The ongoing benefits fraud case at the Toronto Transit Commission continues to unfold as the owner of an orthotics store had pleaded guilty in the case.

According to the TTC, Adam Smith, the owner of Healthy Fit Inc., pleaded guilty to two counts of fraud over $5,000 this week. The court sentenced him to two years in jail.

The development comes as the TTC has also announced it’s suing Manulife Financial Corp. for allegedly not having appropriate fraud controls in place to detect unusual trends or patterns. The statement of claim is seeking damages of up to $5 million for negligence, negligent misrepresentation and breach of contract for all losses incurred by the TTC from the fraudulent claims scheme. None of the allegations have been proven in court.

In 2014, the TTC began an investigation following a tip to its integrity line about receipts provided to employees by Healthy Fit for either inflated amounts or without delivering any product or service. The store would then split the insurance payments with the customers, according to the allegations in the case.

Read: 100 TTC employees fired or resigned over benefits fraud investigation

According to the statement of claim, the TTC entered into an administrative services-only arrangement with Manulife as of Jan. 1, 2012, for its benefits plan. The lawsuit alleges the insurer made representations at the time about its systems and procedures to detect and prevent fraud.

For its part, Manulife declined to comment on the case but it reiterated its commitment to dealing with fraud. “Manulife takes fraudulent insurance claims seriously,” the company said in a statement.

“Manulife works with policy-holders, law enforcement and others in order to detect and prevent fraudulent activity for the benefit of our customers.”

The TTC is also suing Smith, his spouse, Sola Judy Smith and Healthy Fit. Among other things, the statement of claims alleges some TTC employees financed their purchases by borrowing from financing companies controlled directly or indirectly by the defendants in that case.

Read: Up to 600 TTC employees involved in benefits fraud

“At no time prior to April 12, 2014, were Manulife or the TTC aware of the fraudulent claim scheme or of the payments by the defendants to the TTC employees,” the statement of claim in the second lawsuit reads. “The defendants and the TTC employees who participated in the fraudulent claims scheme took steps to hide from Manulife and the TTC their fraudulent activities.”

According to the TTC, 170 employees have been dismissed or resigned or retired to avoid dismissal. The organization notes 10 former employees are facing criminal charges for their part in the alleged fraud.

Copyright © 2018 Transcontinental Media G.P. Originally published on

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