Monday, April 27, 2015

SYNDICATED MORTGAGES FOR DUMMIES (AND POTENTIAL INVESTORS)

In the latter part of 2014, a name cropped up on local radar, prompting me to devote a blog post to a potential problem in our midst. One good thing that came out of the exposure of convicted investment scam artist Gary Fraser is that he resigned from the Crystal Beach BIA Board. However, he still remains as an investor/developer for many local projects. 

This brings us to examine what is known as a Syndicated Mortgage which is the vehicle by which Gary Fraser has been able to "buy" many properties. By definition, a syndicated mortgage is one that is funded by several investors. Most definitions come with warnings such as:

Now look at syndicated mortgages.  In this arrangement, a broker puts together several investors into a single mortgage to secure loans on real estate – often development land.  The rate of interest seems wonderful, 8% or 10% or higher.  As a further enticement, the borrower may agree to pay a bonus, so the return is even higher.  Sounds too good to be true? Well, it often is.  There are many things that can go wrong – the land is worth less than appears (even with an appraisal).  Market conditions may change.  The borrower may be an asset-less numbered company.  The mortgage may be on land that is different than that promised.  There may be other lenders who rank ahead of this mortgage.  © 2012 John Hollander & Harold Geller
One of Gary Fraser's corporations is listed as the developer for a project funded by Lexon Mortgages Ltd. at the corner of Mitchener Road and Schooley Road in Crystal Beach. Fraser also has many other holdings in Crystal Beach and Ridgeway under either Starboardview Homes, Black Bear Homes or Clapboard Construction which is operated out of Ridgeway. Gary has bought three parcels of land, which includes two houses on Ridge Road under the name of Black Bear Homes. He paid $300,000 for the house at 613 Ridge Road North. The property is mortgaged for $800,000, a difference of $500,000. We have to question how a home can be mortgaged for more than twice its purchase price. 

Some of us are very wary of this man and his business dealings. We can't help but remember when Fraser pled guilty to 29 fraud-related charges in 2008. He served 30 months in jail.  While awaiting trial, Fraser managed to convince a fellow inmate to invest in one of his schemes. His own aunt, at Fraser's sentence hearing, said:
"I have been searching deep within myself for the past seven years to find forgiveness for Gary, but I can't," said Cheryl Fraser.
"I didn't see any remorse in his eyes. I looked right at him and he looked right through me."

Fraser has been in town for about a year and has overseen the purchase of many properties. Some are now considered eyesores, like the shell of a building left at Queen's Circle that was once listed at $1 Million for an executive-style mansion and the boarded-up former Pines Restaurant. Houses that one of his companies is constructing on Rebstock Road have a mortgage that is double the purchase price. The selling price for the houses is greatly inflated as are many of the houses that are occasionally listed. Same too with the new proposed development on Michener and Schooley which has a mortgage three times its purchase price. 

The syndicated mortgage company that holds the mortgages is represented by Raymond Hau. It is believed that some locals have invested in this syndicated mortgage group.

To which we can only recount what was revealed at Fraser's sentencing in 2008:

Fraser was ordered to repay his victims, but
 those who attended court don't expect to get their 

money back.
"Our lives now are all about second mortgages,
 lines of credit, credit cards, interest rates and liens," 

said Grace.*

*One of the 13 victims of Fraser's $2 million scam who wished to be identified only as "Grace."


So, does anyone still believe that Gary Fraser paid back 
the over $2 million that he scammed in the early part of 
this century?

If you believe that, there's a great investment opportunity with a convicted fraudster with
connections to a syndicated mortgage company.

Don't say we didn't warn you.

31 comments:

  1. This scam /con scheme is a lot like the one that happened in the City of Niagara Falls," Fallon" it was even touted on the local radio station CJRN , John Michaels a radio personality was scammed out of over one hundred Thousand dollars, it was a pyramid scam worthy of Bernie Madoff, who skimmed off hundreds of millions of dollars, and is now serving time in the Federal Clink, Fallon, offered unheard of interest payments on funds placed with him, he high tailed to Florida and Mexico taking a lot of money with him, Please get the word out ASAP as a lot of local people will lose money that they can't afford to lose .This is one of the oldest type of scams out there, This is Fort Erie where scam artists thrive on the gullible and obtuse residents. look how the voters get scammed here, by the "Trojan Horse" of Racetrack fame. The money some of it, went into so called shopping malls in central Ontario , the only thing actually built was the foundations and a lot of weed wacking.. Buyers beware.!!!!

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  2. It would very very interesting to see just how much money in Syndicated mortgages there are in total on all of the holdings. If it is 2-3 times more than the original purchase price then that would be well over 4 Million Dollars.or more.
    Great scam & lucrative for someone. Especially since little or no monies are going back into the properties !!!
    BTW Frasers name isn't on anything his wife Audrey Van Den Berg is the signing authority on Black Bear Homes.

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    1. Of course you're right. Fraser probably does not have his name on anything because of the sentencing order to pay back the millions he scammed from his previous victims.

      I just hope that people who may have been approached or who are thinking of investing in these projects are fully aware and warned of the potential problems of dealing with this man or those he is hiding behind.

      He has gone back into the investing business even after serving time for fraud. Should raise big red flags for anyone.

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  3. Thank you for that warning. Although not likely to get into anything with the dubious name of a "Syndicated Mortgage" there may be others that might. Its a saying in the real estate business, "think youve seen it all? Wait till tomorrow". There have been some slippery dealings lately. A big one that comes to mind is the havoc "Bundled Mortgages" brought upon us in the states precipitating the great recession of 2007 and on. Real estate. Love it or hate it it sure attracts some bizarre figures. (Read: D Trump and the Atlantic City rise and fall, Don, now with a "reality" show, among other funny business). Reality to these guys is sure a different thing to the average Joe, (or Joanne).

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  4. That investment company had an office on McLeod Road , the sign said "Falloncrest ", I used to go by it every day as I had a business in Chippawa..The dividends were out of sight, just like Bernie Madoffs, it was just another dressed up Ponzi scheme.!!!

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  5. As the song lyrics go, "some outlaws rob ya with a six gun, some rob ya with a fountain pen". Today it would be "some punks rob you with a handgun, some rob you with 'sign on this line, and here..and here.. oh yah and here too..thank you, have a nice day". No real difference. Makes a person wonder what banks would deal with these types of fungus. Maybe no banks? Second or third party owned credit unions or worse? In Canada this type of thing is a little more regulated than on planet stateside. Maybe these crooks have a working relationship with the free and easy on the east side of the river. Best to ask JT and his new best friends about those type of business opportunities. Or maybe not. They may be in deeper than anyone should know about, and not in a good way.

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  6. Raymond Hau was part of Centum ( North York ). They appear to have parted company and Raymond has disappeared. Hmmmm.

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    1. I'm just going by the information posted on line about the development at Michener Road and Schooley. Says that Raymond Hau is the go-to guy for the syndicated mortgage. Lots of loose ends in this scenario.

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  7. Raymond Hau has not disappeared. He is working with Domenic Ha the leader of the syndicated mortgages for Michener rd & Raymond is the mortgage guy. same office address. These 2 have been working together for years. Domenic Ha also worked for Centum in BC same as Raymond Hau. a few years ago. Curious how Fraser met up with these 2. must be a connection somewhere.

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  8. Dirty Doug stated we were closed for business as his Bay Beach retirement scheme came up short. What he didn't tell us was that he rolled the red carpet out for all these con men/carpet baggers/ snake oil salesmen. We will live with his stench er ummm legacy for quite some time, at least 4 more years with JT and the ol boys financial club running the show once again.

    We deserve our reputation.

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    1. Fort Erie, and in particular Crystal Beach, is a prime landing spot for greedy people with get-rich-quick schemes. I have seen quite a few come and go, never to be heard from again. This latest scheme has all the makings of a financial disaster for those who fall for it. Sort of like "kiting checks" a well-known scam. Eventually, someone will have to be accountable for the bills. We heard that one local business has/had a lien on the Schooley Road project. Now, it's cash only for that particular project. We're still wondering what happened to all the wood taken at night from 22 Queens Circle. The building is now a shell/fire trap. No building permit or demolition permit was ever displayed. How does someone get away with this? Another building next door to 22 was demolished last year because of "termites." No termites have been found in the Niagara Region, but they got away with tearing down a building on that excuse.

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  9. Curious asks how do people like this meet. Well, the internet for one, where this type of search for partners in dishonesty goes on all the time. Lets hope this is a sting by the RCMP fraud unit and leads to the elimination of these types from what can be otherwise an honest business. Fraud cops go fishing, some of the bottom feeders come up for the bait, and theyre pulled into the boat. Now guys like Gary who got hooked and skinned a bit are a little more wary (wary gary) but not impossible to catch. Just hope they dont throw him back for being too small this time.

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  10. Something tells me this is no Police sting too much going on & no stopping it.
    I guess they could have met on line but I think he got a lesson in jail on the new way to defraud. He told a neighbor of one of his unfinished dwellings that he only stole $30,000 NOT 2 million - Lie 1 & that he learned how to do things better this go around. Well he has learned better - more money shorter period of time & his name isn't signed on anything. BUT he still gets to be the cock of the walk in Town- I have millions to spend look at me I am a big developer - no stopping me now!!
    I just wonder who the investors are for the $6.000,000 in construction money for the 1st phase of Michener, not on title as lien holders so is it true.???
    He just bought the 2 lots at 4124 Erie near one of his followers' house. He has also gained the trust of at least one shop owner in the beach. And Arlene White who tried unsuccessfully to bully the FOCB and the CB-BIA into a possible money pit is another of his followers.

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  11. Its not illegal to part a fool from his money. Only illegal to lie or improperly disclose the nature of an investment and or its risks. If someone has invested in flipping dilapidated homes on the promise of untold riches on resale, and that resale doesn't happen then too bad for the investor. The contractor gets paid, the landowner who bought the land and "sold" to the "developer" makes a premium and the investor who subsequently buys and funds the construction holds the bag.
    A syndicated mortgage itself is not a "scam". Its just a mortgage funded from numerous unrelated parties.... the responsibility of the selling the syndicated mortgage investment lies squarely on the shoulders of the mortgage agent/broker who is licensed under FSCO.

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  12. Still no change to the mess at the Kmens pool. Same garbage blowing around. Even the same old rotten trash at the base of the entranceway. Someone would think there would be at least a symbolic cleanup of the junk around the pool itself, maybe coil up the hoses and cords for something to do. Its hard to believe after all the hype and chatter about this facility during the months of Feb and March that nothing, and we mean NOTHING has seemed to have changed around that old relic. Maybe the water is a bit blacker, thats about it so far.

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  13. The swimming pool is no more than a hoax on the people of that end of town, for 3 elections Stephen Passero has used this stagnant pool to get himself elected, he is head of the fundraising for that pool, so where are the funds??? Four years and no accounting, even girl scout's could raise at least $4 thousand selling cup cakes during that amount of time.

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  14. The Town should at least send a crew to do yard clean up. Toxic water is a violation & if a home owner were to let their pool go stagnant the By Law officer would be on their case. A big front end loader & a pile of dirt would solve this problem quickly, the pool is a structural mess , fill it in and call it a day.

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  15. One small change to the KMan pool is that a few more shingles have blown off the building part. Also it looks like the guys cutting the lawn in the park blew a lot of lawn cuttings through the fence and into the water. After that long letter published on line and in the paper you would think a few of those Kmen could get up from in front of the TV and waddle over there to clean up the place a bit, if for no other reason than out of some respect for the neighborhoods image. Probly need boltcutters as they have probly lost track as to who even have the keys to the place anymore.

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  16. CorruptionFighterMay 2, 2015 at 1:28 PM

    Bay Beach set for development once again..........read ol boy Kris Dube'e report in the Bullit News. Of course the former head of the shorewalk, Pissboy aka Swiitch Hitter Steve, has already weighed in and says the town needs the money. He's right, we need more and more $$$$ to keep him and his useless swine friends at the trough. Jimmy`s boy hard at work and it has nothing to do with ward 2 or any of the town`s best interest just THEIR bottom lines.

    Will this town ever wake up from it`s stupor.........

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  17. Dube's piece reminds us that the plan will be asking for input from the public as to the direction (if any) the waterfront plan should take. The FOCB will nedd to get together and form a united front against any commercial nonsense that would damage an already over fenced and paved greenspace. Havent developers already wrecked what could have been a gem of the south coast? (with the help of the seated councils over the years selling out to vested interests). When is it done? When every last bit of public waterfront is either paved as a boat launch or sold to private interests? Steve P. saying that people coming for just the day doesent make money is just stupid. Imagine if that same attitude was applied to the sports fields here? ("parks" to some) There just wouldnt be any. Its about time the council stopped trying to wreck what little there is left in CB and sent some money here to upgrade and protect the land as it stands today for future citizens. Bay Beach waterfront park would be a good start. Very little, but NOT too late.

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    1. I responded to the article because one of the minions believes that everyone in Fort Erie should have a say in what happens to the Bay Beach Properties. We went through that with non-resident Rino Mostacci's dream of condo towers all along Bay Beach. We went through that with the 2006-2010 council voting (including the Ward 5 Councillor Martha Lockwood) to enter into an agreement with the Molinaros. Frankly, if it weren't for the efforts of residents of Crystal Beach and the market, the Abominable Tower would have been built by now.

      What is needed is a complete greenspace with shade, benches and picnic tables. Updated large wash./change rooms and elimination of blacktop and ugly fences on the South side of Erie Road. It could be a beautiful place for residents and visitors to enjoy our beautiful waterfront and beach. So simple. It will also, as it already has, draw people in from all over. In my experience running a snack bar, the visitors spent money in the community. The loss of the now CBTYC parking lot on Erie Road is problematic - a challenge. Crystal Beach is a lot more than a beach. It's up to the FOCB and the CB-BIA to market and promote this hidden gem.

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  18. We know the 5 on council really want to give Molinaro what he wants & we will see a re-run from 5 yrs ago. Passero says the beach needs to make money, who says this is really necessary. Does the Race Track make money directly for the Town - NO the town spends half a million dollars to keep this part time event open- only 2 days a week. Well the beach is open 7 days a week & there are more tourists visiting the beach than attend the track on any given day.. So what is Passeros point?.Does the Kinsmen pool make money for the Town again no it sucks up money. If they charge a nominal fee for attending the beach it will make lots of money & theses funds can be used to enhance the beach. The Town used $2 million of gambling money to buy the beach not the taxpayers, he needs a history lesson. All levels of government want our beach fronts enhanced for the public & a concrete tower isn't compliant with the vision. How about a 3 story parking garage on the north side to provide parking - at $5 per day this could really bring in the coin. How much money was collected on the Erie rd parking lot every summer.?
    Too expensive to build then why doesn't the Town purchase some of the vacant lots on Erie rd & create parking that would cost a lot less. Hopefully the residents of Ridgeway & Cb will be pro active & give good input.

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  19. Listened to the Council Meeting. The newbies certainly are still newbies. I attended many of the early meetings in 2010, those new Councillors grasped the position so much more aptly than these new ones.

    And I remember they had to learn yet be on guard contending with a very hostile mayor, lawyer and upper staff.

    Makes me admire those men even more.

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  20. That meeting must have been considered to be a dull one as we saw several of the pro status quo members of the peanut gallery leaving early. People that usually stay untill the bitter end no matter how bitter. Lets hope things get a little more lively. The ninjokes were promoting the idea of "boring is good" but this might be taking that idea a little too far. A lot of people are waiting for that expencive report on the lakeshores fate to drop. That will be kicking the hornets nest. When will they ever learn? Havent they sold off enough lakeshore land over the years to scratch that itch?? We need more REAL parkland for the citizens of the town to enjoy, not some scowling fool on a riding mower paid by the town. If the council is waiting for that report to make some boner move they will hear the people of the community speak loud and VERY clear. Boring meetings like this are probly the calm before the storm.

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  21. That shot of the mayor picking up litter at the lakefront was very telling. What next Wayne with a shovel filling a pothole? There are a lot of places where someone not on the crew doing a union job would get him or her in a lot of trouble. Not here though. The boys at the yard seem to look the other way when its a $hit job being done by some staffer enjoying a photo op. That might explain why the Kman pool as it stands is still full of blackwater surrounded by rust, litter and junk. Maybe its just some cleanup job beneath the skills and talents of the towns well paid work crews. Right next to that million dollar sinkhole they call a library too. Photo op or not something should be done about that concrete eyesore.If the cleanup crew need to be seen in a photo in the paper to get this thing going, so be it.

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  22. A record number of building permits filed and hopefully paid for says the Japanese cartoon site. Record number in one week, or a year? what record? So a few developers wake up and fly back to put in medium housing density plywood crackerboxes and we should be impressed. Well, they might be but ITS SPRING!! Pull open the curtains, put down the brown bottles, turn off the TV and look outside. Pray that kind of density isnt coming full "bore" down your street, like what happened in Stevensville a few years ago.A real "celibration" would be if some of the storefronts on the Jarvis street would open up with businesses we could all use. Never mind new permits, lets try to use the buildings standing dark and abandoned, (some shamefully large, ie; the Zellers mall) before sombody throws a shoulder muscle patting someone on the back for some new crackerbox development that came in so quickly, the yokels were slack jawed in awe.

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  23. Alarming in a good way for users of what you have to be aware. It is really important to know very well the company that would assist in you. Anyway, thanks for this posted article you have shared on us. :)

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  24. He has property in the Bahamas. I am not sure this government or people knows of this...

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  25. http://www.cbc.ca/beta/news/canada/toronto/regulator-suspends-licence-of-toronto-mortgage-agent-who-solicited-nearly-9m-in-syndicated-mortgages-1.4156621

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  26. Does anyone know what has happened to the Schooley Rd / Michener Rd project? We understand its up for sale by a Trustee in St. Catherine's ? does anyone know who that Trustee is ?

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