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An empty home sitting on the lot at 12826 Leslie St. in Richmond Hill, Ont., that was proposed as a development site for 46 homes, on July 27, 2020.

Fred Lum/The Globe and Mail

A large group of retail investors from the Toronto area’s Sikh community are out as much as $9-million after purported land developers pitching housing projects allegedly diverted their investments for their own use, including making a down payment on a 2019 Lamborghini, court records show.

Thrive Capital Management Ltd., a real estate investment company that solicited clients primarily from the suburb of Brampton, Ont., has obtained court orders freezing the assets of three men who partnered with Thrive to develop 37 homes in Brampton and another 45 in nearby Richmond Hill, north of Toronto.

The developers are Michael Hyman, a former player on the practice roster for the Toronto Argonauts and Winnipeg Blue Bombers football teams; Giuseppe Anastasio, a Toronto-based supplier of stone counter tops and tile; and David Bowen, an Owen Sound, Ont., businessman.

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Although no ultimate finding of fact has been made against the three developers, Justice Markus Koehnen of Ontario Superior Court has found the trio in contempt of court, declaring they have provided neither an accurate list of assets nor a full accounting of $9-million invested by Thrive.

In a July 20 ruling, Justice Koehnen found the funds invested by Thrive were not used to buy the Brampton and Richmond Hill properties, “but appear to have been used to pay Hyman, Anastasio and Bowen large sums of money.” In an earlier ruling in June, Justice Koehnen found that Mr. Hyman made a $171,000 down payment for a 2019 Lamborghini Aventador the same day $200,000 was removed from the bank account that held investors’ money.

Lawyers for Mr. Hyman and Mr. Anastasio said in e-mailed statements that their clients would not comment while the matter was before the courts. Mr. Bowen did not respond to e-mails and phone messages.

In addition to Thrive’s lawsuit against the developers, however, more than 100 retail investors have organized and taken legal action against Thrive, the developers, and another Southern Ontario home builder, Moninder Khudal.

The group of investors allege they lost money not just on the Brampton and Richmond Hill projects, but also on other projects that had nothing to do with Mr. Hyman and Mr. Anastasio. These include a failed condominium development in Toronto’s east end as well as proposed townhouses in the town of Innisfil, Ont.

Statements of defence have not yet been filed in that matter and none of the allegations have been proven in court. A lawyer for Mr. Khudal said in an e-mailed statement that he could not comment while the matter is before the courts. Harjot Singh, one of the principals of Thrive, also declined to comment.

Kevin Sherkin, the lawyer representing the group of investors, said in an interview that investor losses on all of the projects total about $43-million.

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Over the past several years, as Ontario’s real estate market has heated up, many investment firms have offered products that, they say, allow ordinary investors to get a piece of the action. A number of these companies have fallen under scrutiny by regulators.

Paramount Equity Financial Corp., a firm that sold units in funds that were supposed to invest in second, residential mortgages, is the subject of an Ontario Securities Commission enforcement proceeding. Paramount was never registered to sell securities and the bulk of the $78-million it raised was sunk into speculative development projects since placed in receivership.

Similarly, many unsophisticated, retail investors also gravitated toward syndicated mortgages backing risky development projects. Many of those projects, launched by companies such as Fortress Real Developments Inc. and the Tier 1 group of companies, have collapsed and been placed under court-ordered supervision.

In the case of Thrive, the company has been aggressively pursuing the developers – Mr. Hyman, Mr. Anastasio and Mr. Bowen – since April, when it first obtained its court order to freeze their bank accounts.

Thrive partnered with the three men in 2019 to purchase the Brampton and Richmond Hill parcels of land. In return for Thrive’s total investment of $9-million, it was supposed to become a 50-per-cent shareholder in two companies co-owned by the developers, which would be used to buy the properties, Thrive alleges.

Instead, the Richmond Hill property sale never closed, and the $2-million deposit was lost, court records show. As for the Brampton land, Thrive alleges the developers bought it through a different company, and placed several mortgages on the property, leaving Thrive with no security over its investment.

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“These protections were of material importance to Thrive,” Justice Koehnen ruled in a decision of July 20 that ordered the sale of the property. Justice Koehnen noted that many of Thrive’s clients had “invested their life savings in Thrive.”

Justice Koehnen has questioned how forthcoming Mr. Hyman has been about his assets, despite being ordered to do so. Mr. Hyman, who described himself as a former New York-based banker with JP Morgan as well as a former football player in an affidavit, listed his assets as a bank account with $17 and shares in two numbered companies valued at $500.

Thrive, however, obtained a different statement of assets that Mr. Hyman supplied to a lender that was supposed to finance the purchase of the Richmond Hill property. That document listed his net worth as $15-million, and included a 2020 Rolls Royce valued at $689,000, a 2019 Ferrari valued at $495,000 and a 2020 Lamborghini valued at $875,000.

In June, Justice Koehnen ordered the developers to disclose the locations of four other luxury vehicles they allegedly own or lease and barred anyone from driving them. The developers objected to this, arguing the matter had not been fully adjudicated and that it would be improper to suspend their “ability to use their automobiles.” Justice Koehnen was not persuaded.

“A party that refuses to comply with court orders to begin with, and then continues its refusal to comply, cannot expect any sympathy for the loss of use of a Lamborghini.”

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