The conviction of two major real estate developers – who already once been accused of committing mortgage fraud -- in one of Canada’s busiest cities highlights the need for brokers to properly vet condo developers before recommending new-construction projects to their investor clients.
Michael Jerome Knight and Jeffrey Karl Wiegel were found guilty of illegally selling securities to 50 people, most of whom were residents of British Columbia.
This isn’t the first time Knight and Wiegel have found themselves in hot water.
A 2012 Vancouver Sun article
states the pair “falsely claimed the promissory would be secured by a mortgage on land at 3701 West Broadway. However, when the two investors sought to enforce the security, they learned that neither of Wiegel, Knight nor Almaval owned the property”.
The British Columbia Securities Commission ordered the men to pay a combined total of $400,000 in fines, and to repay the millions they stole in fraud, including:
- $1.94 million related to investments in 0772835 B.C. Ltd., a company that was set to develop a condo in North Vancouver called The Brook, and
- $1.7 million related to investments in Local 1661 Building Inc., which was set to develop a Vancouver condo that went through several name-changes, such as deVille, The Local 1661 and The Local.
In its final decision, a panel acting on behalf of the BCSC wrote: "The respondents' misconduct has resulted in significant harm to investors. The investments in 835 Ltd. and Local 1661 have been lost. The losses for each investor are generally significant in that many of the individual investors lost amounts between $50,000 and $100,000."