Alleged ringleader in $12-million mortgage fraud ordered to stand trial

The alleged ringleader of a $12 million mortgage fraud involving 22 Calgary properties was ordered to stand trial last week on more than a dozen charges.

Ali El-Sayed, 32, consented to being committed for trial after provincial court Judge Harry Van Harten heard just one week of evidence called by Crown prosecutor Brian Kiers in the scheduled four-week preliminary hearing.

El-Sayed was charged last August in what police said at the time was the latest large-scale mortgage fraud in the Calgary area uncovered by police, one in which none of the money pocketed by the culprits has been recovered.

Provincial registry documents list El-Sayed as the sole director and shareholder of a Calgary company known as Ramses Holdings Inc.

El-Sayed initially faced 23 counts of fraud over $5,000 and one count of extortion.

He is free on bail and must abide by several court-ordered conditions, including surrendering his passport and not having any contact with two co-accused and 14 witnesses.

The suspects are accused of using 14 friends and acquaintances to obtain fraudulent loans from eight financial institutions between 2006 and 2009.

The so-called straw buyers were able to obtain mortgages that far exceeded the value of the properties for sale using inflated home appraisals manufactured by the suspects, police said.

In almost every case, the mortgage amounts listed in court documents far exceeded the property values in the 2010 municipal assessment rolls.

The extortion charge stems from an alleged attempt to get a straw buyer to assume one of the fraudulent mortgages.

Police say the straw buyers were paid between $3,000 and $5,000 for allowing their names to be put on the mortgage, with the suspects promising to assume responsibility for the loan several months down the road.

The scheme was then allegedly pitched to them as an investment opportunity.

Instead, the perpetrators stopped making mortgage payments and took whatever remained of the loan, leaving the straw buyers responsible for the outstanding amount.

Authorities said the case is not related to an alleged $120-million mortgage fraud that is the subject of a lawsuit launched by the Bank of Montreal. The bank named hundreds of respondents in its suit, which claims it lost $30 million in a series of fraudulent transactions involving 200 properties across the province.

The RCMP and city police later launched a criminal investigation into the allegations raised by BMO’s civil suit.

El-Sayed will be in Court of Queen’s Bench with his lawyer John James on Sept. 17, to set a date for trial.

© Copyright (c) The Calgary Herald

Bank of Canada holds key rate at 1%

The Bank of Canada held its trend-setting Bank Rate at 1.25 per cent on June 19th, 2011. This marks the seventh consecutive policy decision in which interest rates have been kept on hold.

The Bank has been warning for some time that interest rates will ultimately have to rise, but hinted more strongly in this most recent announcement that a hike was coming by removing the word “eventually” as to when that might happen.

The Bank said, “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target.”

The Bank noted, however, that downside risks to the outlook remain elevated, with debt woes on both sides of the Atlantic, and that the outlook for a gradually improving domestic picture assumes these issues will be contained. As regards the European situation the Bank said, “The Bank’s projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome.”

The Bank’s forcast for economic growth in Canada was little changed from its April forecast. The Bank now expects the economy will grow 2.8 per cent this year. This was revised slightly from the previous forecast of 2.9 per cent. The Bank kept its 2012 and 2013 growth forecasts unchanged at 2.6per cent and 2.1 per cent respectively.

Also unchanged were expectations that the output gap, a measure the spare capacity in the economy, would be closed by the middle of next year, and that headline inflation would remain above 3 per cent in the near term due to temporary factors, namely higher food and energy prices.

The core rate of inflation, which strips out those volatile items, hit 1.8 per cent in May owing to “persistent strength in the prices of some services.” The Bank now expects the core rate to “remain around 2 per cent over the projection horizon.”

As of July 19th, 2011, the advertised five-year lending rate stood at 5.54 per cent. This is down 0.05 percentage points from 5.59 per cent on May 31st, when the Bank made its previous policy interest rate announcement.

The Bank will make its next scheduled rate announcement on September 7, 2011, and many experts had already been forecasting a rate hike at that time. Given the slight change in tone in this most recent announcement, bets for a September hike will likely be increased further. That said, a lot could happen between then and now, particularly given the magnitude of current downside risks.

(CREA 07/19/2011)

Calgary company defrauded investors of millions

A Calgary company raised millions from investors for real estate deals with companies which didn’t actually own the properties, and funneled $7 million from one specified project to others, an Alberta Securities Commission hearing heard Monday.

“This is a case about deceit,” ASC lawyer Tom McCartney told the panel.

Shire International Real Estate Investments Ltd. and its president and sole director Jeanette Cleone Couch, as well as related entities, made false and misleading statements in an offering memorandum related to property in Hawaii and “perpetrated a fraud” on investors relating to a Calgary site, the ASC alleges.

Couch, who is representing herself and the companies at the hearing, said she will make an opening statement after the ASC finishes with its evidence and will call one witness.

The charges against Shire and Couch relate to two offering memorandums.

One was called the Hawaii Fund, which the ASC alleges raised about $1.3 million from 107 investors between January and June 2009, and the other was Bearspaw at 144th Avenue Ltd., which the ASC believes raised between $16 million and $20 million from 844 investors between August 2007 and June 2008.

“All these projects failed and it appears most investor money has been lost,” McCartney told the hearing.

In the case of the Bearspaw development, the ASC alleges that while more than enough money had been raised for the $13.8 million purchase price, two mortgages were taken out on the property.

As well, the ASC says more than $15 million was transferred from the Bearspaw account to Shire and of that, according to investigators, at least $7 million was used for transactions not related to Bearspaw, including other real estate deals connected to Couch and her daughter,

and a $100,000 payment to Couch.

The Bearspaw property is in foreclosure, the ASC said.

The Hawaii Fund involved two deals on Maui which the offering memorandum stated were to be purchased from companies which in fact didn’t own them, the ASC alleges.

Investigator Viola Pickering, who testified Monday, said Shire first came to the ASC’s attention when the owner of one of the Hawaii properties contacted them, because the two luxury homes had not been purchased as stated.

As well, the numbered company Shire said it had a deal with for the other purchase (although that company didn’t actually own the property, which contained 32 condo units) had as its sole director Shire’s vice-president of special projects, a fact that wasn’t disclosed, the ASC said.

Couch’s husband had previously been listed as a director of that company.

Pickering told the panel that when they launched the investigation, they were “primarily concerned with misrepresentation and fraud.”

She also said Shire’s promotional material stated they were expecting returns of 43.6 per cent over two years on the two Hawaii deals.

© Copyright (c) The Calgary Herald

Calgary MLS sales soar in June. Transactions up over 30% from a year ago

Calgary’s residential real estate market experienced a significant upswing in sales in June compared with a year ago.

Single-family MLS sales during the month were 1,398, up 32.01 per cent from June 2010’s 1,059 transactions, according to data released by the Calgary Real Estate Board on Monday.

And for the first time since April 2010, condo sales were up year-over-year, increasing by 30.56 per cent in June to 581 transactions. In June 2010, there were 445 condo sales.

The average sale price for a single-family home in June dropped by 0.33 per cent year-over-year falling to $479,580 from $481,960.

But the condo average rose by 0.79 per cent to $296,501 from $292,182 a year ago.

June’s condo average condo price was the highest since May 2010.

According to CREB, June’s year-over-year increase in single-family home sales was the highest since January 2010’s 38.50 per cent while for the condo market it was the highest since March 2010’s 36.26 per cent.

On a year-to-date basis, single-family home sales for the first six months of this year are up 5.64 per cent from a year ago to 7,231 transactions while condo sales are down 4.91 per cent to 2,965 units.

“Strong monthly increases does not imply a housing boom, as it is important to put into perspective that sales activity remains below long-term averages,” said CREB in a statement.

Sano Stante, president of the Calgary Real Estate Board, said the housing market in Calgary has gradually improved throughout the year as anticipated.

“We had a late spring market this year,” he said. “It’s all starting to come together in June. And last year we had an exuberant market early on and it died in June. So to draw comparisons year-to-year for that month shows an exaggeration of the trend.”

After the first half of the year, it appears the recovery in the housing market is starting to find its footing, he added.

“This gradual leveling has been fueled by growth in employment, and in particular growth in full-time jobs. Improved job prospects, combined with an increase in the number of people moving to Calgary, will give lift to our housing market for the remainder of this year and into the next.”

Stante said homes that are value-priced are selling and they’re moving relatively quickly. Homes that are over-priced are sitting on the market, he added.

Dan Sumner, economist with ATB Financial in Calgary, said a year-over-year comparison may be a little misleading as to the strength of the Calgary housing market in June specifically. June is often one of the busiest months for sales volumes but sales last June were abnormally slow, he explained.

“Fueling sales is a stronger economy specifically in Alberta, which feeds through into consumer confidence and that’s making Albertans more comfortable with home purchases again. Very accommodative interest rates are also helping as well,” added Sumner.

He said prices have been stable for quite some time now, despite a fairly strong economy over the past year. Because housing prices have risen so much over the past 10 years in Alberta, they are about as high as they can be, he said.

“However, with the economy fairly strong in Alberta and rates increasing affordability, for the time being at least, that is preventing prices from moving any lower. What you end up with is resistance for prices to move in either direction, and flatness ensues,” said Sumner.

The key economic contributors to the current housing market include a strong energy sector and resource prices as well as an improving labour market and strong wage growth. Also interprovincial migration to Alberta has picked up, said Sumner.

“With economic conditions in Alberta strong and looking up, sales during the second half of 2011 should be higher than last year,” he said.

Richard Cho, senior market analyst for Calgary for Canada Mortgage and Housing Corp., said that although demand for housing has been gradually improving, resale activity this time last year was also moderating.

© Copyright (c) The Calgary Herald