Natasha Sharpe, the former chief executive of Bridging Finance Inc., was a part-owner of a luxury condo development known as The One when the troubled lender secretly backstopped the project with investor funds, a recent court action alleges.
Until now, only two people had been identified as co-owners of The One: Developer Sam Mizrahi and Jenny Coco, a former road-paving magnate who co-founded Bridging with Ms. Sharpe in 2012.
However, Bridging’s receiver has alleged in a new court filing that Ms. Sharpe had, at least, a 2.5-per-cent stake in The One, a development that is currently under construction at the intersection of Yonge and Bloor streets in Toronto. Ms. Sharpe was allegedly an owner in the project at a time when Bridging was owed millions of dollars from some of Mr. Mizrahi’s companies, and when Bridging investor funds were allegedly used to backstop a $213-million loan advanced to The One.
PricewaterhouseCoopers Inc., which was appointed as receiver over Bridging in 2021 amid allegations of fraud and mismanagement, says it has “significant concerns regarding the potential conflicts of interest between Jenny Coco and Natasha Sharpe” in their roles as both officers of Bridging and as owners of the condo development.
The allegations were made in a legal application by PwC, which is seeking a court-appointed officer to oversee three development companies linked to Mr. Mizrahi. Those three companies, which were behind a Mizrahi-built condominium at 181 Davenport Rd., owe Bridging a total of about $55-million and are in default, PwC alleges.
Neither Ms. Sharpe nor Ms. Coco responded to requests for comment sent to their lawyers. Mr. Mizrahi is opposing PwC’s application, arguing, among other things, that one of the three companies owes nothing to Bridging. Mr. Mizrahi did not respond to questions about Ms. Sharpe’s alleged ownership in The One.
Bridging Finance was one of Canada’s largest private lenders when it was placed under PwC’s control in 2021 by an Ontario judge. Using funds predominately provided by retail investors, Bridging offered loans to higher-risk companies that had trouble qualifying for financing from traditional banks. At its peak, Bridging managed $2.09-billion on behalf of 26,000 investors.
But in April, 2021, Ontario’s securities regulator rocked Bay Street with allegations that several of the company’s loans had problematic ties to the husband and wife team that led Bridging: David Sharpe, Bridging’s then-CEO, and Ms. Sharpe, who had previously been CEO and by that point was Bridging’s chief investment officer. Both were fired shortly after, and the couple has since been accused of fraud by the Ontario Securities Commission. Bridging’s investors are estimated to lose $1.3-billion.
However, the OSC’s allegations do not pertain to The One, a long-delayed condominium development that has been marketed by Mr. Mizrahi as the tallest condo tower in Canadian history. PwC’s probe into the project widens the scope of potential legal jeopardy for the controlling minds behind Bridging. Ms. Coco and Ms. Sharpe co-owned the private lender, and they both sat on Bridging’s credit committee, which approved its loans.
None of the allegations has been proven in court.
In new legal filings, PwC says it has recovered documents that suggest Ms. Sharpe owns 5 per cent of a holding company that owns 50 per cent of The One, amounting to a 2.5 per cent interest in the condo development. The holding company is primarily owned by Ms. Coco.
Ms. Sharpe originally invested $1.5-million in the holding company between 2014 and 2015, PwC alleges, a period of time when several companies involved in a Mizrahi development at 181 Davenport in Toronto had outstanding loans with Bridging.
PwC also alleges it has located a 2017 e-mail that suggests Ms. Sharpe was offered an additional ownership stake in The One in connection with a loan guarantee from Bridging.
Around this time, The One was in need of financing and negotiated a $213-million loan from China-East Resources Import & Export Co. (CERIECO), a Chinese-state lender. To secure the funds, Ms. Coco put up her family company, Coco Paving, as collateral.
However, Coco Paving did not fully meet the conditions required by the lender so Ms. Coco allegedly arranged for Bridging’s flagship investor fund, the Bridging Income Fund, to act as one of several guarantors.
At the time, the Bridging Income Fund managed about $650-million on behalf of its investors. Ms. Sharpe allegedly signed the document that named the fund as a guarantor, but in some versions of the guarantee the name “Bridging Finance” was redacted from the documents, CERIECO has alleged in a separate legal action. PwC refers to this redacted agreement as an “alleged secret guarantee.”
In the 2017 e-mail discovered by PwC, Mr. Mizrahi summarized a discussion he had with Ms. Coco about their intended offer to Ms. Sharpe: “2.5% coming from me and 2.5% coming from you.”
He also wrote: “The 5% share being given to Natasha is for Bridging/Sprott putting up its balance sheet and guarantees so that we can get rid of China in the next 18 month period we have with them.”
Ms. Coco replied: “Yes, we agree as outlined!” and forwarded the email exchange to Ms. Sharpe.
PwC acknowledges that it doesn’t know whether this additional stake was given, explaining it “continues to investigate whether this additional ownership share was ever provided to Natasha Sharpe.”
At the time, the flagship fund was known as the Sprott Bridging Income Fund, because it was co-managed by Sprott Asset Management. Around this time the fund was purchased by Ninepoint Partners, which is run by former Sprott executives. Asked about Ms. Sharpe’s alleged ownership in The One, Ninepoint said in an e-mailed statement to The Globe: “At no point did Bridging disclose any such conflict, nor did Ninepoint have any knowledge of a conflict.”
The Globe has been unable to locate any record of Ms. Sharpe disclosing this alleged interest in The One to Bridging investors, and there is no mention of any such disclosure in PwC’s recent legal filing.
One of the few times Ms. Sharpe was publicly associated with the development was when she appeared at the launch of The One’s sales centre in November, 2017. Shortly after the event a photograph of Ms. Sharpe, Ms. Coco and Mr. Mizrahi appeared on the website of Dolce Magazine, which describes itself as a luxury lifestyle publication. The photo, a copy of which was obtained by The Globe, was deleted from Dolce’s website shortly after Bridging was placed in receivership.
It is unclear if Ms. Sharpe is still an investor in The One. However, PwC says it has also recovered a Dec. 30, 2020, e-mail where Ms. Coco, while in a dispute with Ms. Sharpe about outstanding Mizrahi loans, stated: “Allow me to remind you, both Sharpe and Coco … remain investors in The One.”
The $213-million loan provided by CERIECO in 2017 is now in default and the Chinese lender is suing because it alleges Bridging Finance and Ms. Coco were released from their guarantees without its knowledge. CERIECO’s allegations have not been proven in court.
Mr. Mizrahi is attempting to have CERIECO’s lawsuit dismissed, arguing that CERIECO had entered into an agreement with The One’s senior lender, KEB Hana Bank, stipulating it would not take any enforcement actions that could jeopardize the project before its completion. That matter was recently argued before Ontario Superior Court Justice Jessica Kimmel in September, but she has yet to make a ruling.