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Condo investors who lost millions disappointed with federal response

'Nobody wants to take responsibility,' says local investor
2021-06-15 Parliament Hill 1
Parliament Hill in Ottawa.

Investors who lost millions of dollars putting their savings in condo developments in Barrie and across the country are frustrated after having received a “form letter” in response to a petition demanding an independent public forensic inquiry.

“Nobody wants to take responsibility. This is a typical reply, almost like a form letter,” said Oro-Medonte Township resident Rose Ray, who has dispatched a response outlining her disappointment, adding the government hasn’t addressed the concerns in the petition.

Ray is among an estimated 14,000 investors across the country who lost about $334 million in syndicated mortgages tied to Fortress Real Developments condominium projects between 2009 and 2018 in what they call the largest mortgage fraud in Canadian history. Many were older people who invested what they had saved for retirement.

The syndicated mortgage investments were promoted to Canadians as safe investments returning eight per cent interest with a secured principal.

In April 2018, the RCMP searched Fortress offices and investors learned that 50 per cent of their principal was deducted for commissions, fees and interest. There have been no charges.

Ray said investors started registering complaints with the Financial Services Commission of Ontario in 2011, but it did not act until seven years later.

The petition was signed by 1,200 people and was presented to the House of Commons by Barrie-Springwater-Oro-Medonte MP Doug Shipley.

The petitioners asked for an inquiry and support for an ongoing RCMP investigation. It also seeks an increase in punishment for white-collar crime and imprisonment for fraud exceeding $1 million.

They’ve also asked for mandated communication across all the country’s provincial financial regulators.

“For how many years now they’ve been talking about a regulatory body,” said Ray. “You should not have all these bodies and nobody cross-referencing it.”

While Fortress was fined $250,000 by one regulatory body, she said it received a licence from another, “which should never have happened.

“We’re supposed to be able to trust the regulatory bodies, that they’ve done their job,” Ray added. “If they had done something in a timely manner and investigated, it could have saved (investors) millions of dollars.”

A response to the petition by the Minister of Public Safety and Emergency Preparedness referred to the government’s “comprehensive anti-money laundering and anti-terrorist financing regime” and that it was working with other departments and governments to prevent and combat financial crimes.

The letter also extensively referenced initiatives related to money laundering, which was not an issue of concern and not mentioned in the investors' petition.

The letter also references the Integrated Market Enforcement Teams, designed to address capital significant capital market fraud offences.

Its suggestions that the current government is stepping up where the Conservative government under Stephen Harper didn’t is a moot point, even if it were accurate, said Shipley, who is a Conservative MP.

“I was really astounded that in response to this they still bring up the Harper Conservatives, which was six years ago,” he told BarrieToday. “It’s time to move forward and help people now.

“I feel terrible for these people who have lost, some of them, their life savings.”

There have been efforts to move forward with lawsuits. A class-action against a real estate broker was launched in March, related to development properties in Calgary, Edmonton, Toronto and Ottawa.