[21][22] During his inauguration, Shamseddin Hosseini, minister of economic affairs and finance in Ahmadinejad's government, described Khavari as a "wise and pious man" and told the reporters that the highest level of scrutiny was employed in his appointment.
[24] In 2011, Khavari resigned from his position at Bank Melli amid allegations of being involved in the $2.6 billion Iranian embezzlement scandal.
[25][26][27] The scandal involved using forged documents to fraudulently buy privatized state assets that included major state-owned companies; Bank Melli, which Khavari led as its chairman of the board and managing director, was accused of facilitating the fraudulent payments.
[28][29][30] Khavari shortly after flew to the United Kingdom in order to attend a meeting at Lloyds Bank and announced his resignation via a fax to Iranian officials.
[13] In an attempt to protect his assets from being seized, Khavari invested in Toronto real estate by loaning money to his sons, Khashayar and Ardavan.
[40][41][42][43] In 2016, Bloomberg reported that Khavari and his sons have been active in the Toronto real estate market even after the scandal, and from 2012 to 2016, the family has purchased at least $12.1 million worth of properties under various names and legal entities.
Avi Jorisch, a former U.S. Treasury official, expressed his opinion in the Jerusalem Post that Khavari was likely to be in violation of the Special Economic Measures (Iran) Regulations for having worked and provided financial services on behalf of a designated Canadian entity.
[56] In February 2014, Iran's Fars News Agency reported that the head of the Interpol Office of the Iranian Police said "a few days ago, the Canadian Interpol Office claimed in a phone contact that he has escaped to a Latin American or Caribbean country but that they couldn't verify the escape yet, and this is the latest piece of information provided by the Canadian Police to us".