Courts, industry taking a hard line on mortgage fraud

Courts, industry taking a hard line on mortgage fraud

Courts, industry taking a hard line on mortgage fraud

An Alberta man on parole for mortgage fraud is going back to prison – proof of the court’s toughening stance on that kind of crime.

Mortgage fraud has become big business in Canada, with a 150 per cent rise in criminal transactions detected just in the last year, according to the credit reporting agency Equifax.

“The schemes are getting so increasingly complex, there is no doubt that organized crime is involved,” says John Russo, chief legal counsel and privacy officer for Equifax Canada.

“They are working with individuals, even from jail, to come up with schemes that are bigger and better than the last.”

Proof positive is 49-year-old Alberta resident James Steinhubl, who had been on parole for a 10-year-old $4-million mortgage fraud conviction, but was sent back to jail this month.

Steinhubl had been convicted with two others – Realtor Eugene Chamczuk and lawyer Robert Wilson Lee – of luring gullible investors into providing names and credit information for $5,000. Steinhubl and Chamczuk were the owners of Canadian Best Homes, and the mortgage fraud involved 31 residential lots owned by them in the Warburg and Empress area of Alberta, between 2000 and 2002.

Those straw buyers were ultimately left legally responsible for the fraudulent mortgages.

Bruce Matthews, deputy registrar with the Real Estate Council of Ontario’s regulatory compliance unit, says the high number of fraud case reflects an active real estate market.

“A hot housing market means more fraud during high activity,” says Matthews. “And there are still cases of Realtors either inadvertently or wilfully participating in fraud.”

The panel of judges who reversed Steinhubl’s acquittal cited a scheme that was “sophisticated, carefully planned and persistent” and that he had shown “little remorse or responsibility.” They also noted that to date he had not made any effort to make restitution or was ever likely to.

The level of detected fraud has been escalating since 2008 and Equifax has been working hand-in-hand with major lending institutions trying to flag fraudulent loans before money is handed over, Russo said.

Largely as a result of those efforts, Equifax helped detect a $2.8 million escalation in attempted mortgage fraud just in the last year, he noted.

  • ON Consumer 2013-02-07 6:56:35 AM
    I wish Ontario and FSCO would take the same tough position.
    Post a reply