Heads-up, Toronto Real Estate Scam

No down payment, security deposit, paperwork or monthly mortgage payments – we'll take care of all that – and in a year or two we'll help you flip that nice condominium and you'll walk away with a fat profit. Sign here.

So they did sign, in all 17 times, so confident in the sales pitch they didn't even bother to inspect the goods. Instead, they were steered toward Multiple Listing Service ads boasting of fireplaces, hardwood floors and ceramic tile.

But as TD Canada Trust learned, when the alleged scam eventually unravelled to the tune of close to $4-million in losses, the unwitting absentee owners of those condos were in fact buying either a parking spot in a Toronto Chinatown high-rise or a small kiosk in a commercial plaza in suburban Markham. Complete with land-registry titles.

Seven people now face a total of 135 fraud-related charges, it was announced Thursday. “It was all choreographed,” said Detective Craig Ellis of the fraud squad.  “The (buyers) were recruited, told there was an investment plan and this is what they had to do. ” Phantom real estate was only part of it, police say.

With the phony mortgages secured, allegedly with inside help at the bank and aid from a realtor and a real-estate lawyer accused of being a conduit for the money, those customers' credentials were then used to obtain personal and business credit lines that were maxed-out before sinking in a sea of red ink.

The customers knew nothing of the credit lines, any more than they ever visited the condominiums they'd supposedly bought. As dupes they were effectively invisible. And – perhaps strangest of all – none appears to have thought anything amiss until authorities came knocking.

The scheme ran from 1998 to 2000 and hinged on two rented properties owned by brothers Patrick and Kam Cheun Chan, aged 61 and 54, Detective Ellis said. One was a high-rise on Spadina Avenue north of Queen Street West, the other a Markham plaza on Ferrier Street comprising small retail outlets.

In both instances, the buyers were told they were buying condominiums, rented out to respectable tenants and ranging in price from $150,000 to twice that amount.

In fact, the properties registered in their names with TD were either parking lots at the high rise or kiosks at the plaza, and the smooth-talking Chan brothers dissuaded anybody anxious to take a close look, Det. Ellis said.

“They'd point to the building and say, ‘There it is on the 23rd floor, we can't go and see it because the people are in there and they're a little antsy, they don't like people around.' “So nobody saw anything and nobody walked in.”

The key to it all, Det. Ellis said, was that none of the dupes had to part with any cash, or indeed do anything. The legal work would be taken care of and the rent would cover the mortgage payments. All they had to do was sign the agreement, sit tight and wait for their condo to rise in value, at which point it could be resold, with the Chans and the purchasers splitting the profits. With the buyer signed up, phony documentation was supplied to the bank and a mortgage duly issued.

But those mortgage funds never reached any of the buyers, police say. Instead they were channelled to Toronto lawyer Steven Mucha, who the Law Society of Upper Canada concluded in a recent decision – before the criminal charges were laid – had “knowingly assisted” in the operation and who in November was consequently suspended for a year.

Other key players allegedly comprised realtor Roland Williams, along with Lascelles Williams and Saquib Majeed Baig, both mortgage specialists with TD at the time.  With the mortgage money advanced, all the monthly payments were paid regularly.

Not until 2003, when the wife of one of the Chans defaulted on a loan, did the TD begin to take a hard look at what had transpired, triggering a long, complex police investigation culminating today in the charges. “This is the age-old problem with real estate,” Det. Ellis said.

“If you have willing participants – and that's all the way up and down, from the real estate lawyer to the real estate agent to the bankers – and if everybody doesn't do what they're supposed to do, it's all very easy.”  As usual buyer beware and if something is too good to be true it probably is, don't get caught up in your own greed.