A duo of financial professionals who deceived numerous investors in a Winnipeg condominium high-rise and a mixed-use project in Barrie, Ontario, were each handed down five-year prison terms and ordered to pay fines totaling $12.2 million on Monday.
Jawad Rathore, aged 49, and Vince Petrozza, aged 50, held executive positions at Fortress Real Developments Inc., a now-defunct syndicated mortgage company based in the Toronto area. The company had raised capital for the unsuccessful 45-story SkyCity tower in downtown Winnipeg and the Collier Centre project in Barrie.
The Ontario Court of Justice found in May that Rathore, the former CEO of Fortress, and Petrozza, the former COO, had defrauded close to 800 investors of $33.1 million over a nearly four-and-a-half-year period, resulting in losses of $24.4 million.
Justice Daniel Moore sentenced both individuals to five years in prison and warned of an additional five-year term if they fail to pay their $12.2 million fines within ten years after their release. The defendants’ legal representatives revealed that an appeal against the verdict has been launched.
Syndicated mortgages involve multiple investors pooling funds for development projects, with the property itself serving as collateral. Investors receive interest and a mortgage to secure their principal investment.
Judge Moore determined that the mortgages tied to the SkyCity and Collier Centre properties surpassed the properties’ values by up to 300%, putting the principal investments at risk due to lack of security.
According to the judge, the fraud in the SkyCity and Collier Centre ventures displayed a high level of planning and complexity. It specifically targeted individual investors, leading to severe financial consequences for many.
The majority of the victims experienced psychological distress, with some suffering significant mental health deterioration that also affected their physical well-being.
Judge Moore acknowledged that neither Rathore nor Petrozza had previous criminal records and highlighted their potential for rehabilitation within the community. Rathore’s family circumstances were noted, including caring for children with disabilities and an ill wife, while Petrozza supported his own family and parents-in-law.
The judge recognized that the defendants stood to gain financially if the SkyCity and Collier Centre projects had succeeded and acknowledged their genuine desire for the projects to be completed.
Contrary to being a complete scam, the judge emphasized that the investments were not part of a Ponzi-style scheme. However, he expressed disappointment at the lack of genuine remorse shown by the offenders.
The prosecution had requested a decade-long imprisonment for both individuals.
