Private lender made false statements about mortgage loans, BCSC alleges
A house 'sold' sign is shown in Oakville, Ont., Monday, July 23, 2012. (Richard Buchan / THE CANADIAN PRESS)
VANCOUVER -- A Salmon Arm man made false or misleading statements about his mortgage investment company, which offered loans to real estate developers, the B.C. Securities Commission is alleging.
The allegations have not yet been proven and a hearing will be scheduled in March.
The BCSC says that Donald Bergman's company, All Canadian Investment Corporation, provided loans to developers of residential and commercial real estate. The loans were secured by mortgages on those same properties.
The company was able to raise $1.6 million from over 50 investors, according to the BCSC, through three offering memorandums that explained how the loans would be secured.
The memorandums said the mortgages would be registered with B.C.'s Land Title and Survey Authority, and would be the first or second mortgage on the properties in question.
But, the BCSC alleges, All Canadian Investment Corporation cancelled some of those land title registrations, and some of its mortgage loans were secured by mortgages that fell farther down the list in terms of priority than they had represented.
That means that if the properties had been foreclosed on, other lenders – and not ACIC – would have been first in line to recoup their losses.
Because the some of the loans were not secured as promised, the BCSC is alleging that Bergman and his company made false or misleading statements in the offering memorandums – and investors then made decisions to invest based on those statements.
The BCSC has the power to issue halt trade orders, cease trade orders, can put firms on an investment caution list, and can order companies to repay money they obtained by contravening the Securities Act.