Indo-Canadian Man Among Two Fined $50,000 Each In Mortgage Fraud

In a decision issued last week, Arvind Shankar and Dennis Percival Rego were each fined $50,000 — the maximum penalty allowed under the Mortgage Brokers Act. The two were called ‘dishonest and fraudulent’ by the B.C.’s Registrar of Mortgage brokers.

VANCOUVER – Indo-Canadian man is among two people who have been fined by the B.C.’s Registrar of Mortgage brokers, who says he hopes hefty fines issued against a pair of B.C. men will send a message to the public about the dangers of licensed brokers “fronting” business for unlicensed partners.

In a decision issued last week, Arvind Shankar and Dennis Percival Rego were each fined $50,000 — the maximum penalty allowed under the Mortgage Brokers Act.

Rego, who was a licensed submortgage broker, was accused of filing misleading and false information in a series of mortgage-related documents for a client. He was also accused of taking direction from Shankar — who was not licensed as a mortgage broker — in relation to the submitting of mortgage applications, reported CBC News.

“Penalties of $50,000 for the parties involved reflect the seriousness of misconduct,” registrar Chris Carter said in an interview with the CBC.

“It also sends a compelling signal to the industry that fronting unregistered activity is treated seriously and won’t be tolerated.”

Carter says the issue of fronting is of particular concern to his office, especially given B.C.’s overheated real estate market and the implications for borrowers seeking money to finance multimillion-dollar homes.

Registrar Chris Carter says ‘fronting’ is of particular concern in Vancouver’s hot real estate market, where financing can be tough to come by. (Jonathan Hayward/Canadian Press)

She said Rego knew Shankar wasn’t registered but “fronted for him in mortgage brokering activities and took direction from him in submitting mortgage applications.”

“Mr. Rego engaged in conduct that was dishonest and fraudulent. He submitted contracts of sale to prospective lenders that he knew were fraudulent. He submitted numerous mortgage applications to lenders that he knew or ought to have known were misleading and that contained varying and unverified information.”

The investigation began in September 2014 when Rego filed a mortgage application for financing of $1.7 million on behalf of a client named JV in relation to the purchase of a home on 41st Avenue In Vancouver. The purported sale price was $2.6 million.

The next month, the credit union employee who handled the file got a call from a solicitor “advising that he was in possession of an assignment contract with respect to the (same) property for a much lower price.”

The sale price on that document was allegedly $1.71 million. The solicitor said the contract was assigned to JV for $70,000.

The credit union employee contacted the head of the appraisal company who had completed an appraisal on the home, and then rescinded the appraisal.

But according to the ruling, Rego continued to submit the same application to other lenders. He also allegedly kept Shankar advised through email.

“I find that Mr. Rego and Mr. Shankar were working together to try and arrange financing for JV, and that Mr. Rego took direction from Mr. Shankar in sending the application to various lenders,” the decision says.

The ruling also details a series of seven mortgage applications allegedly filed by Rego for another client. The man was given job titles varying from cook to real estate investor. And his assets jumped from nearly $200,000 to $6.4 million, depending on the document.

Vickers found that Rego’s conduct “demonstrates a flagrant disregard for the regulatory scheme and for fostering public confidence in the mortgage business.”

At the penalty hearing, Shankar argued that he shouldn’t be fined for something he didn’t do. The evidence failed to establish a number of allegations against him — namely that he “actually solicited mortgage business, negotiated fees with borrowers or discussed mortgage commitments with borrowers.”

But Vickers said that while she “found that some of the specific activities alleged to have been engaged in were not supported by the evidence, (she) found the allegation that he had breached the Act by conducting business as a submortgage broker while unregistered was made out.”

Courtesy CBC News

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