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Andre Lewis was sentenced last July to seven years in prison after an Ontario Superior Court jury found him guilty of fraud.

Peter Power/The Globe and Mail

Toronto businessman Andre Lewis defrauded victims of $7.5-million through a "large-scale, sophisticated mortgage investment scam" that he operated through his real estate and financial firm, the Ontario Securities Commission alleged Monday.

The OSC issued allegations Monday against Mr. Lewis, who ran Toronto-based Lexxco Corp., alleging he was responsible for a fraud "in the nature of a Ponzi scheme."

Mr. Lewis was sentenced last July to seven years in prison after an Ontario Superior Court jury found him guilty of fraud. The OSC is seeking to "reciprocate" the court ruling, allowing it to sanction Mr. Lewis without having to have a full hearing to reconsider all the same evidence that was presented at his criminal trial.

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The OSC is seeking to permanently ban Mr. Lewis from trading securities in Ontario, as well as ban him from working as a registrant in the investment industry or from serving as a director or officer of a company.

In a statement of allegations, the commission said Mr. Lewis operated a fraud from 2004 to 2011 while working as a licensed mortgage administrator. Mr. Lewis raised money from investors that he said would be used to finance private mortgages, offering rates of return of 10 per cent annually.

The OSC said he advertised widely in newspapers and on the radio, explaining the benefits of private mortgage investing, which he said was a safe and secure investments. He gave investors promissory notes pledging the return of their principal at the end of the investment term, the OSC said.

Lexxco Corp. operated a website, which has since been shut down, that told investors, "we provide our clients with the security to be able to sleep well at night."

"In a world surrounded by uncertainty, we provide our clients with a secure, consistent and unparalleled investment alternative," the website said.

However, the regulator said Mr. Lewis invested only a small portion of the money he raised in mortgages, and most of the funds were instead deposited into bank accounts he controlled. He used the money "for his own benefit," the OSC said, and used some of the funds to pay "interest" to earlier investors.

Most of the small portion of money that was invested in mortgages ended up disappearing after the properties were liquidated under power of sale at a loss to investors, the OSC said.

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The OSC said 33 victims lost a total of $7.53-million.

Lexxco was licensed as a mortgage administrator by the Financial Services Commission of Ontario from 2009 to 2011. FSCO suspended the company's operating licence in 2011 and revoked it in November, 2014.

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