https://www.theglobeandmail.com/business...fortress-office-in-mortgage-fraud-probe/
Janet McFarland
4-5 minutes
Police search the Fortress corporate offices in Richmond Hill, Ont., on April 13, 2018. Chris Donovan/The Globe and Mail
Chris Donovan/Globe and Mail
RCMP officers searched the head office of Toronto-region real estate developer Fortress Real Developments Inc. on Friday morning as part of a syndicated mortgage fraud investigation.
RCMP Sgt. Penny Herman confirmed Friday that officers from the RCMP’s Integrated Market Enforcement Team carried out search warrants at six locations in the Greater Toronto Area on Friday morning related to its investigation.
One location searched Friday was the company’s head office in Richmond Hill, Ont., north of Toronto, where an RCMP cruiser was parked out front on Friday morning. Officers were still inside the building as of mid-morning, and some were seen removing a box of materials from the office and putting it into the car.
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Sgt. Herman said the search warrants are related to an investigation into “syndicated mortgage frauds,” but would provide no additional details.
“If the investigation results in the laying of charges, we will advise the nature of the charges and the identity of those involved,” she said. “As this is an ongoing investigation, no further details will be provided.”
Sgt. Herman said the RCMP is encouraging people with information or who have been affected to contact Crime Stoppers or the RCMP.
Officials from the company could not be immediately contacted for comment.
Fortress is a real estate developer focused primarily on multi-unit residential projects. The company’s web site said it is developing or has completed 80 projects with a built-out value of $6-billion, and said it has completed and exited its interest in 27 projects. Fortress said it has partnered with over 25 builders across five provinces, and said it has 20 projects under construction.
The company has already faced questions from regulators related to concerns about risky mortgage practices.
Ontario’s financial regulator revoked the mortgage broker license of Fortress co-founder and chief operating officer Vince Petrozza and three other people in early February following an investigation into risky syndicated mortgage investments, requiring them to stop all mortgage brokering business immediately. A fifth person voluntarily surrendered her license.
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The Financial Services Commission of Ontario (FSCO) said it reached a settlement agreement with four individuals – including Mr. Petrozza -- and four companies, all involved with syndicated mortgage investments related to real estate projects where Fortress was the developer or development consultant.
FSCO, which licenses mortgage brokers, said Fortress itself was not a party to settlement deal. Fortress develops real estate projects but is not a mortgage broker.
One of the companies included in the FSCO settlement deal was Building Development and Mortgages Canada Inc. (BDMC), which arranged loans for many Fortress projects.
As part of the settlement agreement, BDMC agreed that its outstanding syndicated mortgage investments in Fortress projects will be managed by an arms-length administrator, FAAN Mortgage Administrators Inc., which will conduct business in BDMC’s name.
According to FAAN’s web site, it has taken control of 65 of BDMC’s syndicated mortgage loans for projects in Ontario, Manitoba, Saskatchewan and Alberta. FAAN will collect funds from borrowers and make payments to lenders, and said it will also take enforcement action where loans are in default.
BCMC said in a statement in February that it has raised $920-million for real estate projects from 14,000 investors with a total built-out project value of over $6-billion.
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