvement in his scheme.

In 2023, he sent out a demand letter: Pay $500 or he’d to go to a collection agency to get his hands on the full amount of “rebates” paid out by Healthy Fit as well as inform their new employer. “I send this letter now because Healthy Fit Inc. settled their lawsuit with the TTC last summer and is now in a position to recover part of the loss in a subrogation process with its customers.”

Paralegal Anil Sharma fielded dozens of calls from panicked ex-TTC employees. “It was just a cash grab,” he said.

Some of his clients paid the $500, but about 10 refused.

“They’re really pissed off,” the paralegal said. “They already lost their jobs (because of this) and now he’s coming after them for money?”

Smith took them to small claims court. In October 2023, he launched a lawsuit against a now-retired TTC operator, claiming they received more than $21,000 in kickbacks from Healthy Fit for 20 submitted claims between 2012 and 2015 — and Smith wants the money back.

The employee “has been unjustly enriched by $21,235 from Healthy Fit Incorporated rebates,” the claim says.

The employee decided to fight back. Along with Sharma’s partner Krishna Badrinarayan, he argued the lawsuit should be thrown out for two reasons: It was far beyond the two-year time limit and due to ex turpi causa — illegal conduct bars a legal action from succeeding.

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A small claims court judge in Brampton agreed.

“When the plaintiff engages in illegal action or conduct, they should not recover,” wrote Deputy Judge Carrie Bellan in a recently released decision.

“Does the plaintiff have a meaningful chance of success? No. The action is both statute barred and an abuse of process as the plaintiff cannot recover proceeds from illegal conduct. And he can only plead illegal conduct in order to form any claim against the defendant. As such, the claim is struck and this action is dismissed.”