Two individuals, Arlene McDowell and Saverio Aversa have brought a class action suit against Fortress Real Capital, Fortress Real Developments, Centro Mortgages, FFM Capital, FSCO and a number of other entities and individuals, including Fortress president Jawad Rathore.
The plaintiffs are seeking general damages in the amount of $25 million; exemplary, punitive and aggravated damages of $2.5 million; accounting of all funds paid to the defendants by the plaintiffs, as well as funds paid by the development to the defendants; and that the defendants give up all profits made, among others, according to a statement of claim issued earlier this month.
The development in question is the Mady Collier Centre in Barrie, which was recently featured by the Toronto Star after having run into financial trouble.
According to that Star report, hundreds of individuals invested $16.9 million into a syndicated mortgage for the project. They were promised 8% yearly returns and it was a secure investment registered as a mortgage against the property.
The development eventually filed for bankruptcy protection and, in May, the investors’ claims against the property were subjugated, according to the Star report.
According to the claim, “investors are provided with an inflated current value for the real estate investment [and] the values are not arrived at through formal appraisals.”
It also claims investors are neither told the true value of the property nor that being behind the lender or project under development in terms of payback priority is a risky, unsecure position to be in.
Centro, which is also named in the suit along with Fortress, is alleged to have sold the mortgages to investors and that many investors never met with Centro.
To read the full statement of claim, click here
Two plaintiffs are seeking millions of dollars in damages after a project they invested in went belly up.