The scenario may seem improbable: using false identity documents, criminals pose as the owners of opulent houses, obtain a loan on these properties and immediately flee with the lender’s money as soon as the latter is deposited into their account. Yet this is what a group of fraudsters accomplished, revealed the Montreal City Police Service (SPVM), which has just dismantled this well-organized network.
The Economic Crimes Section of the Montreal police force arrested 17 suspects, who appeared Wednesday at the Montreal courthouse in relation to real estate fraud totaling more than $5 million.
These arrests, which were carried out in several phases, are the result of a long-term investigation begun in the fall of 2021, indicate Montreal police officers. “It took a big organization to succeed in deceiving all the actors involved in this,” said SPVM detective sergeant Karine Lessard in an interview.
The police arrested seven women and ten men aged between 22 and 60. They were charged with a variety of crimes, depending on their level of involvement in the scheme, including fraud, money laundering, receiving stolen property and conspiracy. Among the suspects arrested, some face prison sentences of up to 14 years. The person with “the highest degree of involvement” in this real estate fraud was, however, not arrested: an arrest warrant was issued against him.
This is the largest investigation of this type of real estate fraud in the history of the SPVM, underlined Detective Sergeant Lessard. It revealed that the network had targeted five mortgage-free properties: two opulent residences in Westmount and Beaconsfield, which were rented, and three vacant lots located on Nuns’ Island.
The investigation was launched when police were contacted by one of the actual owners, who realized that his property was now encumbered with a mortgage of 1.75 million.
“The victim was really in a state of shock to see that there was such a high loan on his property,” reported Detective Sergeant Lessard, responsible for this important investigation with her colleague Detective Sergeant Mélissa Desautels.
The aggrieved owner immediately contacted the private lender who now held a mortgage on his property. The latter, with other members of a group of lenders, hired a private investigator to shed light on the situation. They then learned that mortgages had also been fraudulently obtained on four other properties by fake owners.
They lost the entire amount of money lent.
A well-executed ploy
Using false identification documents, the fraudsters were able to pose as the owners of a targeted property. They appeared virtually before a first notary in order to sign a power of attorney which gave full powers of administration of the property to a person who was part of the criminal network.
The fraudsters also opened a bank account in the name of the real owners at a financial institution.
Then, the person holding the power of attorney obtained financing from a private lender and signed a mortgage deed with a different notary, explained the SPVM.
Once the loaned money was deposited into the fraudulently opened bank account, the suspects would quickly withdraw it and disappear.
The houses in question were rented, underlines the SPVM: network fraudsters had rented the property, thus having access to the physical premises, which facilitated the commission of criminal offenses.
The transactions also took place during the COVID-19 pandemic. Virtual appointments with the notary, which became the norm at that time, also worked in favor of the fraudsters: their identity documents, required by the notary, were then transmitted electronically. “It’s more difficult to verify a person’s identity virtually,” explains Detective Sergeant Lessard: receiving a photocopy of a driver’s license by email, for example, is not the same as receiving a photocopy of a driver’s license by email, for example. “to have in hand and to be able to examine it from all angles,” she adds.
The SPVM provides advice for notaries, real estate brokers, mortgage brokers, private lenders as well as employees of financial institutions “who can play a key role in preventing identity fraud”. The police encourage them to be wary of customers in a hurry and those who insist on having virtual meetings, avoiding showing up in person at their offices. They instruct them to learn to distinguish a real driver’s license from a fake one and to ask to see additional identification documents. They should also be wary of clients who do not ask questions about the terms of a loan or the fees to be paid.
“It’s a type of crime that exists, and everyone can be affected,” concludes Detective Sergeant Karine Lessard.
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2023-11-02 16:36:29
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