MONTREAL - The founder of a once-successful children's television production company and the heads of two scandal-plagued Quebec investment firms are among four men facing charges stemming from an alleged $120-million fraud.

The eight-year investigation into the links between Cinar Corp., Norshield Financial Group and Mount Real culminated with one man being arrested and warrants being issued for three other men, including Cinar founder Ronald Weinberg.

Police confirmed ex-Cinar chief financial officer Hasanain Panju, 58, was arrested Wednesday and will appear in court Thursday.

The results of a provincial police probe that started in 2003 allege the four men orchestrated an elaborate and large-scale fraud using money from the Montreal-based TV animation company.

The other three men remained on the lam -- two whose whereabouts were unknown and a third who is currently out of the country.

An arrest warrant for Weinberg, 59, was filed in Montreal court.

Similar warrants were also issued for two asset management executives --John Xanthoudakis, president of Norshield Financial Group, and Lino Pasquale Matteo, president of Mount Real.

The four are facing a total of 36 charges among them, including fraud, forgery, using fake documents and publishing a false prospectus.

Weinberg and Panju allegedly invested funds without the approval of the production house's board of directors and in an attempt to profit personally.

Police also allege Xanthoudakis, 52, helped invest the money in the Bahamas while Matteo, 44, helped him camouflage the investments.

The fraud allegedly occurred between August 1998 and March 2000.

The Cinar scandal kicked off in 1999 after the Mounties began investigating the production house. The RCMP suspected the company used Canadian names on American-produced scripts to get tax credits north of the border.

The RCMP never filed criminal charges against Cinar, but the troubling revelations multiplied as the province's securities commission and provincial police opened their own investigations into the company and its executives.

Co-founders Weinberg and Micheline Charest were ousted and the scandal-plagued company was plunged into financial crisis when word leaked of illegally invested money in Bahamian hedge funds.

The couple were subsequently fined $1 million by Quebec's securities commission without ever being found guilty.

Charest, who was married to Weinberg, died in 2004 after a lack of oxygen to the brain following six hours of facial and breast surgery at a Montreal clinic.

Both Mount Real and Montreal hedge fund operator Norshield have been the subject of legal proceedings for allegedly fleecing investors out of millions of dollars.

Cinar, which used to make popular children's shows such as "Caillou" and "Arthur," became mired in scandals by the late 1990s and was subsequently sold in 2004 to Cookie Jar Entertainment Inc., for US$144 million.

In 2008, Weinberg settled out of court with Cinar after a seven-year legal battle, details of which were kept confidential. Cinar had sued Weinberg for $116 million. Weinberg in turn was seeking $8 million from Cinar.

One corporate watchdog said he's not surprised by the fraud charges.

Yves Michaud, whose organization represents small investors, was behind a civil suit on behalf of Cinar investors nearly a decade ago.

"This makes my blood boil," Michaud said.

Provincial police said the lengthy investigation included meeting 50 witnesses, including ex-Cinar employees, witnesses in the Bahamas. and Ernst and Young employees in Canada.

Investigators analyzed about 50 boxes worth of documents and nearly 10,000 computer files.