SkyCity Centre Winnipeg | 45F | 575 Ft | 175.26 M | Cancelled

[Finessing]

Originally Posted by Naive

As a Syndicated Mortgage investor I am wondering if it is better at this point if this thing gets canned completely. I assume that because construction has not started that expenditures would be at a minimum and therefore and losses to the "lenders" would be also be minimal.

I don't think that assumption is correct. About 1/3rd of your investment was paid out in commissions immediately to the folks who ripped you off. From what I understand, your secured position on the property falls behind everybody else. I would be surprised if investors see a dime to be honest.

You should consult a lawyer if you haven't already. Consider it an expensive life-long lesson on the pitfalls of investing without proper due diligence.

[Pi3141592654]

Originally Posted by Finessing

I don't think that assumption is correct. About 1/3rd of your investment was paid out in commissions immediately to the folks who ripped you off. From what I understand, your secured position on the property falls behind everybody else. I would be surprised if investors see a dime to be honest.

You should consult a lawyer if you haven't already. Consider it an expensive life-long lesson on the pitfalls of investing without proper due diligence.

Correct. You subordinate to everything. It's basically akin to private equity.

[Roger Strong]

Originally Posted by Naive

As a Syndicated Mortgage investor I am wondering if it is better at this point if this thing gets canned completely.

They don't even have a builder for it, and given their legal troubles I can't imagine them getting one. (Edenshaw severed its ties with Fortress last year "because the project was not moving forward.")

As for getting money back:

BDMC is the brokerage which provided financing for SkyCity and other Fortress projects through syndicated mortgage investment vehicles [...]

- BDMC is insolvent and in default of its obligations to pay into a $300,000 reserve fund.

- BDMC has been struggling to make a number of important payments, including payroll and rent.

The project and company are in the "disappeared in a puff of litigation" phase. That could take years. I don't now how long it took to reach the point where Rathore and Vince Petrozza were ordered to pay $3M to the Ontario Securities Commission (OSC) over their previous companies. But that happened in 2011, and the court order for the OSC to forward the money to "investor victim" didn't happen until late 2016.

But it's good to hear that those who bought units have their investments protected.

[tree]

it erodes my faith in whatever municipal / provincial / federal body is responsible for SkyCity not being called a sham earlier. Frankly we should be moving on by now - embarrassing.

[Roger Strong]

Originally Posted by tree

it erodes my faith in whatever municipal / provincial / federal body is responsible for SkyCity not being called a sham earlier.

That would be the Financial Services Commission of Ontario (FSCO).

Their investigators were warning this since 2014. But their boss decided in May 2015 that there was not enough evidence to proceed.

And that's after a 2013 FSCO investigation started when the Canada Revenue Agency sent them information it said suggested that Fortress syndicated mortgages were, in effect, a Ponzi scheme. Less than a month later FSCO investigators closed the file for "lack of valid or reliable information to support further investigation."

According to the article the FSCO ignored plenty of other problems.

The RCMP investigation started in October 2016.

[HomeInMyShoes]

I think people just needed to look at other cities...Capital Pointe was at 5 years at that point and we weren't the only city with a negligible progress project.

From October 23rd, 2014:

Originally Posted by Treesplease

If an excavation permit has actually been applied for, the city would be prudent to be a bit circumspect about issuing these jokers a permit to dig a big ass hole in the ground right beside a busy interstection. A hole that the developers may not have the capacity to actually fill with a structure.

Flash to, well okay walk slowly for a long time, to mid 2017 when we now have a hole and nothing else.

[tree]

Originally Posted by Roger Strong

That would be the Financial Services Commission of Ontario (FSCO).

Their investigators were warning this since 2014. But their boss decided in May 2015 that there was not enough evidence to proceed.

And that's after a 2013 FSCO investigation started when the Canada Revenue Agency sent them information it said suggested that Fortress syndicated mortgages were, in effect, a Ponzi scheme. Less than a month later FSCO investigators closed the file for "lack of valid or reliable information to support further investigation."

According to the article the FSCO ignored plenty of other problems.

The RCMP investigation started in October 2016.

Wow amateur hour over there. Thanks - quite concerning. Suspect any foul play or actually just incompetence?

[cheswick]

Ignoring individual investors, the failure of SkyCity hasn't cost the city much if anything. The parking lot that was there remains a parking lot. The St. Regis did get shut down but I'm thinking CentreVenture had every intention of it getting shut down regardless. If SkyCity was never proposed what would be different really.

[Authentic_City]

^Good points. I was getting worried that the St. Regis was going to get demolished without a firm plan in place, but for once the city had a backbone. My only hope is that the parking lot will be put back on the market and a new proposal might someday materialize for that site. So yeah, no real changes positive or negative downtown.

[bomberjet]

Thing is, what's happened to the inside of St. Regis? Seems to it would need a complete overhaul. Heck they've had the windows boarded up for many months now over the winter. Was it heated inside?

[Authentic_City]

Can't be in worse shape than the St. Charles. But yeah, could be just a matter of time before it has to come down because of neglect.

[esquire]

Originally Posted by bomberjet

Thing is, what's happened to the inside of St. Regis? Seems to it would need a complete overhaul. Heck they've had the windows boarded up for many months now over the winter. Was it heated inside?

Semi-abandoned and from what was said about the wood panelling being removed to go the new distillery in the Exchange, it sounds like it has been partly gutted as well.

So it's not like this whole debacle hasn't come at a cost given that the St. Regis is likely to come down as a result of it all.

[Roger Strong]

Originally Posted by tree

Wow amateur hour over there. Thanks - quite concerning. Suspect any foul play or actually just incompetence?

There are other possibilities:

- Properly placed campaign donations paired with complaints about how meddling government employees were causing problems.

- Legislation and enforcement not keeping up with new technology and practices. Syndicated mortgages are a relatively new thing, just like social media privacy and election interference issues, American investment banking practices that led to the 2008 collapse, etc.

- The old concept that "Nothing is illegal if 100 business people agree on it."

- Governments are notoriously sluggish in shutting down legally questionable business that generates lots of tax revenue and props up the economy. A building boom supported by syndicated mortgages certainly counts.

The correct answer is probably "All of the above," including the two options you gave.

[buzzg]

There's only two provinces where syndicated mortgages haven't been banned – Ontario and one of the Maritime provinces. There's nothing anyone here could have done about it unfortunately.

[Urban recluse]

Of course, still no word from CV if the St. Regis will be returned to them...

[Roger Strong]

Originally Posted by Urban recluse

Of course, still no word from CV if the St. Regis will be returned to them...

If I recall correctly, Fortress has until the end of this month to show progress. I expect the city will wait until then before even commenting.

[BuildUpWpg]

Meanwhile Fortress has had a recent flurry of "feel good" tweets on their Twitter account like they don't have a care in the world. Vince P has even tweeting photos of a construction crane going up at one their projects, along with saying all lenders have been paid!

[Naive]

I have requested from FAAN full discloser for my investment in SkyCity. If I am not fully satisfied with what I receive (not necessarily happy) I will be getting myself a lawyer.

[Canucklehead]

Originally Posted by Naive

I have requested from FAAN full discloser for my investment in SkyCity. If I am not fully satisfied with what I receive (not necessarily happy) I will be getting myself a lawyer.

I hate to be the bearer of bad news, but I wouldnt chase good money after bad.

You know where your money has gone?

Firsst, 1/3 GONE on day one. Poof. Comissions, and Advances on Profits (Fortress is a fraud)
Second, you know all of those fancy news conferences, investor meetings, etc. Guess who paid it? You. Think Jawad Rathore flew economy class to Winnipeg? Nope.
The sales centre? Yup, you paid for it
The architecture, engineering, and legal documents for all of the various JV's? You paid.

There will be no money left. I am sorry that you were part of the Fortress Fraud. It really is sad that they scammed to many mom and pop investors.

[Roger Strong]

Third....

Documents seen by Reuters show that in 2013, FSCO staff opened an investigation after the federal tax collector, the Canada Revenue Agency, sent information it said suggested that Fortress syndicated mortgages were, in effect, a Ponzi scheme.

That would suggest that money from projects never completed went to projects that were. That earlier investors made money at the expense of the later ones.

Which in a way offers a small ray of hope:

Wikipedia: Recovery of funds from the Madoff investment scandal: Claim procedures

Known as the legal doctrine of fraudulent conveyance in bankruptcy proceedings means that investors who withdrew their money before the fraud was revealed may be compelled to return their profits or even part of their initial investments.

While Canada isn't mentioned in the Fraudulent Conveyance link, we do have a Fraudulent Conveyance Act and a history of the courts clawing back profits from the winners in a Ponzi scheme to pay the losers.