A Toronto-based developer and executive who played a key role in a syndicated-mortgage scandal, which saw investors lose hundreds of millions of dollars in the fall of Fortress Real Developments Inc., is part of a group spearheading two major developments under the banner of a different company.
Vince Petrozza, who was chief operating officer of Fortress when it crumbled in 2018 amid regulatory scrutiny and an RCMP probe, is involved in a new company, Matera Developments Inc. It has submitted development proposals to the town of Newmarket, Ont., about 50 kilometres north of Toronto, to construct townhouses and apartment buildings in two locations.
On its website, Matera calls itself a “diversified, experienced real estate company with roots in construction for over two decades.” There are various stock photos of condominium buildings and houses, but none of the photos indicate locations of the properties or whether Matera was involved in constructing them. Mr. Petrozza’s name is not mentioned on the website, nor are the names of any other people behind Matera.
The website does goes into detail about one project called Lundy’s Lane Assembly – a plan to build a multi-unit residential rental building on a plot of land in Newmarket within the next 18 months.
Documents submitted to the town by Matera, as part of the company’s development proposal for Lundy’s Lane, were signed by Vince Petrozza on Matera’s behalf.
Mr. Petrozza did not respond to multiple requests by phone and e-mail for comment.
The Fortress scandal shook the real estate sector in the Toronto area in 2018, after the RCMP conducted surprise raids on the company’s headquarters in Richmond Hill, which is north of Toronto and south of Newmarket, as part of a fraud investigation stemming from multiple complaints of lost investments.
From 2009 to 2017, Fortress helped raise $920-million for developers by facilitating the sale of syndicated mortgage investments to thousands of retail investors with the promise of generous returns. The company’s mortgage affiliate also offered attractive commissions to mortgage brokers who brought in those investors.
But under the leadership of chief executive officer Jawad Rathore and Mr. Petrozza, Fortress started but did not complete several real estate projects across Canada, leaving many communities that were expecting transformative developments in the lurch.
Many of these developments, such as the SkyCity condo project in Winnipeg and the Capital Pointe condo project in downtown Regina, never got built, and lenders and receivers put a number of sites up for sale. Investors are still trying to recover their original investments in some of the projects or were paid back a fraction of their investments in others. Fortress repeatedly maintained it adequately warned investors about the risks of syndicated mortgages.
Mr. Petrozza was never charged by the RCMP or other regulatory bodies for the mortgage scandal, nor was he fined, but he gave up his licence to operate as a mortgage broker in a settlement with Ontario’s mortgage regulator. Fortress was slapped with a $250,000 penalty by the Financial Services Regulatory Authority of Ontario last year for breaking the province’s mortgage rules.
At a May 31 virtual meeting organized the town council of Newmarket regarding the Lundy’s Lane development, long-time resident Frances Darwin expressed concern about Matera – particularly Mr. Petrozza’s involvement in the company, given his role at Fortress.
“I am requesting that Newmarket staff perform due diligence on Matera, especially in relation to any risk of financing and construction of any new projects in Newmarket,” Ms. Darwin told town councillors, adding any due diligence performed by the town should be made public.
In an interview with The Globe, Ms. Darwin said she researched Matera and found links to Mr. Petrozza. She said she brought this to the attention of Newmarket officials and asked to make a full deposition regarding the background of the developer at a council meeting, but town officials cautioned her against doing so because she could not prove Vince Petrozza from Matera was Vince Petrozza from Fortress.
“Residents deserve to know,” Ms. Darwin said, referring to Mr. Petrozza’s role at Fortress and the calamitous history of the company.
According to a spokesperson for the municipality, the town is evaluating two applications from Matera, but has “no first-hand knowledge of the background of the individual named Vince Petrozza.”
“The municipality does not have the ability to deny a planning application based on past legal issues,” the spokesperson added.
Corporate records show that Matera is registered to Robert Marzilli, who also owns RAM Contracting Inc., a construction company affiliated with the Lundy’s Lane project. In an e-mail to The Globe, Mr. Marzilli said he is the sole owner of Matera and Mr. Petrozza works for the company, but is not an officer, shareholder or director.
Mr. Marzilli’s connection to Mr. Petrozza dates back more than a decade, property records show. The two developers co-owned several properties in Newmarket, including 49 Charles St. and 52 Prospect St., which are both part of a second Matera townhouse and condo proposal that is under review by the municipality.
The ownership on both addresses was transferred to Mr. Marzilli alone in October, 2018, at the height of the law enforcement scrutiny into Fortress. There is no direct mention of this second project on Matera’s website, but the minutes of a town council meeting on June 29, 2020, say a Vince Petrozza attended virtually and pitched the project.
Property records also show that the five properties slated for redevelopment as part of the Lundy’s Lane project were purchased by Lundy’s Lane Newmarket Assembly Inc., a company incorporated by Mr. Marzilli, for $3.65-million in June, 2020.
The project received backing of more than $4-million from Advance Automotive Industries Inc., a company registered to John Brnjas, according to documents reviewed by The Globe. Mr. Brnjas did not respond to a request for comment.
For Ms. Darwin, it is imperative that Newmarket residents know who is being invited into the community and being allowed to profit from developments there. “There needs to be transparency,” she said.
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