A pair of financiers who defrauded hundreds of investors in a Winnipeg condo tower and a Barrie, Ont., mixed-use project were sentenced Monday to five years in jail each and a pair of $12.2-million fines.
Jawad Rathore, 49, and 50-year-old Vince Petrozza were executives for Fortress Real Developments Inc., a defunct Toronto-area syndicated mortgage company that raised funds for a failed 45-storey tower in downtown Winnipeg called SkyCity and a Barrie mixed-use development called the Collier Centre.
The Ontario Court of Justice ruled in May that Rathore, Fortress’s former chief executive officer, and Petrozza, the former chief operating officer, defrauded nearly 800 investors of $33.1 million over the course of almost four and a half years, resulting in losses of $24.4 million.
Justice Daniel Moore sentenced each of them Monday to five years in jail and potential jail time of another five years each if they do not pay their $12.2 million fines within a decade of getting out of jail, according to the reasons for sentence.
Their legal counsel told CBC News Monday they have appealed the verdict.
Syndicated mortgages are loans made by several investors to cover development costs, with the land itself acting as collateral. The investors are offered interest as well as a mortgage to secure their principal investment.
Moore ruled the mortgages registered against the SkyCity and Collier Centre properties exceeded the value of those properties by as much as 300 per cent, placing the principal investments at risk because they were not secured.
“The overleveraging caused by the fraud virtually guaranteed there would be loss if the projects failed,” the judge stated in his reasons for sentence.
In his reasons, Moore also said the fraud in the SkyCity and Collier Centre projects involved a “high degree of planning and complexity.”
The fraud “targeted ‘mom and pop’ investors, upon whom the impact of the losses was much greater and in some cases were financially catastrophic.”
Most of the victims, Moore said, suffered psychological harm and some “suffered extremely serious deteriorations of their mental health” which also impacted their physical health.
On the other hand, Moore said neither Rathore or Petrozza have prior criminal records and both possess “strong potential for rehabilitation given their roots in the community.”
Moore noted Rathore has six children, three of which have learning disabilities, a wife with an autoimmune disorder that often limits her mobility and two elderly parents that require care.
Moore noted Petrozza is married with three children and supports his parents and mother-in-law.
The judge also noted the offenders would have financially benefitted if SkyCity and the Collier Centre succeeded and accepted they wanted the projects to proceed.
“This was not a pure scam or Ponzi-style scheme where the investment does not even truly exist,” Moore wrote.
The judge also stated he did not have “any evidence of true remorse.”
The Crown had sought 10-year prison sentences for both offenders.
