Facts. Did you Know?
Did you know that the Loan to Value Ratios (value of land compared to the loans provided by the investors for the Fortress projects) far exceeded the Private Lender industry standard? Read more about it here.
Did you know that once the RCMP were made aware of the Fortress Syndicated Mortgage fraudulent activity, it only took them 1 month to commence the investigation?
How is it then, that FSCO was alerted on multiple occasions since 2011 by numerous people of Fortress SMI activity, however they did not act until after the November 2017 Reuter's article? Justice Michael Brown issued the RCMP search warrant which was executed on April 13, 2018, as set out in the Globe and Mail story. In order for Justice Brown to issue the search warrant he had to find that there were reasonable and probable grounds that fraud was committed. The following are extracts from the sworn information and attached is part 1 of 6 parts.
Extracts from the sworn information:
"32. Investigators believe that the key aspects of this Fraud occurred from 2012 to 2017 and are as follows:
a. Syndicated Mortgage Investors were presented with inflated “as is” property values securing their syndicated mortgage investment.
b. Loan to property value ratios that are in excess of 100%.
c. Promotion of the Syndicated Mortgage as RRSP eligible, when the investments that investigators have examined are not RRSP eligible and could be subject to adverse taxation by the Canada Revenue Agency.
d. Investment funds being used for purposes other than what was disclosed to investors. A portion of investor funds are not directed to the development project and instead are retained by Fortress Real Capital Inc. at the time of placement of the loan.
33. As a result of the inflated current as is land valuations, investigators believe that there are currently millions of investor dollars, including retirement savings, where the amount of mortgages on the property exceed the current value of the property. This is contrary to what was told to investors. This has created a risk of detriment to the financial and real estate market."
The full RCMP document is available here.
After you have read this document you will have a better understanding of how you were defrauded. So far CRA has not taken any action despite obviously knowing that the mortgages were not RRSP eligible. If they did take action, the penalty is 50% of the amount you invested plus interest from the date you invested.
Regulators should be Proactive vs Reactive in order to Protect the Public & Prevent fraud