Organization that financed at least one local project being investigated by the RCMP

News 100 redBy Staff

April 15th, 2018

BURLINGTON, ON

 

It was a number of years ago, we wrote a piece on how a Burlington based developer was financing their projects.

We were threatened with a law suit for libel and given that we already had two libel suits on the go we removed the story from the web site. There is only so much money available to pay legal fees.

Adi financing - Fortress

Financing of any development project is critical. If you want to understand how the Lynx is being financed – look no further than this organization.

Some time later we did a follow up story on the developer and how their Link project on Dundas was coming along.

That story is here.

This weekend the Globe and Mail published an article on a company called Fortress Real Developments Inc.

Here is the link to that Globe and Mail article.

Promotional piece for the Link site on the Fortress web site.  Here

If there were any local people who lost their money on a Fortress investment in a local development – we would certainly like to here from you – we will protect your identity.

If there are people who made a profit – let’s hear from them as well.  All anonymous.

Sgt Penny Herman of the RCMP is encouraging people with information or who have been affected to contact Crime Stoppers or the RCMP.

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7 comments to Organization that financed at least one local project being investigated by the RCMP

  • Gil

    I’m just gonna leave this right here….From a MacLean’s article in 2017.

    As the article states, syndicated mortgages had been marketed to investors in a manner which regular securities could not be with statements like guaranteed rates of return. Unfortunately it’s FSCO and not the OSC that regulate syndicated mortgages. In a low interest rate environment, when someone is promising an RoR of 8%, that’s a huge red flag. Returns (rewards) don’t come without risk. The higher the return, the higher the risk. Anyone trying to tell you differently is being dishonest.

    “Syndicated mortgages are not nearly as safe nor sound as the slick marketing materials make them out to be. If things go wrong with a project, syndicated mortgage investors have to get in line behind banks and other primary lenders. Syndicated mortgages also exist in a regulatory grey zone. Despite being pitched to investors as a rival to stocks, bonds and mutual funds, they are not governed by the same rules as traditional securities, allowing salespeople to make claims about their performance that stock brokers would never legally get away with.
    In addition, the 2 principals of Fortress had sanctions imposed by securities regulators several years ago. In 2011 the Ontario Securities Commission accused the pair, along with a third man, of engaging “in conduct contrary to the public interest” by selling clients of their debt-management business shares of companies caught up in a B.C. stock scam. Petrozza and Rathore agreed to pay close to $3 million and were slapped with a 15-year ban on trading securities.”

    Unfortunately syndicated mortgages aren’t considered a security.

  • Stephen White

    First, kudos to the Burlington Gazette for their investigative work on this story. It highlights why local journalism is important in our community, and why the printed and electronic media are critical in our democracy.

    Second, kudos to the RCMP for their diligent followup. It is nice to see that “white collar” crime is finally attracting increased surveillance and review. I wish Canada Revenue Agency would take a lead from their example and start pursuing business syndicates and corporate crime more thoroughly instead of chasing down small business people and individual taxpayers.

    Third, while the financing of these developments is a concern, what is equally a concern is the number and viability of these ventures. When you just look at the sheer volume of these development applications, and the suddenness with which they have appeared, one has to be a little suspicious/concerned. Developers are great at marketing and public relations, but their business and financial skills are typically lacking. Their capacity for overextending themselves is amazing as folks like Robert Campeau and Peter Pocklington can attest.

    My bigger fear though is that with the combination of government imposed buying restrictions in the housing market, increases in the bank rate, and the very real possibility of bankruptcies/investigations/reviews into many of these developments, and we could see our city dotted with construction cranes on unfinished high rise developments, empty downtown lots, and dozens of prospective homeowners who may lose thousands on down payments.

    Burlington is not the only community with concerns:

    http://www.iheartradio.ca/610cktb/news/more-problems-could-be-brewing-for-port-dalhousie-development-1.3598834

    To quote from the article: “City Councillor Carlos Garcia tells CKTB he has always been concerned about Fortress’ reputation. He says it has to be a huge blow to have a lead staff member at Fortress have his licence suspended and he wonders how that will impact funding for projects moving forward”.

    But fear not! Our Council, our Mayor and our Planning Department have everything under control, and are well-prepared for these kind of contingencies. In the words of Bobby McFerrin “Don’t Worry, Be Happy”!!

    • Gil

      Hi Stephen, unfortunately this has nothing to do with the CRA. It’s the regulators of the industry. As I noted in my comment, the financing for syndicated mortgages is regulated by the FSCO (Financial Services Commission of Ontario) and not the Ontario Securities Commission.

      Syndicated mortgages, while not a bad investment, are marketed by some as safe with a guaranteed return. These aren’t GICs. Nothing is guaranteed. Unfortunately if a project doesn’t finish or if the market turns, that’s when bad things happen and we hear about investors losing money as well as investors that never should have had their money in it in the first place as the investment truly wasn’t suitable.

      I agree with your statement. It’s good to see the RCMP is investigating as well. Will be interesting to see how this progresses.

      • Stephen White

        Gil: I realize full well this issue has nothing to do with CRA. My comment about CRA was a side comment, and not germane to this investigation.

  • Maggie

    Wish I could read the Globe and Mail article but you have to be a subscriber. I can think of at least one other development company that should be looked at by the RCMP.

  • Judy

    You have to be a subscriber to the Globe to read the article. Can you give us the highlights?

  • I investigated Fortress myself last year to see if they were funding the Aid 26 storeys on Martha, but couldn’t find a connection in the press. Nice work,

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