Founders of mortgage investment firm Fortress Real Developments Inc. charged with fraud

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Jawad Rathore and Vince Petrozza, Fortress’s co-founders, were each charged with one count of fraud and one count of accepting secret commissions

Inc., one of the first Canadian companies to offer higher risk, syndicated mortgage products to retail investors, have been charged with fraud.Vince Petrozza, the company’s former chief operating officerThe RCMP news release did not detail the allegations, which have not been proven in court. Both men say they will fight the charges.

About a week after the RCMP search, an Ontario court put the trustee, FAAN Mortgage Administrators, in charge of Fortress’s mortgage brokerage affiliate at the request of a provincial regulator. At that time, about $560-million in investors funds were backing 45 Fortress-affiliated real estate development projects.

Scott Fenton, a defence lawyer for Mr. Rathore, said in an e-mailed statement that Fortress followed all of the necessary disclosure requirements in its documentation and did not directly engage with investors. That was the responsibility of brokers and agents who promoted Fortress syndicated mortgage products, some of which were sold out of Toronto strip malls.

But critics of Fortress, including lawyers representing investors, have said those brokers were hardly independent of Fortress, pointing out that many of them previously worked for Fortress, or the company’s in-house mortgage brokerage subsidiary, Building & Development Mortgages Canada Inc.

 

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