By Heather Rose
BMO Bank of Montreal is claiming it’s a victim of one of the largest mortgage frauds in history in a giant lawsuit that names hundreds of people ranging from their own employees, to lawyers and even Calgary Northeast MP Devinder Shory.
The bank is claiming it lost over $30 million in a scheme that involved more than 200 properties valued at about $120 million in total.
It’s alleged that homes with values less than nearby houses were targeted by fake buyers, who were paid between $3,000 and $8,000 for their involvement. These buyers would lie about their income to be approved for mortgages, and the prices of the homes would be inflated. The proceeds from each of these inflated homes is estimated to be between $40,000 to $60,000 for the fraudster. CBC used a more expensive example in one of its articles, showing a Calgary home that was bought for $900,000 and then artificially inflated to a value of $2.3 million in three years, which is a profit of $1.4 million. When this method of mortgage fraud is used, the bank alleges that the lawyers involved would have to be “in on it”.
Shory, the MP, was the lawyer on record for four mortgages involved where the bank says it lost around $300,000 total. Most of the people named, including Shory, have not yet seen a statement of claim or been informed of details about the accusations.
“When I am, I will defend myself vigorously against these accusations. I have done nothing wrong,” Shory said in a statement. “As the matter is before the courts, I have no further comment at this time.”
The RCMP is currently deciding whether or not it will launch an investigation and statements of defense have not been filed nor has anything been proven in court. The RCMP has about 100,000 documents left to go through that were brought up through the internal probe conducted by BMO.
Mortgage fraud is a billion dollar industry in Canada, and many financial experts estimate that this is mostly due to lenders not checking applicants more thoroughly. There were suspicions of the scam as early as 2006, according to BMO.
Heather Rose is a Toronto based Journalist, who is a regular contributor to the Muddy York Real Estate Blog. Heather website is located at heatherroseportfolio.squarespace.com.