A scandal has shocked the shores of Muskoka — and it’s not neighbours fighting over jet ski noise.
What happened: A Toronto mortgage broker is being accused of running a Bernie Madoff–style real estate scam in Ontario cottage country, leaving duped investors with over $100 million in losses, per Bloomberg.
How it worked: Investors thought their money was being pooled into syndicated mortgages, which are essentially loans for property developments that pay interest over time until they’re built.
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A court-appointed receiver says much of the cash never made it into mortgages at all, and the interest payouts that investors got were (in classic Ponzi fashion) likely just other investors’ money.
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When the housing market started sliding and money stopped flowing into the scheme, the house of cards tumbled. Early estimates suggest more than 60% of the funds are now gone.
Why it matters: The saga shows how housing booms can become breeding grounds for scams. While property prices were soaring across Canada, investors, renters, and homeowners alike rushed to get into the market, sometimes overlooking the fine print.
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Fake rental listings, title fraud (selling someone else’s home without them knowing), and other housing scams have all skyrocketed since the pandemic.
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In 2020 alone, there were over 1,500 reported cases of real estate fraud, with Canadians losing a reported ~$100 million, though the real number is likely a lot higher.
Bottom line: Experts say the biggest driver of real estate scams is the lack of housing supply and the desperation it creates in buyers. Until that picture changes, schemes like these likely aren’t going anywhere.—LA