After a five-year probe code-named "Project Bridle Path," Toronto Police have arrested and charged four people with allegedly carrying out what investigators say was a sophisticated series of mortgage frauds involving high-end homes that netted $17-million.
Police say the charges relate to allegedly fraudulent transactions involving two large houses in Toronto's wealthy Bridle Path area, as well as other properties located in similar neighbourhoods.
The force's financial crimes unit unveiled the charges on Tuesday, when lawyers for the accused were scheduled to appear in court at Toronto's Old City Hall. The arrests were all made over the course of the past month, with the last suspect picked up last week. All four people charged have been released on bail.
The alleged scheme, police say, dates back to before 2013 and involved enticing private lenders to hand out money for mortgages for people or companies that were posing to be the owners of expensive homes, including a then-vacant 14,000-square foot Bridle Path mansion with a gated driveway. But the mortgages were never registered and false documents, including title insurance and property-insurance certificates, were used to seal the fake deals, police allege.
Arash Missaghi, 48, of Richmond Hill, faces charges of fraud, conspiracy and uttering a forged document. Grant Erlick, 45, of Toronto, faces fraud, conspiracy and money laundering charges, as does Masumeh Shaer-Valaie, 48, of Richmond Hill. Bob Bahram Aziz Beiki, 53, of Toronto, faces a forgery charge. None of the allegations have been proven in court.
None of the accused could be reached on Tuesday.
The allegations in the case have already been the subject of a tangle of litigation in civil courts.
Police began their investigation into the case five years ago, after a civil lawsuit was filed on behalf of investment companies, headed by a Toronto businesswoman named Tova Marks, alleging a series of mortgage frauds.
Ms. Marks and the lawyers on the case could not be reached on Tuesday.
The charges come amid concern that has been rising for more than a decade about mortgage fraud in Toronto, still one of the country's hottest real estate markets despite a recent slump, and the limited ability of law enforcement and prosecutors to pursue what can be complex cases.
But Toronto Police Detective Alan Fazeli, the lead officer on this investigation, said that while such cases are often difficult, the five-year delay in this one was largely due to the absence of one key figure: Golnaz Vakili, a lawyer involved in many of the transactions who fled the country and was later disbarred after facing a fraud charge, according to a 2015 Law Society tribunal decision made in her absence.
"The judicial system is having a hard time finding guilt in a lot of these cases," Det. Fazeli said, speaking generally about mortgage fraud and not referring specifically to the current charges. "None of these cases are concrete cases."
Some observers have warned that mortgage fraud of a more banal variety has long been on the rise as some home buyers are tempted to lie about their finances in order to secure a larger mortgage in Toronto's pricey market.
But there have also been cases where fraudsters have stolen an unsuspecting homeowner's identity by obtaining personal information and then engineering fake mortgages – crimes that Det. Fazeli said homeowners can avoid by ensuring they have title insurance and that they guard their personal financial information.