David Franklin, a real estate lawyer from Toronto believes that Ontario investors have lost more than $1B of their investment money in syndicated mortgages. A CBC news report recently shared that 120 Chinese investors in the GTA stand to lose about $9M in investments like these and David Franklin adds that this news is just a small fraction of what’s going on.
Franklin was recorded to have stated that the $9M loss is the smallest one he’d seen after he reviewed the contracts with Black Bear Homes.
Franklin further stated that in his opinion, the said investments deals are fraudulent. He also shared that based on the court documents that he’s been able to take a look at, the investors will lose an amount that’s more than a billion dollars in Ontario.
Investors who provided funding for the syndicated mortgages with Black Bear Homes were tricked to provide mortgages in values that far exceed the real worth of the investment properties. On top of this, interest payments from their own capital were given to them until the funds were used up.
As a backgrounder on syndicated mortgages, they can be legal or legitimate investments where a borrower forgoes going to the bank and instead, just finds more than one private lender to invest money in a property.
Franklin adds that more syndicated mortgages like those for Black Bear projects are being sold by several companies. With further digging, CBC News found out that the Financial Services Commissionof Ontario has shut down at least one of those companies.
The Investigation Deepens
Back in October 2016, a cease and desist compliance order was issued by FSCO for Tier 1 Mortgage Corporation. Since that day, the interests of syndicated mortgage investors have been protected by an appointed trustee in 16 Tier 1 real estate development projects.
It is to be noted that one registered mortgage broker named Dominic Ha solicited investors for investors Black Bear projects and did the same thing for Tier 1. A CBC News investigation has found that some of the syndicated mortgages investors for Black Bear projects are also investors for Tier 1 projects.
Investor Guan Bai Long shared that has $180,000 worth of investments in Tier 1 and Black Bear projects through Dominic Ha. He also shared that the agent even went to his home to have him sign documents and convince him to invest another $150,000 from his retirement funds. These investments were supposed to be paid back to him more than 2 years ago. Guan shared that as a result of the unfortunate turn of events, he had to take out loans to fund his children’s tuition.
Mortgage agent Ha began soliciting syndicated mortgages investors in 2011. He also had an appearance in Chinese TV promoting the investments just 2 years ago in 2015. Ha insists that all pertinent information has been provided to investors, his lawyer shared.
Certified fraud examiner Bill Vasiliou shared that after taking a closer look at the investors’ stories, ledgers, and syndicated mortgage contracts of Black Bear projects, he believes that there is an ongoing fraud. He was also quick to add that there are similar cases and that the Black Bear cases are mere peanuts compared to others he had seen.