The case of John Rosenthal, a Toronto accountant once trusted by a network of affluent clients, has unravelled further, revealing a complex web of alleged deceit and financial hardship. What began as a seemingly lucrative investment opportunity has left numerous investors facing significant losses, with claims now exceeding $13 million. The story, initially reported by the Toronto Star, highlights the dangers of unchecked trust and the potential for even close relationships to be exploited in pursuit of financial gain.
Rosenthal, who served as both accountant and confidant to many of his clients, pitched real estate investments promising attractive returns. Investors, including Edward Borins, a prominent Toronto bookseller, and Michael Levine, a businessman who considered Rosenthal a “best friend,” were drawn in by the promise of high yields. However, as early as 2018, red flags began to emerge. Borins, after questioning the lack of documentation surrounding his investments, eventually recovered $500,000 from Rosenthal, but only after initiating legal action.
The situation deteriorated significantly in 2024, with investors reporting bounced monthly interest cheques and a series of increasingly implausible explanations from Rosenthal and his partner, Mark Zaretsky. Excuses ranged from “cyber attacks” to “fraud” at the bank, and a claim of “major wire fraud” and frozen accounts. Robert Sidi, another investor, described receiving increasingly desperate texts from Rosenthal, culminating in an admission of financial distress.
The Chartered Professional Accountants of Ontario (CPA Ontario) began investigating Rosenthal and Zaretsky in 2021, following a complaint from Borins. The investigation revealed serious professional misconduct, including the alleged commingling of investor funds, unauthorized loans to third parties, and withdrawals of investor money without consent. The regulator ultimately stripped both men of their accounting licenses in 2024, imposing fines of $75,000 on Rosenthal and $50,000 on Zaretsky. However, the regulatory proceedings remained largely under the radar until recently, allowing the alleged scheme to continue operating.
Several investors expressed frustration that the CPA Ontario investigation wasn’t more public, potentially alerting others to the risks. The lack of transparency allowed new investors to continue entrusting funds to Rosenthal, even as concerns mounted. Levine, despite being aware of the issues surrounding Borins’ investment, continued to maintain a close relationship with Rosenthal, only to later find himself facing financial losses as well.
Zaretsky, who declared bankruptcy in September 2024 with debts exceeding $17.9 million, has largely remained silent. He reportedly told a Toronto Star reporter that he had “moved on” and declined to discuss the matter. Rosenthal has been unresponsive to repeated attempts to contact him. Text messages obtained by the Toronto Star reveal Rosenthal’s claims of having no remaining assets, attributing his financial woes to a failing business venture and a pending divorce.
The case bears hallmarks of a Ponzi scheme, where early investors are paid with funds from new investors, rather than from legitimate profits. While this has not been legally established, several investors, including Sidi, have alleged in court filings that this was the operational model. The situation echoes past Ponzi schemes, including one uncovered in 2022 involving a retired IRS agent defrauding an elderly woman out of her life savings.
Currently, 15 lawsuits have been filed in the Superior Court of Ontario, seeking damages from Rosenthal and Zaretsky. However, many investors have chosen not to sue, believing that recovery of their funds is unlikely. The police have received complaints, but investigations have been hampered by the complexity of the case and the difficulty of proving fraudulent intent.
The story serves as a cautionary tale about the importance of due diligence and the dangers of placing blind trust in financial advisors, even those with long-standing relationships. As one investor, Gilbert Sharpe, reflected, “His moral compass was screwed up.” The fallout from Rosenthal’s alleged scheme continues to reverberate through Toronto’s financial circles, leaving a trail of broken trust and significant financial losses.
