RBC Files $8.9 Million Law Suit Against Ex-Employee

The Calgary Herald today has broken a very significant part of the Calgary mortgage fraud scene, with the news that the Royal Bank of Canada has launched an 8.9 million dollar law suit against a former Calgary based mortgage specialist and some local associates.

The associates include the former mortgage specialist’s two brothers, his wife, one of his brothers’ wife, and an associated builder and his wife. As well, a lawyer is also included as a party in this matter. There are also five corporations, all controlled by the group above, that are also included in this matter.

Rainbow Investigations has numerous clients, (victim buyers, or sometimes called “straw buyers), who are actually undergoing foreclosure actions with the Royal Bank as we speak. As a result, we feel it would be inappropriate for us to comment on any of the specifics with the news of today.

However, we will say, in a very general way, while the news today is significant, we feel this news revealed so far does not come close to explaining the entire mortgage fraud scene in Calgary. The news today is only the tip of the iceberg, and there is much more to be uncovered with this issue.

In closing, Rainbow Investigations strongly suggests anyone caught in this scam, as a victim, to come forward either to the Commercial Crime Unit of the Calgary Police Service, or talk to us about the options available to deal with this situation.

The story from the Calgary Herald of today is pasted right here:

CALGARY - The Royal Bank of Canada has filed an $8.9-million lawsuit against one of its former employees and members of his family over allegations they orchestrated a complex mortgage fraud scheme that has left the financial institution facing millions in losses for properties with artificially inflated values.

At the heart of the lawsuit are allegations the defendants -- including Ilan Levy, who worked with the bank as a mortgage specialist between August 2004 and March 2009 --approached people to allegedly buy real estate at prices that had been intentionally inflated over market value in exchange for fees between $20,000 to $70,000, according to court documents obtained by the Herald.

The defendants then apparently received payments of part of the mortgage loan proceeds, for Levy or companies under his control, that translated into at least $2.46 million, the documents allege.

As a result, the bank claims it was "intentionally misled" into agreeing to loan more money than the properties were worth.

In the documents filed by the Royal Bank last month in the Court of Queen's Bench, the bank indicates Levy was terminated because it was "discovered that he planned, organized, participated in and executed the fraudulent transactions." The documents state Levy or companies under his control received at least $2.46 million from the proceeds of mortgages obtained fraudulently.

He is among eight people and six corporations named as defendants in the suit, including his wife, two of his brothers and a lawyer.

None of the allegations have been proven in court.

In all, the bank claims the group was involved in at least 20 transactions using a so-called straw buyer scheme, most for properties in the Elbow Valley area, some with mortgages for more than $2 million.

The bank, in its statement of claim, alleges Levy--whose duties included helping people apply for and obtain residential mortgages from the Royal Bank--organized, planned and executed each of the 20 transactions and that either he or another defendant found the properties, drafted documents and retained an appraiser for the fraudulent purchases.

The bank is suing for $8.9 million in damages, along with interest.

The bank has also called for all of the defendants' assets to be frozen.

Gwendolyn Richards © Copyright (c) The Calgary Herald

Date of Story: Thursday, July 09, 2009
Story Posted By: Ron Reinhold
Source: Calgary Herald

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