How the scam worked

The scam came to light in August 2011 when a real estate lawyer did his job and checked the title of a condo that his client had bought. He found a loan by-law that was not shown on the status certificate. He then phoned Fine & Deo, the condominium corporation's lawyer to inquire about this.

Initial investigations for the condominium corporation revealed that a fraudulent loan had been advanced in the corporation's name, without any knowledge on the part of the board of directors.

Fine & Deo conducted searches on title for all condominium corporations in their client list that were managed by Channel, and discovered that a purported borrowing by-law had been registered on title to the units in several condominiums.

They subsequently received confirmation from the lender that $3,500,000 had been advanced in MTCC 831's name pursuant to that purported borrowing by-law, and that the funds were deposited by wire transfer in an Royal Bank account.

The fraudulent loan was advanced in December 2009, and the lender confirmed that monthly payments were being made without interruption out of the same account.

Fine & Deo contacted MTCC 831's auditor to advise him of the information they had uncovered, who in turn, confirmed that he was not aware of any loan involving MTCC 831.

Fine and Deo contacted the board of directors and management of MTCC 831 to alert them to the information they had discovered. Both the board of directors and management confirmed that the board had no knowledge of and did not authorize any borrowing by-law, and had no knowledge of and did not authorize any loan. Further. The board and management also confirmed that they had no knowledge of, and did not authorize any account with the Royal Bank.

Fine & Deo met with the board of directors and management in late August 2011, at which time they received confirmation that the documents that were signed in connection with the loan were all forged. The forged documents contained the names of real individuals that were or are directors on MTCC 831’s board, but the lawyers visually confirmed that the signatures on those forged documents do not match the actual signatures of the directors (past and present).

In all cases, the lender was Morrison Financial Services Limited (who subsequently assigned the loans to other lenders), and the law firm that completed the transactions was Deacon, Spears, Fedson & Montizambert.

While there are slightly different factual circumstances between each of the corporations, the scheme that was orchestrated was substantially the same: forged borrowing by-laws were signed using unknown Identities, or identities of known individuals whose signatures were forged; commitment letters were obtained from Morrison Financial on the basis of contracts for work, which were never required; bank accounts were created at a single Royal Bank branch using each corporation's name; and, loan proceeds were wired directly by the lender into those accounts.

The Toronto Police Services, Financial Crime Unit has assigned a detective to all of the fraudulent loan cases, as well as other cases involving contract fraud for which Channel and/or Manzoor Khan has been implicated.

Fine & Deo initiated lawsuits to have the fraudulent loans declared void and of no effect as against MTCC 831 and the other condominium corporations.

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